ExxonMobil resumes Liquefied Natural Gas production in Papua New Guinea

THURSDAY, APRIL 12, 2018 

*Production safely restarts ahead of schedule at the PNG LNG plant near Port Moresby

*Production to increase in the coming weeks; LNG cargo deliveries to commence soon

*Company continues to assist with humanitarian relief efforts 

IRVING, Texas – ExxonMobil said today that production of liquefied natural gas (LNG) has safely resumed at the PNG LNG project in Papua New Guinea following a temporary shutdown of operations after a severe earthquake occurred in the region on Feb. 26. LNG exports are expected to resume soon.

One train is currently operating at the LNG plant near Port Moresby. The plant’s second train is expected to restart as production is increased over time.

During the period that production was shut-in, ExxonMobil was able to complete unrelated maintenance scheduled for later in the year to allow for more efficient operations in the months ahead.

“Resuming LNG production ahead of our projected eight-week timeframe is a significant achievement for ExxonMobil, our joint-venture partners and our customers,” said Neil W. Duffin, president of ExxonMobil Production Company. “We will continue to support those communities impacted by the earthquake as we work toward fully restoring our operations. We hope our contributions and assistance will provide comfort to those in need.”

ExxonMobil is supporting multiple local and international relief agencies involved in the humanitarian response to the earthquake.

In addition to the company’s previously announced $1 million contribution for humanitarian relief, ExxonMobil crews have donated and delivered more than 37 tons of food, 14 tonnes of drinking water, 600 tarpaulins used as emergency shelters, 1,000 solar lights for households, 20 larger solar lighting units for institutions, as well as other essential supplies including water purification tablets, cooking aids and hygiene kits.

The company is also assisting with the restoration of health care facilities and community food gardens, and is providing resources to help the government address the significant task of restoring roads in the Highlands region.

“While a lot of work remains to be done, we are confident that with the support of all our partners and stakeholders, we can help our friends and neighbors recover from this tragic natural disaster,” said Andrew Barry, managing director of ExxonMobil PNG.

About ExxonMobil in Papua New Guinea

ExxonMobil has had a presence in Papua New Guinea since the 1920s and currently has a workforce of 2,600 in the country, 80 percent of whom are Papua New Guineans. The company operates the PNG LNG project, an integrated development that includes natural gas production and processing facilities, onshore and offshore pipelines, and liquefaction facilities. Production and processing facilities are located in the Southern Highlands, Hela, Western, Gulf and Central provinces of Papua New Guinea. The company also has interests in oil production and fuels marketing.

World Bank raises East Asia's 2018 GDP outlook, but wary of trade war

reuters.com | March 27, 2018

JAKARTA (Reuters) - The World Bank raised its growth forecast for East Asia and the Pacific for 2018, but warned that a possible U.S.-China trade war could harm growth in countries that are part of the Chinese goods supply chain.

The Washington-based lender said in a report on Thursday it expected 2018 growth in the developing East Asia and Pacific (EAP) region, which includes China, to expand 6.3 percent, a notch up from 6.2 percent forecast in October.

The 2018 forecast is slower than last year’s 6.6 percent growth, reflecting a slowdown in China as it continues to rebalance its economy away from investment towards domestic consumption, with policies that focus more on slowing credit expansion and improving the quality of growth, the bank said.

China’s 2017 growth was a faster-than-anticipated 6.9 percent, prompting the World Bank to revise up this year’s growth projection to 6.5 percent from October’s forecast of 6.4 percent.

Sudhir Shetty, the World Bank’s chief economist for the region, said the forecast did not take into account a potential trade war between the world’s two largest economies, although he did not feel that one was imminent.

Some U.S. officials and analysts have said they believe the dispute could eventually be resolved via dialogue, but Beijing reiterated on Thursday that no formal talks have taken place.

However, Shetty noted that two thirds of Chinese goods on a U.S. list targeted for increased tariffs are made in a supply chain that stretches across the region, particularly in the Philippines, Malaysia and Vietnam.

Should the tariffs be imposed on goods assembled in China, there would be “a knock-on effect” to economies in the supply chain, Shetty told a news conference.

“That is a significant thing to be concerned about because the success of this region is based on open trade,” he added.

The World Bank suggested bolstering regional trade through mechanisms such as the ASEAN Economic Community, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and the China-led Regional Comprehensive Economic Partnership so that the region can try to insulate itself against the threat of a trade war.

“Will that completely offset the impact of a possible trade war? Probably not, but it could certainly mitigate against the worst effects of those developments,” Shetty said.

The pace of interest rate increases in advanced economies is another short-term risk for the region, Shetty said.

