PERTH (miningweekly.com) – The Papua liquefied natural gas (LNG) project is one step closer to realisation after the joint venture (JV) partners entered into a memorandum of understanding (MoU) with the Papua New Guinea government.

JV partner Oil Search said on Friday that the MoU provided the framework under which a gas agreement could be negotiated, with the aim of having the agreement in place by the end of March next year.

“This MoU marks a significant milestone for the Papua LNG project. It paves the way for the completion of a comprehensive gas agreement which, together with key commercial agreements, will allow the commencement of the front-end engineering and design (FEED) phase of the project,” said Oil Search MD Peter Botten.

The MoU followed the Papua New Guinea LNG (PNG LNG) and Papua LNG JV parties reaching broad alignment in 2018 on the preferred downstream concept for the next phase of LNG development in the country.

The Papua LNG project will comprise the construction of three 2.7-million-tonne-a-year LNG trains, producing some 8-million tonnes a year of LNG, all allocated on the existing PNG LNG project site.

Two trains will be supplied with gas from the Elk-Antelope fields, while one train is underpinned by gas from the existing PNG LNG fields and the P’nyang field.

Oil Search and global producer ExxonMobil are both JV partners in the PNG LNG and the Papua LNG project, with French major Total holding the majority 31.1% interest in the new venture.

“Material progress has been made on the commercial agreements that support the integration of the Papua LNG and P’nyang developments with the PNG LNG project, including those related to site and facility access,” said Botten.

“Pre-FEED downstream studies on the three-train development concept are well under way. The scope of this engineering work includes design, process and layout optimisation of the expansion concept from the gas inlet to the LNG loading arm. Work taking place includes the brownfield tie-ins, compressor driver selection, LNG loading and shipping, condensate treatment, storage and loading and execution planning.

“We expect this will underpin entry into FEED,” Botten said.