PNG to supply 2M ton LNG to Sinopec

Santos announced that the PNG LNG project participants have finalized a binding sale and purchase agreement with Unipec Asia Co Ltd, a subsidiary of China Petroleum and Chemical Corporation (Sinopec), for the long-term sale and purchase of LNG totaling approximately 2 million tons per annum.

Under the agreement, the Papua New Guinea LNG project will supply LNG to Sinopec for a period of 20 years. Details about pricing are not disclosed.

The PNG LNG project is an integrated development which includes gas production and processing facilities, onshore pipelines and offshore pipelines, plus LNG plant facilities. Participating interests are ExxonMobil (41.5%, operator), Oil Search 34%, Santos 17.7%, Nippon Oil 5.4%, Mineral Resources Development Company 1.2%, and Petromin PNG Holdings Limited 0.2%. 

The PNG LNG will supply an LNG terminal that Sinopec is going to build in Qingdao, Shandong Province. Phase I capacity of the terminal is 3 million tons per annum. With the developments of the market, Sinopec plans to expand the facilities to receive 5-6 million tons per year in a phase II stage. 

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Santos oil production drops 46%

Santos, Australia, reported 46% drop of crude oil production in its Indonesian operation for the first half 2009. 

Santos reported to Australia Stock Exchange (ASX) last week that Indonesian oil output reached 303,900 barrels in H1 2008, dropped 46% from 566,100 barrels in the same period last year. Santos reported significant drop in second quarter 2009 to 127,100 barrels against 268,900 barrels in Q2 2008.

Crude oil production in Q2 was 28% lower when compared to Q1 2009 due to natural field decline and the sale of Kakap PSC. 

But sales gas production of 7.1 PJ in Q2 2009 was 16% higher than Q2 2008 due to higher Maleo gas offtakes. 

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CUE: Oyong gas production will be on target

Cue Energy Ltd, owner of 15% participating interest in Sampang PSC operated by Santos, was optimistic that first gas production from Oyong field will be on target this quarter.

Cue Energy told Australia Stock Exchange (ASX) this morning that construction of the Oyong Gas phase development has progressed as scheduled ahead of anticipated first gas in late third quarter 2009.

Meanwhile, no oil production revenue was received by CUE from Oyong field during the second quarter 2009 due to timing of oil cargoes. The average production rate for the field for Q2 was approximately 3500 barrels of oil per day. Production was shut in for five days while modifications were made to the production barge for phase two gas production. 

Regarding the Wortel Field, CUE said a plan of development for the field was submitted to Upstream Oil and Gas Regulatory Body (BPMigas) for approval.

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Santos' another LNG maneuver

Australian-listed Santos, with significant oil and gas operations in Indonesia, announced today that Papua New Guinea (PNG) LNG project participants have reached alignment on the commercial terms with three major LNG buyers in the Asian region for sales of approximately 4.3 million tons per annum. Another threat for Indonesian LNG.

Santos said a fourth LNG buyer is awaiting government approval of key commercial terms for the remaining 2 million tons per annum of production capacity.

PNG LNG project is a neighbor for Indonesia's Tangguh project in West Papua. The project will develop resources in the Hides, Angore, and Juha fields and the associated resources in Kutubu, Agogo, Gobe and Moran, PNG. The gas will be transpored by pipeline to an LNG facility 20-km northwest of Port Moresby on the coast of the Gulf of Papua. The gas will be liquefied, enabling export by ship of approximately 6.3 million tons per annum of LNG.

The project is operated by ExxonMobil and is currently in the front end engineering and design (FEED) stage. FEED is expected to conclude with a final investment decision in the fourth quarter of 2009. Santos has a 17.7% interest in FEED phase of the PNG LNG the project, while others are ExxonMobil (41.5%), Oil Search (34%), Nippon Oil Exploration (5.4%), MRDC ( a PNG company representing landowner interests) with 1.2%, and Eda Oil 0.2%.

ExxonMobil Gas and Power Marketing Company said in a press release this morning that it expects to commence the delivery of LNG by late 2013 or early 2014. 

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Santos signs LNG supply to Petronas

Just when Pertamina and Medco are struggling to proceed with Donggi-Senoro LNG project, Santos and Petronas, partners in a multi billion dollar LNG project in Queensland, signed a binding heads of agreement to sell 2 million tons per annum of LNG to Petronas with an option for an additional 1 million tons. The agreement is conditional only upon the GLNG project reaching a final investment decision. 

Santos told Australia Stock Exchange (ASX) this morning that the agreement covers the sale and delivery of LNG to Petronas for a period of 20 years beginning in 2014. The LNG will be utilized in the Malaysian domestic gas market. 

GLNG is the world's first major coal seam gas (CSG) to LNG operation. Petronas acquired 40% interest in GLNG last year, while Santos keeps the balance of 60%. 

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