Oil Search has reported that the ExxonMobil-operated Papua New Guinea (PNG) liquified natural gas (LNG) project continues to perform ahead of expectations.
Outlined in the company’s third quarter report, the operation produced at record levels over the first nine months of the year, reaching a rate of 8.8 million tonnes per annum (Mtpa). The output included 6.55 millions of barrels of oil equivalent (mmboe) from the PNG LNG project.
Oil Search managing director Keiran Wulff said discussions on LNG expansion opportunities in PNG were ongoing between all participating parties.
“This coincides with a strengthening in demand and a potential improvement in the LNG price outlook, despite the COVID-19 impact on global energy and LNG demand pushing back the demand window to around 2027,” Wulff said.
During the quarter, discussions between ExxonMobil and the PNG Government continued, with the objective of securing fair and balanced fiscal terms on the P’nyang gas agreement.
An internal analysis undertaken by Oil Search, using third-party datasets and discussions with potential buyers, highlighted that the rebalance of supply and demand in the LNG market is likely to have been deferred by a few years.
In addition to the strong production performance, Oil Search has introduced cost reduction and operational excellence programs in PNG across the company.
Oil Search is also continuing work on third-party spend, supply chain and operation efficiencies to ensure cost reductions are sustainable, with a focus on continuous improvement and performance.
“A primary focus during the third quarter has centred around finalising the longer-term strategy for our business, taking into consideration the global economic and investment conditions and trends, as well as ensuring the company is resilient to lower oil prices and well positioned to optimally take advantage of its world-class assets and deliver full value when conditions allow,” Wulff added.
The company’s oil production declined by 7 per cent to 0.68 mmbbls during the third quarter, while production from the Hides gas-to-electricity project remained suspended following the temporary closure of the Barrick-operated Porgera gold mine in April.