MELBOURNE Aug 19 Partners in the Papua New
Guinea LNG project, which started exporting liquefied natural
gas (LNG) in May, are in talks with customers to shift from
spot-priced cargoes to contract sales before the end of 2014,
PNG LNG partner Oil Search said.
Spot prices for LNG in Asia LNG-AS have slumped about 20
percent since shipments of PNG LNG started, partly due to the
new supply from PNG, and any shift to contract sales should ease
the glut on the spot market.
"There's no doubt that PNG LNG cargoes have played a role in
setting the spot pricing," said Peter Botten, managing director
of Oil Search Ltd, which owns 29 percent of the PNG LNG
He said the joint venture partners, led by ExxonMobil Corp
, wanted to make sure output was stable from the two
trains at the plant before moving to contract sales to its
long-term customers: China's Sinopec, Japan's TEPCO and
Osaka Gas, and Taiwan's CPC.
Between May and the end of June, seven cargoes of PNG LNG
were sold, all on the spot market, with five going to Asian
buyers, according to Oil Search's June quarterly report.
"Clearly with stability in the project and stability in the
production, we anticipate that we'll move across to contract
sales certainly before the end of the year," Botten said.
"I can't give you any further timing on that until the joint
venture has finalised its review with the customers itself, but
the intention is to move across to contract sales as soon as
reasonably possible," he told reporters on a conference call.
Botten was speaking after Oil Search reported a 34 percent
jump in half-year profit, thanks to the earlier than expected
start and ramp-up of PNG LNG exports.
(Reporting by Sonali Paul; Editing by Richard Pullin)