Interest rates in most economies in the EAP region are currently at historically low levels and monetary tightening may be needed to help offset capital outflows should rates in advanced economies rise faster than expected, he said.

This was particularly the case for countries with high debt levels or rapid credit growth, such as Malaysia, he said.

Meanwhile, countries such as Papua New Guinea, Laos and Myanmar may have to increase their fiscal buffers through a conservative fiscal stance and better public debt management, he said.

The World Bank expects the region to grow 6.1 percent in 2019, unchanged from its prior forecast, and 6 percent in 2020.

Uncertainties delaying economic recovery in the Pacific

adb.org | April 11, 2018

SYDNEY, AUSTRALIA (11 April 2018) — Growth in the Pacific is expected to remain weak in 2018, as economic and political uncertainties, fiscal challenges, and natural disasters hold back some of the region’s larger economies. The outlook projects a slow recovery, with growth picking up only in 2019, says a new Asian Development Bank (ADB) report launched today.

Expected recovery in Papua New Guinea and strong growth in Timor-Leste should contribute to Pacific regional growth picking up to 3.0% in 2019.

The Asian Development Outlook (ADO) 2018, ADB’s flagship annual economic publication, projects that Pacific economies will, on average, grow 2.2% in 2018—the same rate as last year. However, expected recovery in Papua New Guinea (PNG) and strong growth in Timor-Leste should contribute to regional growth picking up to 3.0% in 2019.

“Several Pacific countries face heightened economic uncertainty and the impacts of extreme weather events and disasters, highlighting the need to build resilience across the region,” said Carmela Locsin, Director General of ADB’s Pacific Department. “Climate-proofing infrastructure, maintaining fiscal buffers, and investing in education to expand economic opportunities are all vital for more resilient economies in the Pacific.”

PNG—the Pacific’s largest economy—was adversely affected by a major earthquake in late February this year, which will hold back growth in oil and gas production, and slow economic growth to 1.8%. However, the Asia-Pacific Economic Cooperation meetings in 2018 is expected to provide economic stimulus. The ADB report says the medium-term outlook for PNG remains positive with GDP growth likely to reach 2.7% in 2019.

After a steep growth slowdown in Fiji in the wake of Cyclone Winston in 2016, reconstruction spending, improved agricultural output, and tourism growth spurred recovery. With most cyclone reconstruction ending soon, economic growth is expected to decelerate slightly from 3.9% in 2017 to 3.6% in 2018 and 3.3% in 2019—with tourism, construction, and agriculture likely to be the main contributors.

In Timor-Leste, the economy contracted in 2017 as political uncertainty held back public spending and private investment. The 3.0% and 5.5% projected growth rates for 2018 and 2019, respectively, hinge on a solid public expenditure program after the election of a new government expected in May. A new treaty with Australia to pave way for the development of the Greater Sunrise oil field will boost the growth outlook in the long term. The report says renewed emphasis on skills development and a supportive approach to labor migration would give young people better access to employment.

Slower growth in Solomon Islands is expected in 2018 and 2019 as new construction will only partly offset a likely further decline in logging. Progress is being made in implementing a national transport plan, but challenges remain.

Growth will moderate in Vanuatu in 2018 and 2019, due to the completion of several large infrastructure projects. Vanuatu’s ambitious infrastructure pipeline is supporting its current and future prospects, but a rise in public debt poses challenges for fiscal management.

The economic outlook for the North Pacific economies is mixed, with tourism expected to recover in Palau, but capacity constraints could limit infrastructure investment-driven growth in the Federated States of Micronesia and Marshall Islands. The report notes that improving education can equip a young labor force with better skills to fill domestic employment over the long term.

Moderate growth in the South Pacific economies of Cook Islands, Samoa, and Tonga is seen this year and the next. Damage caused by Cyclone Gita which hit Tonga in February 2018 is projected to push the economy into a slight contraction. Growth in Samoa will fall sharply this year as one of the country’s biggest employers—a manufacturing plant—closes operations. The Cook Islands’ economy is expected to expand by 3.5% in 2018, supported by tourism.

Economic prospects for the small island economies of Kiribati, Nauru, and Tuvalu are weakening. Growth is projected to decelerate slightly in Kiribati and Tuvalu, but more significantly in Nauru due to the winding down of the Regional Processing Centre for asylum seekers. Public investments financed by development partners are expected to drive economic growth in these countries throughout 2018 and 2019.

ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members—48 from the region.

Violence and landslides block aid access to Papua New Guinea quake victims

reuters.com | April 12, 2018

Violence rooted in tribalism and frustration at the slow response following earthquakes in Papua New Guinea was blocking efforts to reach those in need, aid workers said on Thursday.

