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With concerns for a winter shortage of natural gas in China, Sinopec's trading arm, Unipec Asia is in talks to buy more LNG from the Exxon Mobil operated Papua New Guinea (PNG) project Reuters reported.

PNG LNG Terminal

PNG LNG Terminal

Exxon’s existing PNG LNG deal with Unipec was inked in 2009 is for around about 2 mmtpa for 20 years. The overall PNG project has a total contracted volume of 7.5 mmtpa Oil Search has indicated. Those mid-term LNG sale and purchase agreements are with PetroChina and BP. The existing long term contracts are for 6.6 mmtpa to Japanese trading giant JERA, Osaka Gas, Sinopec and Taiwan’s CPC Corp. PNGLNG began production in 2014.

Other Chinese companies have been seeking to tie up in supply ahead of winter and have the added threat of the trade war between China and the U.S. to contend with. China’s Petrochina International signed a three-year agreement with the PNG LNG project in July for the supply of 0.45 million tonnes of LNG a year. Last month to much fanfare from China with regard to the trade war Petrochina signed a 22-year deal with Qatargas for 3.4 million tonnes of LNG a year.

China is the world’s second-largest LNG importer and forecasts have it importing a record 54 million tonnes this year, that is up  more than 40 percent from 38 million tonnes last year SIA Energy said this week.  

Liquefied Natural Gas (LNG) Main Customers

There are four long-term major customers in the Asia region including:

  • China Petroleum and Chemical Corporation (Sinopec)
  • Osaka Gas Company Limited
  • The Tokyo Electric Power Company Inc.
  • CPC Corporation

PNG LNG Map

About Papua New Guinea LNG

ExxonMobil is responsible for the construction and operation of the US$19 billion PNG LNG Project  and has a 33.2 percent interest.

Oil Search Limited has a 29 percent interest in the PNG LNG Project. Oil Search is PNG’s largest oil and gas producer and operates all of PNG’s currently producing oil and gas fields. Oil Search Limited has a 29 percent interest in the PNG LNG Project.

Kumul Petroleum Holdings Limited (formerly NPCP Holdings Limited) has all its shares beneficially owned by the Independent State of Papua New Guinea through Kumul Consolidated Holdings (KCH) (formerly, Independent Public Business Corporation of PNG) Kumul Petroleum Holdings Limited. Kumul Petroleum Holdings Limited through its wholly owned subsidiary Kumul Petroleum (Kroton) Limited holds the State’s equity interest in the PNG LNG Project. KCH was given the mandate by the National Executive Council in October 2008 to be the State’s nominee with respect to the State’s equity interest in the PNG LNG Project. KCH established Kroton No. 2 Ltd as a special purpose vehicle through which the State’s participation was effected. The Kroton No.2 Limited name was changed in November 2010 to National Petroleum Company of PNG (Kroton) Limited. In December 2014, all the issued shares in National Petroleum Company of PNG (Kroton) Limited were transferred to Kumul Petroleum Holdings Limited. In September 2015, the National Petroleum Company of PNG (Kroton) Limited name was changed to Kumul Petroleum (PNG LNG) Limited and subsequently changed in January 2016 to Kumul Petroleum (Kroton) Limited. Kumul Petroleum holds a 16.8 percent participating equity interest in the PNG LNG Project, making Kumul Petroleum the third largest participant in the Project.

Santos Limited is one of Australia’s leading gas producers, supplying Australian and Asian customers. Santos it is one of the largest producers of natural gas for the Australian domestic market.  Santos Limited has a 13.5 percent interest in the PNG LNG Project.

JX Nippon Oil & Gas Exploration, a 100 percent subsidiary of JX Holdings is Japan’s largest integrated oil company and is a major oil importer and distributor of petroleum products. JX Nippon Oil & Gas Exploration has a 4.7 percent interest in the PNG LNG Project.

Mineral Resources Development Company Limited (MRDC) is a 100 percent State-owned company. MRDC now concentrates entirely on landowner equity interests in both mining and petroleum projects. Projects in which MRDC-managed landowner entities hold an interest include the Kutubu, Gobe and Moran oil developments as well as the OK Tedi gold mine and the Ramu nickel joint venture. Petroleum Resources Kutubu Limited and Petroleum Resources Gobe Limited each hold direct interests in the Project and are both 100 percent owned subsidiaries of MRDC which holds these interests as a corporate trustee in trust for the Kutubu and Gobe landowners. MRDC Exploration has a 2.8 percent interest in the PNG LNG Project.

Source: PNGLNG, Reuters

From The TradersCommunity Research Deak

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