April 22, 2015 / 10:31 AM / 4 years ago

UPDATE 1-Total-led LNG project in Papua New Guinea targets first gas in 2021 - InterOil VP

(Adds comment, details)

BEIJING, April 22 (Reuters) - First shipments from a new liquefied natural gas (LNG) project in Papua New Guinea operated by French oil major Total SA is expected in 2021, a top executive at a partner in the project told Reuters on Wednesday.

Total and its partners InterOil and Oil Search plan to begin marketing a total of 6.8 million tonnes of LNG per year from the project mainly to buyers in China and Japan by the end of this year, said Keli Taureka, executive vice president of InterOil, in an interview.

The project will become the Southeast Asian country’s second, after Exxon Mobil Corp in May last year began exports from its $19 billion PNG LNG project.

The new project, drawing gas from Papua New Guinea’s biggest undeveloped gas deposit, the Elk and Antelope fields, hopes to take advantage of many LNG contracts expiring in North Asia around that time, Taureka said, adding he expected Chinese demand to double.

The project “would be taking advantage of contract expiring in North Asia, a rebound in energy prices...and China will be doubling in demand,” Taureka said.

However, the project may face competition from LNG from North America and Australia, where projects will ramp up towards the end of the decade.

Asian LNG prices have more than halved since last year in tandem with lower oil prices and as demand growth fails to keep up with new supply.

Preliminary estimates show the Elk and Antelope fields hold 5-9 trillion cubic feet of natural gas, although reserves will only be confirmed once an appraisal study is complete by the middle of this year, Taureka said.

Total bought a 40.1 percent stake in the project from InterOil in April last year for $429 million. The sale was disputed by Oil Search, which claimed it had the right to buy the stake, but lost the case in international arbitration.

Total has made few comments on the project, but said on its website that Papua New Guinea holds the right to acquire a 22.5 percent stake in the project once a final investment decision has been made, which would lower Total’s stake to 31.1 percent.

InterOil has a 36.5 percent stake in the project, while Oil Search holds about 23 percent. (Reporting by Aizhu Chen; and Jacob Gronholt-Pedersen; Editing by Gopakumar Warrier)

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