Papua New Guinea LNG opportunity for India

Vol 15, PW 25 (28 Jun 12) People & Policy

Papua New Guinea’s political system is a mess but India still wants a strategic foothold in this Pacific Ocean island nation before the Chinese and others take a lead.

PETROWATCH learns oil ministry director for international cooperation P. Kalyanasundaram is trying to convince state-owned oil companies to show interest in a 6.6m t/y LNG project backed by US giant ExxonMobil.

Kalyanasundaram wrote to OVL, GAIL, Bharat Petro Resources, IndianOil and Hindustan Petroleum on June 19 alerting them to investment opportunities in the expansion of the $15.7bn under-construction liquefaction facility, where Sinopec has contracted to buy 2m t/y of LNG. Promoted by Exxon subsidiary Esso Highlands, the Papua New Guinea LNG project is under construction at a site 20-km northwest of capital Port Moresby.

Gas will be sourced from the Hides, Angore and Juha onshore gasfields and associated gas from the Kutubu, Agogo, Moran and Gobe Main oilfields. Kalyanasundaram sees no room for Indian involvement in the initial 6.6m t/y capacity to come onstream from 2014 but suggests investment in a third LNG train, either through an equity stake in the expansion or as a LNG buyer like Sinopec.

Kalyanasundaram’s letter was prompted by a meeting in May between the Indian High Commissioner to this Pacific Ocean island nation, AM Gondane, and Esso Highlands managing director Peter Graham. Gondane was impressed by project progress and advised the ministry to pay attention, suggesting GAIL and OVL should talk to Esso.

“The breakneck speed of the project shows Esso is serious,” says a ministry source. “I hope our companies take this opportunity seriously before China and others get in there.