OSL Inks Deals To Bolster LNG Contracted Volumes
Oil Search (OSL) has inked a mid-term liquefied natural gas contract to bolster the total contracted volumes for Papua New Guinea (PNG) LNG up to 7.9 million tonnes per annum (MTPA).
This was disclosed by Oil Search CEO Peter Botten during the company’s 2019 first half year results presentation recently. Mr Botten described the move as “a smart thing to do in the current market and it will leave minor volumes exposed to LNG spots”.
The first half year results reports also stated that in April the final 0.45 MTPA tranche of mid-term PNG LNG contracted volumes on offer on the market was contracted to Unipec Singapore Pte Ltd.
Hence, the total contracted volumes for the PNG LNG project are now 7.9 MTPA, which represents approximately 90 percent of the projects total LNG production with limitation of exposure to the spot LNG market.
The report also revealed that in April last year, the PNG LNG project contracted the final mid-term tranche of LNG volumes with Unipec Pte Ltd.
“The contract ensures a commitment to supply 0.45 million tonnes per annum (MTPA) of LNG volumes over a four year period.”
Mr Botten said the PNG LNG undertook some significant schedule maintenance in the first half of the year and they are expecting a strong second half performance from the project.
“We also had successful evaluation (appraisal) at the Muruk Two drilling plant which tested very good reservoir quality that demonstrated that Muruk Two is in connection with Muruk One,” said Mr Botten.
“That will have ramifications on resource based announcements later in the year and early next year.”
However, Mr Botten revealed that the Papua LNG project also dominated their discussions and interest over the last three to four months.
“Key commercial agreements governing Papua LNG’s access to PNG LNG project infrastructure were essentially completed, while a letter of intent was signed between PRL 3 joint venture and Santos to broadly align the ownership between PRL 3 and PNG LNG joint ventures.”
According to him, the pre-FEED on the downstream facilities and associated gas expansion (AGX) project also advanced and both are ready to move into front –end engineering design (FEED) phase.
“We are effectively ready to align our joint ventures and interests of the various commercial entities.”
“Off course we fully recognise and respect that any government has the right to review agreements and over the Papua Joint Venture agreement signed earlier on in the year provides the State with significantly greater benefits quite rightly then the PNG LNG project.
“As PNG’s largest investor, we are obviously very sensitive of the uncertainty surrounding where the Papua LNG gas agreement is going and we are working extremely hard to resolve and work with the joint venture partners and government to resolve any outstanding issues,” said Mr Botton.
“Thus, we are all ready to go when the Papua LNG and P’nyang gas agreements are confirmed and finalised by the PNG Government,” added Mr Botten.
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