ExxonMobil, one of the largest oil and gas companies in the world, has announced the shutdown of its Gas Conditioning Plant located in Papua New Guinea (PNG).
The plant operated in the Hides Gas Conditioning Plant in Hela Province and functioned to process the natural gas produced from the Hides, Angore, and Juha fields. The gas was then transported to the Papua New Guinea LNG project’s export terminal in Port Moresby for shipping to export markets.
However, due to unforeseen technical issues, ExxonMobil had to take the decision to shut down the Gas Conditioning Plant. This unexpected turn of events has come as a major setback for the PNG LNG project and the country's economy.
Why is the Gas Conditioning Plant Important?
The Gas Conditioning Plant is a vital component of the PNG LNG project. It conditions the raw gas extracted from the fields to produce high-quality liquefied natural gas (LNG).
LNG is a cleaner, more efficient, and more eco-friendly fuel than coal or fossil fuels, and it is in high demand in countries all over the world. Papua New Guinea is one of the few countries endowed with vast natural gas reserves, and the PNG LNG project was a once-in-a-lifetime opportunity to use these resources to generate long-term revenue for the country.
The PNG LNG project consists of two LNG processing trains that can produce over 8.3 million tons of LNG annually. The project has been operational since 2014 and has been exporting LNG to Japan, Taiwan, and China.
How will the Shutdown Affect the PNG LNG Project?
The shutdown of the Gas Conditioning Plant will have significant ramifications for the PNG LNG project. While ExxonMobil has stated it will continue to produce oil and gas from its projects, it has not yet offered a timeline for the resumption of gas conditioning activities.
The PNG LNG project employs thousands of workers and contributes significantly to the country's GDP. The loss of revenue from the LNG exports will deal a severe blow to the country's economy, which is already grappling with the COVID-19 pandemic.
Apart from the direct economic impact, the shutdown of the Gas Conditioning Plant will also have cascading effects on other businesses associated with the LNG project. The shutdown will affect port operations, shipping schedules, and supplies of LNG to importers.
Conclusion
The shutdown of the Gas Conditioning Plant comes as a significant blow to Papua New Guinea's fledgling natural gas industry. The country had high hopes for the PNG LNG project and was counting on it to generate long-term revenue and create job opportunities. However, the technical issues that led to the shutdown have dealt a devastating blow to the economy, which is already reeling under the effects of the COVID-19 pandemic.
The government and stakeholders in Papua New Guinea must work closely with ExxonMobil to find a workable solution to the shutdown. The country must also look to take steps to diversify its economy and reduce its dependence on the extractive industry to ensure its long-term economic growth and development.