Diversification the answer for Oil Search: Botten

OIL Search managing director Peter Botten says the company “is not going to put all its eggs in one basket” with regards to commercialisation of its “lazy” 4.5 trillion cubic feet of gas in the PNG Highlands, and it is making steady progress in bringing several different projects online in the next few years in spite of recent setbacks with the PNG Pipeline.
Diversification the answer for Oil Search: Botten Diversification the answer for Oil Search: Botten Diversification the answer for Oil Search: Botten Diversification the answer for Oil Search: Botten Diversification the answer for Oil Search: Botten

Speaking at the Good Oil Conference in Fremantle yesterday, Botten said Oil Search was focused on continued growth in the “New World Order” in which diversification would deliver value.

On the theme of diversification, Botten dedicated significant time during his presentation to promoting the company’s planned three in-country developments, which he said would require a fivefold increase in production over the next four years.

Aside from the currently stalled PNG Gas project, Oil Search is currently considering development of a petrochemicals plant in Port Moresby, requiring around 150 petajoules of gas per annum, an ammonia plant, and a possible liquefied natural gas facility that would need around 250 petajoules per annum.

Botten said the proposed petrochemicals plant was at the final feasibility study stage, with a sanction decision expected next year, with possible first production in 2010. Japanese partners in the development Mitsubishi and Itochu are said to be looking to sign a sales commitment to the project for 86PJpa.

First production from the ammonia plant, to be developed in partnership with Oswal Industries, is pegged for 2010 with a detailed feasibility study said to be ongoing.

Last week, the company announced it had signed a memorandum of understanding with major British Gas for development of a single-train LNG facility in PNG.

Botten said first production from the proposed facility would likely be around 2013, with British Gas likely to completed studies into the development within the next six to 12 months. Gas for the development would likely be sourced from Hides, Angore and Juha where a significant exploration program is planned for the coming year.

In light of the progress being made on additional commercialisation options in PNG, Botten did point out that the PNG Gas project remained the company’s preferred option in terms of first development.

He said it remained a “robust economic project” and he was still hopeful on settling a “range” of issues in the short term including gas prices, final loads and distribution, confirmation of the pipeline route and capital cost estimates.

Last month, the PNG Gas project suffered a major setback when Australian Gas Light decided to scale back engineering studies due to a lack of foundation customers. However, AGL recently revealed it was still considering development of the pipeline in stages.

Botten indicated the company may be forced to take a hardline stance on the project if delays continue, “as there are other options for development”.

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