Place your Ad Here!
Oil and Gas
PNG Business News - February 26, 2021
Oil Search Shows Strong Performance
Oil Search has brought a strong financial year in 2020 with a core net profit after tax of US$22.0million (K77m), also reported to a full-year production of 29.0 mmboe and the strongest safety performance since assuming operatorship in 2003.The financial results were significantly lower realised hydrocarbon prices in 2020 as compared to 2019, which resulted in a full-year net loss of US$320.7 million (K1.1bn). This includes a post-tax impairment charge of US$260.2 million (K908.7m) that had been recognised in the interim financial results.For managing director Dr Keiran Wulff, “Oil Search emerged from 2020 stronger and more resilient as a result of its response to the Covid-19 pandemic, demand collapse and oil price downturn. Despite the material challenges, Oil Search achieved three important records for the year. The first is the strongest safety performance in PNG since becoming the operator of the PNG oil fields in 2003, with a total recordable incident rate of 0.78 per million hours worked, and no Tier 1 process safety events.”According to Wulff, the second is the strongest production reliability from its operations in PNG since the 2018 earthquake and, the delivery of record annual production from the PNG LNG project.He said that the company brought down some decisive actions. “We also undertook a major strategic review to prioritise activities and capital spend for a low carbon future,” he said. “This resulted in streamlining our portfolio and incurring a non-recurring, post-tax impairment charge of US$260.2 million (K908.7m). We are a more focused, leaner and lower cost resilient business in a strong position to commercialise our world-class resource base and leverage the oil price. We will continue to focus on maximising operating cash flow and delivering material growth projects which will be underpinned by resilient operations and disciplined capital management. We have set up a dedicated transformation team to embed a high-performance culture across the business.”
PNG Business News - February 15, 2021
PM Says LNG Project is Moving in the Right Direction
After the signing of the fiscal stability agreement, Prime Minister James Marap said that the Papua LNG project is going in the right direction. He gave confidence to the investors that PNG has an active democracy. “We appreciate very much that this project has now been moved,” he said. “The Government will ensure that all necessary support is procured for this project to be moved as our project developer moves into the FEED phase. Our country is moving into exciting years ahead. Let me sound this out to our investors: Today is a testament to what democracy in PNG is all about, irrespective of the politics that is at play. Our economy is in a very vibrant democracy. Our rule of law prevails, our judiciary always presides over matters that are in conflict. Our country has not terminated any project agreement during the life of the contract.”Apologising to investors that the government had caused them too much stress, he said, “The Government provides the social licensing, provides the security also. It needs to ensure that all ticks that need to be ticked are ticked, with respect to the laws that we have.”
PNG Business News - February 15, 2021
Oil Search Happy with Papua LNG Progress
Oil Search Ltd is happy to see the progress of the US$12 billion (K41.38 billion) Papua LNG project.According to Oil Search managing director Dr Keiran Wulff, “We are pleased to see further progress achieved on the Papua LNG. This milestone highlights the commitment from the Government towards Papua LNG and is a significant step in de-risking the project. It also demonstrates increasing alignment between the Government and the joint venture partners. We look forward to progressing the Papua LNG and announcing further milestones consistent with our strategic review announced last November.”Total, the operator of the project signed the agreement - together with ExxonMobil and Oil Search - signed an agreement with the government early this week. This is seen as a final step under the Papua LNG gas agreement to proceed with the project fiscal stability. Total managing director, meanwhile, Jean-Marc Noiray said that they welcome the “whole stabilisation of the project”.“The Feed (front end engineering design) itself will last between 15 and 18 months, from the moment we reach the final investment decision,” he said. “And from final investment decision to first gas, we have about four years of construction. It’s a long journey before we get to the first gas, and the first revenues for the developers and the country.”
