ExxonMobil’s Papua New Guinea LNG Plant Set to Feed Asian Demand

With ExxonMobil’s announcement that its joint venture-led Papua New Guinea’s Liquefied Natural Gas (PNG LNG) has started production ahead of schedule, there is officially a new LNG supplier to Asia.

May 20, 2014 at 9:32AM

This article was written by Oilprice.com -- the leading provider of energy news in the world. Also check out this recent article:

With ExxonMobil's (NYSE:XOM) announcement that its joint venture-led Papua New Guinea's Liquefied Natural Gas (PNG LNG) has started production ahead of schedule, there is officially a new LNG supplier to Asia. The $19 billion plant will supply 6.9 million tons per year (mtpa). Not surprisingly, nearly all this gas has been contracted.

Of the 6.9 mtpa, 6.6 mtpa has been contracted to Asian buyers, including: TEPCO (~1.8 mtpa) and Osaka Gas (~1.5 mtpa) from Japan, CPC from Taiwan (~1.2 mtpa) and Sinopec (~2.0 mtpa) from China. PNG LNG is expected to produce more than 9 trillion cubic feet (tcf) of gas over the project's expected 30 years of operation.  

PNG's entrance into the LNG producer market comes at a time when many other LNG projects from around the world have received the lion's share of media attention. From the prolific cost overruns on LNG projects in Australia to the burdensome regulatory approval process in both Canada and the United States, LNG has been known to be very expensive and politically contentious.  

At this point, it looks like the PNG LNG plant has escaped some of these challenges, particularly because of its competitive advantages. The project has substantial booked reserves with high liquid yields from onshore sources with an existing infrastructure base for oil developments, a great location relative to the growing Asian LNG markets, and a fair fiscal regime that is backed by a government that is keen for new revenue streams.

According to an economic impact study completed by ACIL Tasman, when the project is in production it will more than double Papua New Guinea's GDP and triple export revenues. Harvard's Kennedy School conducted a study in 2013 estimating that some 20 to 30 billion PNG Kina (the local currency, or about $7.5 to $11.7 billion at May 2014 exchange rates) will accrue to the national government over the projected 30-year operation.

Map of Pipelines
Photo Courtesy of ExxonMobil

Looking ahead, PNG LNG's recent production start is just the beginning of what the ExxonMobil consortium has in mind for the country. LNG PNG just completed phase 1 of an anticipated five-phase project. Phase 2 is expected to begin in 2017 and phase 5 isn't projected to begin until 2024.  

This scale of development is being led by ExxonMobil's long-term view of Asia-Pacific's growing demand for LNG. In November 2011, ExxonMobil PNG LNG project executive Decie Autin predicted, "From a regional perspective, gas demand in Asia-Pacific is expected to grow faster than any other region: we're looking at about 4 percent per year. At that rate, Asia-Pacific will become the largest regional gas market in the world by 2015."

PNG LNG's output is only a fraction of what Asia-Pacific will demand in the future. As Autin said, "We believe that the Asia-Pacific demand for LNG will grow in just the next two decades by the equivalent of more than 10 PNG LNG projects...the project provides PNG with a tremendous opportunity to compete for an increased portion of this rapidly growing market."

It appears ExxonMobil's long-term view has proven accurate.

Your best bet on energy investing
Imagine a company that rents a very specific and valuable piece of machinery for $41,000... per hour (that's almost as much as the average American makes in a year!). And Warren Buffett is so confident in this company's can't-live-without-it business model, he just loaded up on 8.8 million shares. An exclusive, brand-new Motley Fool report reveals the company we're calling OPEC's Worst Nightmare. Just click HERE to uncover the name of this industry-leading stock... and join Buffett in his quest for a veritable LANDSLIDE of profits!

 

Written by Chris Pederson at Oilprice.com.

The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers