ExxonMobil Corporation’s (XOM) affiliate ExxonMobil PNG Limited has inked an agreement with the government of Papua New Guinea (“PNG”) to provide about 20 million cubic feet per day of domestic natural gas for two decades. ExxonMobil PNG Limited operates the PNG LNG Project.
The agreement is in line with the government’s strategy to increase the capacity and consistency of the country’s power supply. It also facilitates a long-term supply of natural gas to sustain Port Moresby’s urgent power generation requirements.
Per a memorandum of understanding (“MoU”), PNG LNG will be capable of providing about 25 megawatts of electrical power or about 20% of Port Moresby’s current generation capacity from a part of the natural gas supply apportioned for domestic use. The supply will be for a temporary period during which the government will respond to long-term power generation options.
The residual gas supply will be used to feed a new state-owned gas-fired power generation unit anticipated to be situated near the LNG Plant outside of Port Moresby.
The agreement also awards a petroleum development license and associated pipeline licenses for the P’nyang field. This provision will assist the licensee to gain access to the long-term natural gas reserves required for power generation. Moreover, it will assist in the expansion of the PNG LNG Project. The expansion comprises the development of a potential additional train.
Esso PNG P’nyang Limited, a subsidiary of ExxonMobil and operator of the P’nyang field along with its co-venture partners is likely to start drilling preparations of a P’nyang appraisal well within two years of the awarding of the petroleum development license.
Subject to advancement of technical work, permitting and budgeting, preparations for appraisal drilling are scheduled to begin in 2015.
Currently, Eni carries a Zacks Rank #5 (Strong Sell). Better-ranked stocks from the same industry include Seadrill Partners LP (SDLP), Spectra Energy Partners, LP (SEP) and GeoPark Limited (GPRK). All these stocks sport a Zacks Rank #1 (Strong Buy).
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