ExxonMobil-operated PNG LNG project, which recently marked its first year of production, has produced more than 6 million tonnes of LNG and delivered 90 cargoes of the chilled gas since April last year.
Speaking at the annual general meeting on Friday, Chairman of Oil Search, Richard Lee said that the company, which owns a 29 pct stake in the LNG project, could be involved in the “construction of up to three additional, high returning LNG trains in PNG by 2017/2018.”
PNG LNG project took Oil Search’s 2014 total production to 19.3 million barrels of oil equivalent, nearly three times higher than in 2013 and an all-time record for the company.
While Oil Search achieved many records in 2014, the year was not without its challenges. In the second half of the year, the oil price dropped dramatically, from US$115 per barrel in June to US$55 per barrel at the end of the year, before sinking further, to a low of US$45 per barrel in January 2015, Lee said.
“The extent and speed of the fall took everyone by surprise, resulting in an extremely volatile year for the oil and gas industry. While the oil price has since rallied a little, it is still trading some 40% lower than the average price realised in 2013.”
These moves have not only affected the price Oil Search receives for its oil field production but also the gas and LNG sales prices, which are closely linked to the oil price.
“Due to an approximate three-month lag between the spot oil price and LNG contract prices, our LNG revenues remained relatively buoyant during 2014 and into the first quarter of 2015, but are expected to fall in the second quarter, as lower oil prices flow through to LNG pricing,” Lee added.
LNG World News Staff; Image: ExxonMobil