Exxon-Led PNG Venture May Produce More Gas Than First Expected


Exxon Mobil Corp. and its partners in a $15 billion liquefied natural gas development in Papua New Guinea are likely to produce more fuel than they initially expected during the first phase of the project, analysts said. 

The venture initially may produce 6.9 million metric tons of LNG from two units, up from the 6.6 million tons previously projected, according to Credit Suisse and Citigroup Inc. analysts who cover Exxon’s partner, Oil Search Ltd.

The Hides field drilling campaign next year is likely to underpin an expansion of the project to a third processing unit, Sydney-based Credit Suisse analyst Sandra McCullagh said after a visit to the project in Papua New Guinea. A final investment decision on the next stage may occur in 2012, she said.

Exxon and partners approved the development of the project almost a year ago. The venture may double the size of Papua New Guinea’s economy, Port Moresby-based Oil Search has said.

First exports are due in 2014. A third plant may begin in 2016, McCullagh said in the report today.
“We are increasingly confident” Oil Search has additional growth opportunities that may boost earnings, she said.

Oil Search rose 2.3 percent to A$6.67 at the 4:10 p.m. close in Sydney, compared with a 0.3 percent increase for the benchmark S&P/ASX 200 Index.

An additional unit, or train, producing 3.5 million tons of LNG annually, may cost about $5 billion, Citigroup’s Mark Greenwood in Sydney wrote in his report dated yesterday

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