Sydney — China's state-owned PetroChina International has signed a three-year agreement for the purchase of 0.45 million mt/year of LNG from the ExxonMobil-operated Papua New Guinea LNG project, expected to begin in the coming days, Santos and Oil Search said in filings to the Australian Stock Exchange on Friday.
China's increased procurement of LNG supplies on the back of higher demand has helped soak up new and existing production capacity, supporting prices in the region. The Platts JKM for cargoes to be delivered in September was assessed at $9.279/MMBtu on Thursday.
"We are delighted to have entered into a SPA [sale and purchase agreement] with PetroChina, which has been an active buyer of spot LNG cargoes from PNG LNG. The first sale under the new agreement is expected to take place this week," Oil Search's Managing Director Peter Botten said.
The deal takes the total contracted volumes from PNG LNG to 7 million mt/year, with 6.6 million mt of the project's annual output already committed under long-term contracts to JERA, Osaka Gas, Sinopec and CPC, the two companies said.
ExxonMobil is also negotiating with a number of other parties for potential mid-term LNG supply agreements in lieu of spot sales, on behalf of the partners in PNG LNG, Santos said.
"These agreements are expected to be concluded in the near term and increase sales under new mid-term agreements to 1.3 million mt/year," it added.
The LNG project has a nameplate capacity of 6.9 million mt/year, but consistently operates above it.
Earlier in the week, Oil Search said that since fully coming back online in late April, following the earthquake earlier in the year which forced a suspension of operations, PNG LNG saw a production rate of 8.5 million mt/year in May and June. That compares with a total production of 8.3 million mt for calendar 2017.
Along with Oil Search (29%), Santos (13.5%) and ExxonMobil (33.2%), National Petroleum Company of PNG (16.8%), JX Nippon Oil and Gas and Exploration Company (4.7%), and Mineral Resources Development (2.8%) also have stakes in the project.