PNG Business News - February 11, 2021
PNG and Total Sign Papua LNG Project Agreement
Following the signing of the Fiscal Stability Agreement (FSA) for the Papua LNG Project between the Papua New Guinea government and with French company Total and partners ExxonMobil and Oil Search, Prime Minister James Marape has announced that the Papua LNG project will proceed as a two-train project, independently of the P’nyang project. This came after a twenty-two months delay after landowner issues and a change in government leadership. The initial Memorandum of Understanding was signed in early 2019.“This demonstrates that the government can still honour legally-signed agreements which in the long run provides comfort for long-term investors,” he said. “It demonstrates Papua New Guinea’s commitment to this Papua LNG Project and gives comfort and encouragement to the developers to progress the project.”According to Petroleum Minister Kerenga Kua, the long incubation period was because of exploring whether this project will connect with the fledgeling P’nyang project in Western Province. "After 22 months it was felt that we should de-link the two projects," he said. "Papua LNG, because it's a fully executed agreement, is capable of proceeding as a stand-alone project. And P'nyang can follow its own pace after this event."He assured landowners that they would get a fair share from the project. “I want to assure everybody that this process is at an advanced stage,” he said. “Landowner identification has been substantially completed. However, the project developer cannot bring it to my level at the department for the final vetting partly because there is an injunction sitting there somewhere, stopping the company Total from presenting their studies to me. Now that we have achieved this, we will now put our focus back to the National Court proceedings. I want to assure the landowners in the Gulf and Central that we will do everything possible to hear them out and make sure that the processes are fast-tracked.”Kua added that this agreement would enable the Front End Engineering & Design (FEED) to proceed, with the Construction phase to follow in time. For Managing director Jean-Marc Noiray, the economic benefits of the projects would come to fruition after the construction phase.“We need to embark on the whole stabilisation of the project which we call the pre-FEED. We are working hard on that,” he said. “The FEED itself will last between 15 and 18 months, from the moment we reach the final investment decision. And from final investment decision to first gas, we have about four years of construction. It’s a long journey before we get to the first gas and the first revenues for the developers and the country.”He added that the project is a long journey. “It was a milestone as we achieved solid steps along the way,” he said. “By signing the stability agreement today (yesterday), we are building a solid foundation and also a confirmation that we can now go ahead.” The new project was recently signed at the Government House in Port Moresby. In attendance were Kua, Prime Minister James Marape, and representatives from Exxon Mobil, Total, and Oil Search.
PNG Business News - February 01, 2021
Oil Search Boosts Performance
Because of its focus on performance, capital and cost allocation, Oil Search has resulted in a firm production. Managing director Keiran Wulff said the developments of Oil Search had regained momentum with the passing of the government in Parliament the remaining amendments to Acts for Papua LNG fiscal stability.He said that assurance reviews for the Pikka Unit Development were already finished and that the project is ready for design and front-end engineering in early 2021. “Despite the material challenges of 2020, PNG LNG continued to outperform in the fourth quarter, ending the year with its highest ever annual production of 8.8 MT,” he said. “The North West Moran oil field was also brought back online during the quarter following a shut-in due to the 2018 earthquake.”Wulff said that the continuation of production was a collective effort by everyone and brought about by a gross contribution of around 2500 bopd.“At our investor briefing in November, we shared our renewed purpose and ambition and laid out our new strategy to focus on delivering full value and enhancing our appeal to stakeholders through building resilience to lower and uncertain commodity prices,” he said.“We expect that 2021 will continue to be another challenging year and the company is focused on maintaining the operational discipline that resulted in excellent results in 2020, despite the difficult conditions. Oil Search is increasingly well-positioned to manage through uncertainty and deliver our projects in 2021 and beyond.”
PNG Business News - January 29, 2021
Hides Gas Development Company Receive Award for Workforce Development and Employment
To recognise the efforts of the company to provide employment, workforce development, and business opportunities, the PNG LNG project’s best national content contribution of the Year award went to the Hides Gas Development Company Ltd energy services. According to ExxonMobil PNG Ltd’s national content manager Sisa Kini, “We are proud of HGDC Energy Services’ achievement and success. Continued growth in the capacity and capability of local companies is central not only to ExxonMobilPNG’s success but also the national economic development.”Since 2009, the energy services have made workforce development a priority. Among its projects include an apprentice programme for mechanical fitters, a Women in Workforce programme, and a mentoring programme. The workforce is composed of ninety-nine per cent Papua New Guineans with 70 per cent coming from Hela. HGDC Energy Services chairman Libe Parindali said the award means delivering the highest standards. “We are proud of our work to invest in and develop local talent,” he said. “This enables them to compete and work anywhere in the world.”
