In This Article:
(Refiles to add chief executive's full name and title in paragraph 4)
* PNG LNG expansion to double capacity
* Plan to add 2 trains for Total's gas, 1 for Exxon's gas
* Plan makes expansion easier to finance, Oil Search says
* Oil Search 2017 profit nearly triples, as expected
By Sonali Paul
MELBOURNE, Feb 20 (Reuters) - Global giants ExxonMobil Corp and France's Total SA have reached broad agreement on plans to double gas exports from Papua New Guinea, their partner Oil Search Ltd said on Tuesday.
The plan to expand the ExxonMobil-operated Papua New Guinea liquefied natural gas (LNG) plant to around 16 million tonnes per annum (mtpa) would see it rival Australia's biggest LNG projects, at a cost of around $13 billion, according to analysts.
Oil Search said the companies plan to add three new LNG units, or trains, with two underpinned by gas from the Elk-Antelope fields, run by Total, and one underpinned by existing fields and the new P'nyang field, run by Exxon.
"There's no doubt that keeping it simple is one of the great advantages of the concept that is presently on the table," Managing Director Peter Botten told analysts after the company reported a near threefold rise in annual core profit.
"It also allows a smart way of both marketing gas and financing."
The partners aim to start engineering and design work in the second half of this year, but first need to agree terms with the PNG government, Botten said. These include domestic gas supply requirements, local content and landowner agreements.
The companies also need to sign off on cost-sharing and phasing the timing of their gas field developments.
"Joint venture alignment challenges remain, and shouldn't be underestimated," said Saul Kavonic, an analyst with consultants Wood Mackenzie.
Botten was confident ExxonMobil and Total are committed to the project, which is aiming for a final investment decision in 2019.
"I know they all have other interests around the world. But in no way do I see any blinking or any reluctance to move these projects forward. They're good, economic solid projects," he told reporters.
COSTS TO FALL
The expansion is expected to be much cheaper than the original $19.5 billion cost of building the PNG LNG plant. Botten said, declining to comment on the cost estimate ahead of further engineering work.
Bernstein analysts estimate the 8 mtpa of new capacity could be added for between $12 billion and $14 billion, or around $1,600 a tonne.
That would be less than half the per tonne cost of Chevron Corp's Gorgon LNG plant in Australia, which is slightly smaller than the expanded PNG LNG plant would be.