Boston, MA -- (SBWIRE) -- 01/10/2013 -- BMI View: Plans to commercialise Papua New Guinea's gas potential with a number of LNG projects continue to advance. With first gas from Exxon's PNG LNG projects set for 2014, the country is on track to benefit from its strategic location and sizable unused reserves. The entrance of new players such as Total and potentially Shell to the country's upstream could support new LNG projects and revive existing proposals. However we highlight that unlike our bullish outlook for gas production, we forecast that falling liquids production will by 2021 leaving PNG with a net import requirement of some 46,400b/d.

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The main trends and developments we highlight for PNG's Oil and Gas sector are:

- First gas from the US$15.7bn ExxonMobil-led PNG LNG project could treble PNG's exports and boost its GDP by at least 20%. The project remains on track for first gas in 2014, and Exxon and its partners continue to aggressively target the reserves to support a third train at the facility.
- InterOil's Liquid Niugini (Gulf LNG) project could be revived after nearly being cancelled by the frustrated PNG government. Negotiations continue with Royal Dutch Shell for a stake in the upstream fields and terminal itself.
- However the latest proposal set forth by Inter Oil would see stakes in the Elk-Antelope fields that underpin the project sold off to the PNG government in order to advance the delayed project.
- Total's farm-in agreement with Oil Search adds a proven player to the country's upstream, and the French IOC has already announced its intention to become the operator of an LNG facility and move ahead with a robust exploration schedule in 2013.
- We expect oil production to average 34,000b/d in 2012 while consumption is forecast to rise by around 5.0% per annum to 2021, implying demand of around 71,400 barrels per day (b/d) by the end of the forecast period. The net import requirement would therefore be approximately 46,400b/d by 2021.
- Rising competition in the LNG market in Asia, as well as from new sources of supply abroad, could undermine the commercial viability of greenfield export projects in PNG. This remains a downside risk to the sector's development.

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