Total and Oil Search build reserves for Coral Sea LNG
On October 9th 2012, the french major Total and the Australian – Papua New Guinea junior Oil Search Limited (Oil Search) signed a Farm-in agreement on five natural gas onshore and offshore blocks around the Gulf of Papua.
This deal came as the conclusion of a selection process among international oil companies.
According to the terms of the agreement, Oil Search will retain the operatorship of the exploration but Total will take:
– 50% of the offshore PRL 10
– 40% of the offshore PPL 234 and PPL 244
– 35% of the onshore PPL 338 and PPL 339
As a result, the other Australia – Papua New Guinea junior Kinea Petroleum Limited (Kinea) will retain its 20% shares in the PPL 338 and PPL 339 blocks.
In the case the upstream side of the project would lead to develop a stand alone onshore liquefied natural gas (LNG) project, Total should become the operator of the downstream phase of the project.
Since Yemen LNG project, Total and Oil Search established close relationship in exploration production of natural gas field and LNG projects.
Total and Oil Search extended their cooperation in the Kurdistan Region of Iraq where they are currently prospecting the Tara oil and gas field approximately 80 kilometers southwest of Sulaymaniyah.
Listed in Australia at Sydney Stock Exchange, and in Papua New Guinea at Port Moresby Stock Exchange, Oil Search is established in Papua New Guinea (PNG) since 1929.
The State of Papua New Guinea holds 15% stake in Oil Search which declared in December 2011, 553 million barrels of oil equivalent (boe) of proven and probable reserves (2P).
Oil Search is the largest operator in PNG, 90% of its 2P reserves are related to the PNG LNG project operated by ExxonMobil and where Oil Search has 29% working interest.
PNG LNG construction is in progress so that it should start commercial operations in 2014.
Even if a third LNG train project is already under study for PNG LNG, Oil Search is now cooperating with Total on a stand alone LNG project, the Coral Sea LNG project.
Oil Search works on $6 billion stand alone LNG project
In this perspective the Farm-in agreement signed with Total is to boost exploration production to build sufficient natural gas reserves.
In April 2012, Total prepared ground in registering an affiliate in PNG with office in Port Moresby with the plan to start drilling appraisal program on first half 2013.
Oil Search ordered all the long lead items required for the drilling program and hired the semisubmersible drilling rig to explore the Coral Sea, offshore west of Port Moresby.
From previous geophysical data analysis, Oil Search identified 30 prospects, expected to contain from 500 billion cubic feet (bcf) to 1.5 trillion cubic feet (tcf) of natural gas.
In addition to the signed Farm-in agreement on five blocks, Oil Search intends to Farm-out two more blocks, the PPL 276 and the PPL 385 in a context where Total and Oil Search have agreed to form a strategic partnership to assess other opportunities in Papua New Guinea (PNG).
Depending on the results of the first appraisal campaign, Total and Oil Search will be define the size and phases of development of the upstream side in parallel to the onshore Coral Sea LNG train project.
Oil Search is already working with the PNG Government on a $6 billion LNG project.
Papua New Guinea holds an offshore sea bed rich of natural gas, mostly still unexplored, and is ideally geographically positioned to supply Asia large consuming countries.
In cooperating with ExxonMobil on PNG LNG expansion and with Total on this new Coral Sea LNG project, Oil Search and Kina Petroleum are placing the first milestones of a decade of oil and gas onshore and offshore exploration and production in Papua New Guinea.
