Papua New Guinea’s transformational PNG LNG project has been exporting gas to Asian markets since 2014. But what’s next for the project and its developer, ExxonMobil? Business Advantage PNG speaks with Andrew Barry, the Managing Director of ExxonMobil PNG Limited, to find out.

The LNG tanker ‘Papua’ loading at the PNG LNG project’s marine terminal. Credit: ExxonMobil/Richard Dellman

Business Advantage PNG: Now that the PNG LNG project is operating successfully, what do you see as your major challenges and goals for the year ahead?

Andrew Barry: My goal for ExxonMobil PNG is that we continue to maintain the reputation PNG LNG has built for being a reliable supplier of LNG to our customers. We do this by remaining focused on our fundamental values: safety, security, environment, integrity, excellence and teamwork. 2015 was an outstanding year, with the PNG LNG facilities operating at levels of efficiency and reliability that were above our expectations.

ExxonMobil’s Andrew Barry

We produced 7.4 million tonnes of LNG in 2015, which represents an increase of 7 per cent from the original design specification. The benefits of this increased production are wide-ranging and include additional revenues for the Government of Papua New Guinea, landowners and provincial governments.

Clearly, the industry is dealing with the challenge of low crude oil prices. ExxonMobil believes prices, over the long term, will continue to be driven by market supply and demand—with the demand side largely being a function of global economic growth.

Our assessment is that PNG LNG operations will continue to be successful in a variety of market conditions as a result of our approach to disciplined investing, expense management, asset enhancement programs and a highly skilled and dedicated workforce.

Business Advantage PNG: ExxonMobil has a number of agreements to partner with the PNG Government. How are the current projects progressing?

Andrew Barry: PNG LNG is itself a partnership between the State, Landowners and private companies such as ExxonMobil. The nature of this partnership means that the government and people of Papua New Guinea directly benefit from multiple revenue streams from the Project, including equity dividends.

We are very supportive of the government’s plans to improve the power generation capacity in the country, which will serve as a catalyst for more business and economic growth. We believe that investment in power generation has the biggest value multiplier effect of all potential domestic market investments.

‘We have invested more than one billion kina in PNG exploration alone.’

The Memorandum of Understanding that we signed with the Government of Papua New Guinea in January 2015 provides for the supply of domestic gas to improve the capacity and reliability of Papua New Guinea’s power network.

We delivered on the first phase of that commitment, to generate 25 megawatts of electricity in just five months.

The LNG Plant in Central Province. Credit: ExxonMobil/Richard Dellman

The P’nyang field reserves have the potential to increase the supply of domestic gas for power generation and also provide energy for future growth of the PNG LNG Project. We are continuing to work with the Government on the Petroleum Development and associated pipeline licences for the P’nyang field, which are required prior to our investment and development of an additional 50 megawatt gas-fired power station near the LNG Plant, on behalf of PNG Power.

Business Advantage PNG: What do you see as the potential for uncovering and developing further gas reserves in PNG?

Andrew Barry: In the past five years, together with our joint venture partners, we have invested more than one billion kina in PNG exploration alone.

We are looking to confirm resources for the potential expansion of the PNG LNG Project.

‘Sharing infrastructure between projects is an effective way to help manage risk and cost.’

In the first half of 2015, we completed a seismic data acquisition program covering more than 100 kilometres around the Juha and Hides fields in the Southern Highlands which, once analysed, will, we hope, lead to further field drilling programs in those areas. In 2016 we will have an active onshore and offshore seismic acquisition effort.

Business Advantage PNG: What do you see as the potential for cooperation between new and existing players in LNG?

Andrew Barry: ExxonMobil supports the principle of cooperation when technically feasible and commercially attractive for both parties.

I can’t speculate on specific companies, but what I can say is that in the same way that major projects have partners to help reduce risk and cost by sharing the significant investment costs, sharing infrastructure between projects is an effective way to help manage risk and cost.

Business Advantage PNG: How viable do you think onshore value-adding of petroleum products is for PNG?

Andrew Barry: We support the Government’s efforts to explore options to derive additional benefit from Papua New Guinea’s significant resources. ExxonMobil PNG’s view is that each opportunity needs to be evaluated for the full economic benefits to the country. We continue to support the Government’s efforts in evaluating these.