PNG Business News - January 22, 2021
Puma Energy Predicting Rise in Fuel Prices
Puma Energy (PNG) Ltd expects that fuel prices will increase as demands for ground fuels also increase. This is in line with economic recovery. According to the Country manager and director Hulala Tokome, this will have an effect locally compared to during the COVID pandemic. “In general, prices are moving up and expected to continue to move up which will have an impact locally compared to the last few months and during the Covid-19 period,” he said. “With the gradual release of the Covid-19 vaccine globally, governments are rushing to get their population vaccinated to kick-start their economies. Brent prices are back in the mid US$50/bbl (K173.32/barrel of oil) range as positive sentiment is that the worst is over and the global economy is on track for a strong recovery. Biden winning the US presidency and aggressive monetary policy have pushed the US dollar (USD) lower which in turn makes crude more attractive on a USD basis helping push up Brent prices."He continued, “The cold winter took North Asia by surprise and many end-users were caught short on fuels for heating demand causing a surge in prices in the short-term. We expect prices to continue their upward trajectory as demand for ground fuels increase in line with economic recovery.”Meanwhile, the Independent Consumer and Competition Commission (ICCC) said that the cost of kerosene, petrol, and diesel will increase on average This is due to the increase of crude prices last month - which was caused by the easing of lockdowns after the second wave of the pandemic. , the indicative retail prices for petrol, diesel and kerosene will all increase on average, throughout the country.According to the ICC, the prices this month “are inclusive of the import parity prices, domestic sea and road freight rates for the first quarter of 2021, the annual wholesale and retail margins for 2021, excise duty, and goods and services tax”.
PNG Business News - January 21, 2021
Twinza Oil Awaits Formal Approval for Pasca A Gas Project
Before Twinza Oil Limited moves forward with the Front End Engineering and Design (FEED) stage, the firm is awaiting the formal approval of the Pasca A Gas Project Agreement by the National Executive Council.The agreement was finalised last year and now awaits presentation by the Petroleum Minister, Kerenga Kua to the National Executive Council. Once approved, Twinza Oil can now move with the FEED stage of the first offshore oil and gas production in PNG. Meanwhile, effective February 1, 2021, Twinza has appointed Erick Kowa to the Board of Company from his role as Gas Project Development Manager where he co-led the Twiza all-Papua New Guinean negotiating team for this Agreement. According to Twinza Chairman and CEO Ian Munro, the Board acknowledges his expertise in the oil and gas industry, and also his strong relationships with the stakeholders in PNG and in the region of Asia. Munro adds that with the agreement is complete and awaiting approval before proceeding, the firm needs to strengthen the Board moving forward to the Final Investment Decision for the Project in 2022. Twinza hopes that the Pasca A will be finished in 2025, leading to the further development of the Gulf of Papua.
PNG Business News - January 15, 2021
Kumul Petroleum Awards Two Contracts
Kumul Petroleum Holdings Limited (KPHL) has awarded two contracts to Chiyoda Corporation of Japan in partnership with Moss Maritime of Norway, and Wison Offshore and Marine based in Shanghai, China for the design and the development of a floating, storage, re-gasification and power (FSRP) generation unit in Lae. The state-owned firm said that the awarding of these contracts would facilitate extra electricity generation for the people. KPHL said that it had worked on the robust facility development and design request for quotation and evaluation process. This has attracted some of the most experienced floating offshore facility construction and engineering firms of the world. The mandate of Kumul is to distribute and aggregate both domestic and equity-invested gas allocations from present and future PNG development projects. “Kumul Petroleum has awarded these contracts on the basis of holding a design competition between the two requests for quotation compliant engineering contractors (one Japanese and one Chinese) as each of their design options presented offered very different, and very interesting, value benefits to PNG, such as significant capital cost reductions and fast track schedules.”“Kumul Petroleum has taken a leadership role by awarding these two design and engineering development contracts that will facilitate the additional electricity generation for the people of PNG and assist in fast-tracking development of the heavy industry.”
PNG Business News - December 21, 2020
Kumul Petroleum Hopes to Work with Developers of Papua LNG Project
Kumul Petroleum Holdings Ltd (KPHL) hopes to work with the developer of the Papua LNG Project and its partners.According to Managing director Wapu Sonk, KPHL hoped to work with Total and the Papua LNG joint venture partners to start the front-end engineering design work and begin the liquefied natural gas (LNG) financing and marketing work.It can be recalled that Petroleum Minister Kerenga Kua has said that an announcement would be made where the Papua LNG Project would be a stand-alone project towards next year’s design phase. He said that a meeting would be held between the government and the Total senior management this month. “If the decision is made, it will be positive for PNG because we will begin to see some early work going on,” Kua said.The country’s national gas and oil company, KPHL is in charge of managing the State’s 16.57 per cent equity in the ExxonMobil operated US$19 billion (K64.91 billion) PNG LNG project. This has allowed the firm to become the third-largest player in the largest single investment made by the country. Sonk added that even with this pandemic, there had been no material impact on the project and its operations, besides a few delays in various areas. “PNG LNG project performed very well in terms of LNG production,” he said. “The main challenge has been LNG prices, which has been very low in Q1 to Q2 and in the third and fourth quarter, the prices have improved to approximately US$6.40 to US$7.50/MMbtu (K21.98 to K25.76 million British thermal units) from as low as US$2.40/MMbtu (K8.24/MMbtu) early this year. LNG and oil price has impacted all the joint venture partners and us at Kumul Petroleum as well as with MRDC (Mineral Resources Development Company), no exception. PNG Government also is impacted as a result.He said, “We hope that the oil and LNG prices will recover and be stabilised given there is now a vaccine for the Covid-19. ExxonMobil maintains the great job in optimising and improving production in a safe and environmentally friendly manner.”Sonk added that KPHL paid K200 million as dividend due to better cost commodities last year. “We have been able to continue to train Papua New Guineans at the Kumul Petroleum Academy, deliver cheap and reliable power into Port Moresby through NiuPower, delivered the rural electrification programme mostly in Hela and Southern Highlands connecting Nipa to Tari, Tari to Koroba and Tari to Hides (Juni) and Ialibu to Kagua,” he said.
PNG Business News - December 16, 2020
Total Team to Visit PNG This Week
Total senior management team will be in the country this week to talk about the next steps in the Papua LNG Project.According to Petroleum Minister Kerenga Kua, the meeting between the government and the developer of this project had been planned last week but there were delays on clearances and protocols. They are to arrive this week.The announcements for this project will be made on December 17. Meanwhile, Prime Minister James Marape said that other groups such as the Oil Search Ltd and the ExxonMobil PNG would be attending the discussion to further the project into the next segment. Marape said that the meeting between the government and Total was for the latter to “to tell us the exact timeline of the Papua LNG project”.“The economy should be happy and excited that Papua LNG hasn’t been scraped off as far as direct foreign investment is concerned,” he said.To start the project next year, Kumul Petroleum Holdings Ltd also hopes to work with the developer of the Papua LNG Project. According to managing director Wapu Sonk, they would like to start work on the front-end engineering design work and the financing and marketing work of the liquefied natural gas.
PNG Business News - December 09, 2020
Kina Petroleum Corp Submits Application for Delistment
Kina Petroleum Corporation has submitted an application to delist from the Australian Securities Exchange (ASX).This follows a delist from Papua New Guinea’s stock exchange (PNGX) and ASX, but subject to receiving approval from ASX to continue with the ASX delisting.It added that the notice of meeting for the shareholders of the company would be convened to think about, and if thought fit, to work on the delisting with accompanying materials expected to be released to shareholders this Friday. The firm said that the board of directors are leaning towards delisting because:Small trading volumes having a disproportionate impact on the cost of shares – in the 18 months since relisting, the fully paid ordinary shares traded on only 36 days and the cost of the share decreased from US$1.80 (K6.22) to US$0.38 (K1.21) based on the trading of 232,710 shares. The low liquidity worked on the important volatility in the cost shares from limited trading with a disproportionate impact on the share price. The board believed that this occurrence came out with a share price not reflective of the true value of the company;Inability to increase capital at costs reflective of underlying asset value. The board thought that with the shares listed on ASX and PNGX, the prospects of increasing funds on PNG and ASX foreign exchange at a cost commensurate with underlying value were poor and any future capital raising would have a very dilutionary impact on shareholders. Investor interest and minimal liquidity is because of concentrated shareholdings.
Place your Ad Here!
