In a release to the Australian Stock Exchange this morning, Oil Search managing director Peter Botten said the initial investigation into an LNG development was seen as “highly complementary to our other gas commercialisation projects in PNG”.
Oil Search added that the studies would focus on areas outside the licences that contain the gas currently dedicated to the PNG Gas project, which represents around 40% of the company’s PNG gas reserves.
An Oil Search spokeswoman this morning told PetroleumNews.net sister publication,PNGIndustryNews.net, this morning that the company had been in talks with BG for some time, and the signing of the MoU was not a direct result of news from Australian Gas Light last week that it had decided to scale back front-end engineering and design work on the pipeline.
Speaking to media and analysts last week following the company’s first half profit announcement, Botten said he saw LNG development as a medium-term development option, with a start-up date unlikely before 2012.
“An LNG project without other projects coming to help the infrastructure will always be a very, very tough business in PNG. That’s not to say it can’t be done, especially in this present gas price market.
“I don’t believe it is the optimal first development, albeit that, I do think it is a medium-term development with other opportunities being progressed in parallel.”
Botten added that the likely gas requirements for LNG would be around 6 trillion cubic feet with a two-train development being desirable. He added that the preliminary research had indicated a likely capital expenditure of around $US250-500 per tonne of LNG capacity.
BG, which recently reported a total operating profit for the first half of 2006 of £1.71 billion ($US3.26 billion), is listed on both the London and the New York stock exchanges.
According to the company’s website, its core business focus is on exploration and production, transmission – through pipeline systems or LNG liquefaction and transport – as well as the creation and distribution of energy through gas-fired power generation.
BG presently has LNG operations in Egypt, Trinidad and Tobago, Nigeria and the United States.
Meanwhile, Oil Search also announced this morning that it had purchased a 20% stake in A & T Petroleum, which holds a 50% stake in the Bina Bawi exploration and production sharing agreement (EPSA) in Iraq’s northern Kurdistan region.
Under the agreement, Oil Search has the option to convert its 20% shareholding in A & T Petroleum into a 10% direct interest in the Bina Bawi EPSA within a year.
The remaining 50% interest in the Bina Bawi EPSA is held by Hawler Energy, a wholly owned subsidiary of US-based independent exploration and production company Prime Natural Resources.
