M’sian companies eye LNG projects in PNG

KUCHING: Two Malaysian companies eyeing liquefied natural gas (LNG) projects in Papua New Guinea (PNG) may soon be enlisted to take up the projects in PNG.AmResearch Sdn Bhd (AmResearch) in a research report yesterday cited that Wah Seong Corporation Bhd (Wah Seong) and Bredero Shaw Malaysia Sdn Bhd (Bredero Shaw) are currently the two pre-qualified bidders who are keen on projects in PNG.
It noted that there was a possibility that the pipe-coating contract amounting to over US$200 million could be divided among the two contenders.
It observed that KNM Group Bhd may also be looking to supply process equipment worth a few hundred million in US$ to the LNG facility.
PNG’s Department of Environment and Conservation has given the nod for the implementation of the LNG project. Operators such as ExxonMobil Corporation (ExxonMobil) confirmed that the country’s most comprehensive environment assessment was undertaken by environment experts with years of experience working in PNG with information about current oil fields.
The research house added that with participating interests in the PNG projects are ExxonMobil, through various affiliates, including Esso Highlands Ltd as operator at 41.5 per cent, Oil Search Ltd (34 per cent), South Australia Northern Territory Oil Search Ltd (Santos) (17.7 per cent), Nippon Oil Ltd (5.4 per cent), Minerals Resources Development Company (1.2 per cent) and Eda Oil Ltd (0.2 per cent).
It said these participating interests will change when the PNG state nominees join as equity participants. Meanwhile, the PNG LNG project which is expected to cost US$15 billion for the first phase by 2015, is an integrated development that include gas production and processing facilities, onshore and offshore pipelines and LNG plant facilities.
The project was proposed to commercialise undeveloped petroleum resources in the Hides, Angore and Juha fields and associated gas resources in the currently operating oil fields of Kutubu, Agogo, Gobe and Moran in the Southern Highlands and Western provinces of PNG.
AmResearch also noted that gas will be conditioned for transportation by a 440-mile pipeline to an LNG facility with a daily capacity of 960 million cubic feet-20km northwest of Port Moresby on the coast of the Gulf of Papua.
It said at the plant, the gas will be liquefied and the annual LNG capacity of 6.3 million tonnes will be loaded onto ocean going tankers and shipped to gas markets overseas.
It added that the preliminary schedule for the project indicated a final investment decision in late 2009 with a target of the first LNG cargo shipment in 2013 to 2014. It observed that once fully constructed, the project will have a lifetime or production phase of 30 years.
The research house pointed out that besides PNG, there are other huge LNG projects in Western Australia for instance in the Gorgon Browse and Ichthys. It observed that in PNG, only Wah Seong and Bredero Shaw have been short-listed for the Gorgon project.
Overall, the value of the pipe-coating contracts including the Gorgon and PNG projects could be worth up to an estimated US$1 billion.
AmResearch continued to be optimistic on the oil and gas sector given the declining situation of global oil reserves which is expected to lead to another shortage over the long term. Coupled with most international oil corporations who have reaffirmed their long-term capital expenditure programme, the research house maintained its favourable recommendation on the sector.
Its top picks included Kencana Petroleum Bhd and SapuraCrest Petroleum Bhd.
The research house also favoured Boustead Heavy Industries Corporation Bhd, Coastal Contracts Bhd, Alam Maritim Resources Bhd, Tanjung Offshore Bhd, KNM Group Bhd, Dialog Bhd and Wah Seong Corporation Bhd.
It maintained a neutral position on Petronas Gas Bhd, Scomi Group Bhd and Sealink International Bhd.