Papua New Guinea LNG Project

Papua New Guinea LNG Project
Name	Papua New Guinea LNG Project
Country	Papua New Guinea
Region	Gulf Province and Southern Highlands Province
Operators	ExxonMobil (operator), Santos, Kumul Petroleum, JX Nippon Oil & Gas Exploration
Discovery	1980s
Start of production	2014
Estimated gas in place	Over 9 trillion cubic feet

Papua New Guinea LNG Project. It is a major integrated liquefied natural gas development located in the Papua New Guinean highlands and coastal regions. Operated by ExxonMobil, the project extracts gas from the Hides gas field and associated fields, processes it, and transports it via pipeline to a liquefaction facility near Port Moresby. Since commencing exports in 2014, it has become a cornerstone of the national economy and a significant supplier to markets in Asia.

Project overview

The integrated project encompasses gas production and processing facilities in the Southern Highlands Province, a 700-kilometer pipeline traversing rugged terrain to the coast, and a two-train liquefaction plant located on the coast of the Gulf Province. Key upstream gas fields include the Hides gas field, Angore, and the Juha gas field, with gas also supplied from the Gobe and Kutubu oil fields. The project is a joint venture between operator ExxonMobil, Santos, Kumul Petroleum, and JX Nippon Oil & Gas Exploration, with Kumul Petroleum representing the interests of the Government of Papua New Guinea. The LNG plant has a nameplate capacity of 8.3 million tonnes per annum, with primary long-term offtake agreements with buyers in Japan, China, and Taiwan.

Development and construction

The project's origins trace to gas discoveries in the 1980s, notably at the Hides gas field, but commercial development only gained momentum in the 2000s. A key milestone was the signing of the Gas Agreement between the project partners and the Government of Papua New Guinea in 2008, providing the fiscal and legal framework. Front-end engineering and design was led by ExxonMobil and Fluor Corporation, with the final investment decision announced in 2009. The construction phase, one of the largest private investments in the Asia-Pacific region at the time, involved major contractors like Fluor Corporation, Chiyoda Corporation, and Saipem. The challenging environment, including the Highlands Highway, necessitated significant logistics planning. First LNG cargo was shipped in May 2014, ahead of schedule.

Production and operations

Gas is conditioned at the Hides gas conditioning plant and other facilities before entering the dedicated pipeline that crosses the Southern Highlands, Hela Province, and Gulf Province to the LNG plant. The liquefaction facility, located near Port Moresby, employs the ConocoPhillips Optimized Cascade liquefaction process. LNG is then loaded onto carriers for export from the Port Moresby harbor. The project has consistently maintained production levels at or above nameplate capacity, with cargoes delivered to major utilities such as Tokyo Electric Power Company, Osaka Gas, and CPC Corporation. Operational safety and maintenance are managed by ExxonMobil with support from a national workforce.

Economic and social impact

The project has transformed the Economy of Papua New Guinea, becoming the largest source of government revenue and export earnings. Revenues flow through mechanisms like taxes, dividends to Kumul Petroleum, and development levies for provincial governments in the Hela Province and Southern Highlands Province. It has spurred associated infrastructure projects, including upgrades to the Highlands Highway and Jacksons International Airport. The project established the PNG LNG infrastructure tax credit scheme and various community development initiatives. However, its presence has also intensified local tensions over benefit distribution, contributing to social challenges in the Highlands region.

Environmental and safety considerations

The project underwent an extensive environmental impact assessment under the Environment Act 2000 of Papua New Guinea. Key considerations included the pipeline's routing through the Kikori River basin, forest ecosystems, and landslide-prone areas. The design incorporated measures to minimize deforestation and protect biodiversity. The project has faced scrutiny over its management of induced seismicity related to gas production and its greenhouse gas emissions footprint. Major incidents, such as a 2018 earthquake in the Southern Highlands that forced a production shutdown, highlighted operational vulnerabilities. International standards from bodies like the International Finance Corporation are applied to its environmental and social management plans.

Expansion and future projects

The joint venture has pursued expansion through the integrated Papua LNG project, which will develop the Elk-Antelope gas fields discovered by InterOil Corporation. Following a series of transactions, TotalEnergies became the operator of Papua LNG, with ExxonMobil and Santos as partners. A separate expansion concept, the P'nyang gas field development, has been under negotiation between ExxonMobil and the Government of Papua New Guinea. These proposed projects aim to add new liquefaction trains at the existing site near Port Moresby, potentially doubling the country's LNG export capacity, though final investment decisions have been delayed by commercial and fiscal negotiations.

Category:Liquefied natural gas Category:Energy infrastructure in Papua New Guinea Category:ExxonMobil