Oil Search increases spending
Reuters is reporting that Australia’s Oil Search Limited has announced that it will boost capital spending this year to help expand output in Papua New Guinea in coming years, despite reporting a 70% drop in annual core profit on weak oil and gas prices.
The company is pushing global giants ExxonMobil Corp and France’s Total SA, its partners in two rival projects, to work together to expand LNG exports from the country.
While slumping LNG prices due to a flood of new supply have forced several proposed projects to be shelved, projects in Papua New Guinea are still seen as promising, thanks to the quality of the gas, low costs and proximity to big buyers in Asia.
Oil Search plans to approximately double capital spending this year to between US$360 million and US$460 million, particularly on work to understand a new find, Muruk, in the highlands of Papua New Guinea, which could provide a cheap source of gas to expand Papua New Guinea LNG.
The Muruk partners, ExxonMobil, Oil Search and Santos Ltd, believe the field could hold between 1 trillion and 3 trillion ft3 of gas, which would be on top of a recent 25% increase in the resource estimate for the Papua New Guinea LNG fields to 11.5 trillion ft3.