Three tremblors have hit Papua New Guinea, one of the world’s poorest countries, since the remote, mountainous highlands region was rocked by a magnitude 7.5 quake on Feb. 26. The latest, a magnitude 6.3 aftershock, struck on April 7.

At least 132 people have been killed, 500 injured and about 43,000 uprooted from their homes, while 270,000 are urgently in need of assistance, aid agencies said, with the scale of the emergency testing the nation’s finances and capacity.

The United Nations and the International Planned Parenthood Federation (IPPF) said they had to withdraw teams from the Hela provincial capital of Tari after violence erupted on March 28.

“There were houses set on fire and some people were murdered in Tari,” said Robyn Drysdale, a doctor and deputy humanitarian director with IPPF.

“It just means aid will be slowed even further, because aid workers won’t want to go into those areas,” she told the Thomson Reuters Foundation by phone from the capital, Port Moresby.

A spokesman for the United Nations children’s agency, UNICEF, said the situation in Tari was still tense and staff have remained in the Southern Highlands provincial capital of Mendi, where they were relocated.

In another incident on April 7, a group of men attacked a UNICEF convoy that was returning to Mendi after visiting health facilities in the Southern Highlands district of Nipa-Kutubu, said David McLoughlin, the agency’s country representative.

“We know the marauders do not represent the PNG people who have been kind, helpful and grateful for our assistance,” he said by email, adding that UNICEF “will continue to stay in the highlands to help children in need”.

Drysdale said some people were frustrated with the slow delivery of aid, which was hampered by landslide damage to many of the roads in the mountainous region, which were already in poor condition.

She said tensions were also inflamed by long-running tribal rivalries over rights to land and resources, and payments made to groups by companies exploring for oil on traditional land.

The World Health Organisation has warned of “the high potential of waterborne and vaccine-preventable disease outbreaks” in quake-affected areas.

Quakes are common in Papua New Guinea, which sits on the Pacific’s “Ring of Fire”, a hotspot for seismic activity due to friction between tectonic plates.

Key gas field for PNG LNG expansion gets huge resource upgrade

platts.com | April 12, 2018

Papua New Guinea's PNG LNG has had a huge increase in upstream gas resources, which will support the plan to almost double the facility's export capacity, project participant Oil Search said Thursday.

The gas resources increase is in the P'nyang field in PRL 3, where Oil Search has 38.51% stake, resulting in 1C gross contingent gas resources more than tripling to 3.51 Tcf, and certified 2C contingent gas resources rising to 4.36 Tcf, Oil Search said.

"Combined with gas resources in the Elk-Antelope fields in PRL 15, Oil Search believes there is now approximately 11 Tcf of certified gross undeveloped 2C gas resource available to support the proposed development of 8 [million mt/year] of additional, globally competitive LNG capacity at the existing PNG LNG plant site," Oil Search managing-director Peter Botten said.

"Importantly, there is in excess of 8 Tcf of 1C resource, which will greatly assist marketing activities within each venture."

Oil Search holds a 29 per cent interest in PNG LNG, along with operator ExxonMobil (33.2 per cent), Santos (13.5 per cent), Kumul Petroleum Holdings (16.8 per cent), JX Nippon Oil & Gas Exploration Company (4.7 per cent) and Mineral Resources Development  Company (2.8 per cent).

PNG LNG currently has a nameplate capacity of 6.9 million mt/year but consistently operates above it. In December, it averaged 8.6 million mt/year and is expected to be able to maintain rates above 8.5 million mt/year when operational.

RESTART BY EARLY MAY

PNG LNG was forced to close on February 26 due to a 7.5 magnitude earthquake in the PNG Highlands.

An ExxonMobil spokeswoman said Thursday that the projection gave on March 5 that it would take approximately eight weeks to complete repairs and restore production remains on track. Roughly eight weeks from March 5 will take the restart to the end of April or start of May. It may take some time to ramp back up to full production rates.

Oil Search said Thursday that ongoing discussions are taking place between the joint venture partners as well as the PNG government on the preferred development concept for LNG expansion, which proposes one new train underpinned by gas from P'nyang and the PNG LNG project fields, and two trains dedicated to Papua LNG, supplied with gas from the Elk-Antelope fields.

"The joint ventures are targeting entry into front end engineering and design on this expansion in the second half of 2018," Botten said.

RBC Capital Markets analyst Ben Wilson said the question for the JV parties and what will likely ultimately determine the value of the additional resource will be the timing when the additional gas from P'nyang gets developed.

