PNG plans to start cooking with gas

THE commercialisation of natural gas will become a major driver of Papua New Guinea’s economic development with the PNG pipeline being just the first stage in gas-driven projects, Minister for Petroleum Sir Moi Avei and Oil Search representatives told the South-East Asia Australia Offshore Conference (SEAAOC) in Darwin yesterday.
PNG plans to start cooking with gas PNG plans to start cooking with gas PNG plans to start cooking with gas PNG plans to start cooking with gas PNG plans to start cooking with gas

“We want to see more downstream processing of gas in PNG to boost industry and employment,” Avei said.

“The PNG-to-Australia gas project is a backbone project needed to underpin development of infrastructure and the economy. But other projects will also be necessary.”

Other gas commercialisation opportunities could be partly driven by investment from Asia, especially China, he said.

“The PNG economy is small and vulnerable to external shocks. We are looking north to cultivate more Chinese investment in PNG.”

Avei said the PNG Government had signed a memorandum of understanding with Chinese major CNPC to look at extensive exploration and drilling programs. CNPC was also helping the Government examine the viability of a liquefied natural gas plant.

The Government was considering two proposals for LNG plants on the country’s north coast, one put forward by Oil Search, which is listed on the Australian Stock Exchange and the other by Toronto-listed InterOil, Avei said.

Oil Search told the conference it had received interest from “multiple international parties” for small and large-scale LNG plants, but LNG was only one of the options it was considering for commercialising its gas reserves.

“Oil Search has a billion barrels of oil equivalent proven and probable uncontracted gas, condensate and LPG,” gas commercialisation executive Jesse Lee said.

Currently the company was reinjecting most of its gas back into reservoirs and even once the PNG pipeline project started up, this would take only about 40% of Oil Search’s gas.

“A gas commercialisation strategy was essential,” Lee said.

As well as LNG, Oil Search was considering compressed natural gas (CNG) exports to New Zealand, which is facing an impending gas shortage, petrochemical plants, and a dimethyl ether (DME)/methanol plant to be built in partnership with Japanese majors Mitsubishi Gas and Itochu.

Currently, DME is used only as an aerosol propellant but other possible uses included power generation or as a substitute for liquefied petroleum gas, Lee said.

The planned plant would be able to produce either methanol or DME, which would provide a natural hedge against market changes, he said.

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