PNG Business News - December 07, 2020
Santos Upgrades 2020 Production Guidance
Australian natural gas developer Santos Ltd has lowered its production cost guidance at US$8.00 (K28)-$8.50 (K29.80)/boe (barrels of oil equivalent) and has upgraded its 2020 production guidance to 87 and 89 million barrels. According to the firm, the upgrade was due to a strong operating performance across its base businesses and represents more than 50 per cent growth since 2015 and 15-18 per cent production growth for the year. Its asset of PNG LNG has produced 30 per cent above nameplate capacity without extra capital.In spite of the pandemic, the firm is still on track to deliver the cost reductions it has announced in March - which sees 2020 guidance decreased to US$8.00 to US$8.50/boe.Other developments include capital expenditure expected to be approximately US$900 million (K3.15b), steady with the 38 per cent reduction for the year announced in March; the integration of the ConocoPhillips acquisition finished in May with guidance on acquisition synergies heightened from US$90 million (K315m) to US$105 (K368mil) million per annum.Managing director and chief executive officer Kevin Gallagher said that with these developments right on track, the firm is positioned for sustainable shareholder returns and disciplined growth. “Our strategy has been to establish a disciplined low-cost operating model that delivers strong free cash flows through the oil price cycle,” he said. “Our 2020 forecast free cash flow breakeven oil price is less than US$25 (K87.70) per barrel before hedging and around US$20 (K70) per barrel after hedging. Our base business is strong with production levels expected to remain relatively steady for the next decade and providing significant free cash flow.”
PNG Business News - December 07, 2020
Santos Says PNG LNG Is A World-Class Asset
Australian natural gas developer Santos Ltd said that the PNG LNG is a world-class low-cost asset delivering above nameplate productivity. According to chief operations officer David Banks, opportunities for expansion can come in the future. “One core asset that is operated by others is the PNG LNG,” he said. “Exxon Mobil, the operator, does a very good job in terms of filling the plant. The plant has been tracking at 30 per cent better than nameplate capacity through very low-cost operational improvement and bottlenecking that has been completed. The production cost of US$4.85 (K17)/boe (per burial of oil equivalent) demonstrates that it is a world-class asset and within that US$4.85/boe is something approaching a dollar of earthquake impact which we are in the process to recover through insurance and the like.”He added, “In terms of backfill options, we have a number, one of them P’Nyang which is subject to framing agreements and we are working with partners in the Government on that Muruk and Hides are also exciting backyard opportunities that will enjoy extreme capital-efficient development costs and make the most of very well run the infrastructure that we have in place there.”
PNG Business News - December 03, 2020
Kua Provides Updates on Oil & Gas Projects
Petroleum Minister Kerengua Kua said that there will be an announcement next month if the Papua LNG will be a stand-alone project towards the design phase next year. He added that the Total senior management and the delegation of the government will be meeting on Thursday, December 10. “If the decision is made, it will be positive for PNG because we will begin to see some early work going on,” Kua said. “There will be cash flow for the country and it could have an impact on the gross domestic product for us. It’s a positive thing to look forward to so we will wait for the decision on Dec 10 or 11. We will make the announcement on whether we will delink Papua and P’nyang and make them separate stand-alone projects.”Kua noted that this was the status of P’nyang and that there was still time to negotiate.“The fact that we delink the two projects, it will not disadvantage P’nyang because whether you link it or delink it, the construction phase of P’nyang is still four to five years away down the track,” he said. “We have all the lead time here to negotiate a good contract, no need to rush because we don’t need a gas agreement for P’nyang for another four to five years yet. The construction for Papua has to start and complete before P’nyang connects so we still have a lot of time.” Kua said the dialogue with Exxon showed opportunities for negotiations and that there could be good deals. “There is still some promise there so we will continue to work on that,” he said.Kua said that Pasca was the only small project with less volume of oil and gas. He said that the construction is estimated to cost around K6.9 billion (US$2 billion) on a scale of PNG LNG which is K65bil (US$19bil) and Papua LNG which is K34.5bil (US$10bil). “In PNG US$2bil (K6.9bil) is a lot of money and negotiation is at a very advanced stage,” he said. “We will announce a gas agreement as soon as we can. Our concentration on the negotiations has been compromised by the disturbance of politics but we are monitoring it.”Kua said that investors are not leaving, adding that the state has wanted to reform legislation.