Papua LNG is also facing a wave of global competitors aiming to increase demand for LNG in the mid-2020s and who may not occur. „A P`nyang gas agreement is a precursor to the entire LNG expansion project, which is competing for a rapid market opening later in the decade,“ says Kavonic. Tuesday`s agreement allows the partners to enter the FEED phase of the study that will lead to the final investment decision in 2020. The proposal for the development of a gas field at P`nyang involves the construction of a third LNG train in the PNG-LNG project at Caution Bay, near Port Moresby, but is considered an integrated autonomous gas project, in accordance with the terms of a gas agreement. According to the government, the new gas agreement for P`nyang will be separated from the terms of the agreements for the initial PNG LNG project and the new Papua LNG project. The companies had insisted that Total comply with the LNG agreement signed in April, and Oil Search warned in August that the cost of the project could increase if it was delayed by protracted discussions. Exxon Mobil, which is also a partner in the Papua LNG project, said it was looking forward to working with the PNG government to conclude the gas agreement for the P`nyang project before making decisions on the design work of three new processing units, called trains, in the GNP sector. „The review of the gas agreement for the Papua LNG project confirms the commitment of all parties involved to complete the project and add value to all parties involved,“ an Exxon Mobil spokeswoman said in an email to Reuters, commenting on Kua`s statements. Discussions on P`nyang were suspended earlier this year when the government attempted to revise Total`s LNG agreement in Papua. This agreement was finally approved in early September with minor concessions from Total. Prime Minister Peter O`Neill said friday in Port Moresby, the capital, that „physical conditions“ had been agreed.
He said negotiations on how municipal and provincial government revenues would be shared required more work. I would say that we are close to 50%60% already having our understanding of revenue participation,“ O`Neill said at Reuters` request. Differences of opinion on landowners` rights and revenue-sharing agreements have been an almost constant feature of the evolution of resources in PNG. A non-binding Memorandum of Understanding (MOU) signed on Friday is basically a government commitment to rule out a gas agreement in early 2019 that would lead to the development of Total-operated Papua LNG. The MoU was signed at the Asia-Pacific Economic Conference (APEC) in Port Moresby, in the presence of Peter O`Neill, Prime Minister of Papua New Guinea, and Patrick Pouyanné, President and CEO of Total. The proposed gas agreement is expected to be finalized in the first quarter of 2019. Total operates the Onshore Elk and Antelope fields and is alongside ExxonMobil partners (28.3%) the largest shareholder of PRL-15 with a 31.1% stake. and Oil Search (17.7%), post the State back-in right of 22.5%. The Papua LNG project consists of two MMtpy LNG trains of MMtpy each and is being developed in synergy with existing LNG facilities (operated by ExxonMobil). Total and its partners have agreed to launch the first phase of engineering studies for this project.
Signed by the PNG State and the papua LNG project partners, the MoU is an important step in the commitment of all parties to the project,“ said Patrick Pouyanné, Chairman and CEO of Total.