"P'nyang is currently the furthest gas from Hides along the Hides to P'nyang trend and would require longer pipelines and more capex to be developed," he said.

The JV parties will likely be looking to develop gas in an order that is closer and hence cheaper to Hides, he said.

"There is still a chance that gas from Muruk will usurp P'nyang in the order of development with further drilling at Muruk-2 later this year that should firm up that resource size following initial booking of gas this year (pre-drill expectations were in range of 1-2 Tcf) with that trend estimated to hold up to 10 Tcf of unrisked gas," he said.

He noted that Oil Search recently outlined that it was re-examining plans to accelerate gas from existing PNG LNG fields that would be used to front load the PNG LNG expansion train.

ExxonMobil announces 84 per cent increase in P’nyang resource, potential expansion in PNG

ExxonMobil
Wednesday, April 11, 2018

2 trillion cubic feet of gas added to P’nyang field resource estimate
Recoverable resource now estimated at 4.36 trillion cubic feet of gas
Supports three-train LNG plant expansion concept

IRVING, Texas – Exxon Mobil Corporation today announced that the size of the natural gas resource at the P’nyang field in Papua New Guinea has increased to 4.36 trillion cubic feet of gas, an 84 percent increase from a previous assessment completed in 2012.
The increase supports a potential significant expansion of operations in the country.
The independent recertification study by Netherland Sewell and Associates follows the successful completion in January of the P’nyang South-2 well, located in the Western Province of Papua New Guinea.
The results support ExxonMobil’s discussions with its joint venture partners on a three-train expansion concept for the PNG LNG liquefied natural gas (LNG) plant near Port Moresby, with one new train dedicated to gas from the P’nyang and PNG LNG fields and two trains dedicated to gas associated with the Papua LNG project.
“The increase in the estimated resource size of the P’nyang field helps illustrate the tremendous growth opportunities for our operations in Papua New Guinea,” said Liam Mallon, president of ExxonMobil Development Company.
“We are working closely with our joint venture partners and the government to progress the P’nyang field development proposal and secure the licenses needed to develop this world-class resource.”
The development concept, which would add approximately 8 million tons of LNG annually, would double the capacity of the existing LNG plant operated by ExxonMobil.
“This investment would extend our gas pipeline infrastructure into the country’s Western Province and have a meaningful and lasting economic impact for Papua New Guinea and its people,” Mallon said.
The P’nyang field is located within petroleum retention license 3, which covers 105,000 acres (425 square kilometers). ExxonMobil affiliates operate the license with a 49 percent interest in the block. Affiliates of Oil Search have a 38.5 percent interest and JX Nippon has 12.5 percent interest.
Papua LNG is seeking to commercialise the Elk-Antelope fields located in petroleum retention license 15 in the Gulf Province of Papua New Guinea.
An ExxonMobil affiliate holds 37.1 percent interest, and affiliates of operator Total S.A. and Oil Search Limited have 40.1 percent and 22.8 percent interest, respectively.  

Scandal-tainted Papua New Guinea football chief quits

SPORTS CGTN
2018-04-11

Scandal-tainted football chief David Chung has quit as head of the Papua New Guinea Football Association, days after resigning as Oceania Football Confederation (OFC) president over corruption concerns.

Chung stepped down on Friday as Oceania's top football official citing "personal reasons." But FIFA subsequently revealed an audit had uncovered "potential irregularities" in the construction of a lavish new Auckland headquarters for the OFC.
The world governing body has temporarily suspended all funding to Oceania. The fall of Malaysian-born Chung is now complete after he also resigned as president of the PNGFA, a position he had held since 2004, a statement on its website said Wednesday.
"To ensure good governance and accountability at all levels, the executive committee of PNGFA will adhere to the status of PNG Football Association and comply with the process in electing a new president of PNGFA," said Vice President John Wesley Gonjuan.
"In the meantime, it's business as usual." The FIFA audit raised concerns about the construction of a sports hub in Auckland that Chung said would become "The Home of Football" in the Pacific region.
With a reported budget of 15 million NZ dollars (10.9 million US dollars), it was a pet project of Chung, who had led the OFC since 2010.
The New York Times has reported that Chung and former OFC General Secretary Tai Nicholas awarded contracts for the scheme without tender to companies with no track record in the area.
It claimed the audit showed many of the companies were set up just before the contracts were awarded and questioned their relationship with those driving the project.
The newspaper alleged the OFC's executive committee was planning to suspend Chung for "gross dereliction of duty or an act of improper conduct" at a meeting last weekend before he fell on his sword.
Nicholas quietly resigned in December, also citing personal reasons.