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ExxonMobil (XOM), Total to Expand Capacity at PNG LNG Plant

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ExxonMobil Corporation (XOM - Free Report) and Total SA have proposed major expansion plans in the Papua New Guinea (PNG) liquefied natural gas (LNG) plant, per their partner Oil Search Ltd.

Per the analysts, the expansion plan is aimed to increase gas exports from the PNG LNG plant by two fold to about 16 million tons at a cost of about $13 billion.

The plan will include the addition of three LNG units, or trains. Of this, two are backed by gas from the Elk-Antelope fields, managed by Total. One unit will be supported by existing fields and the new P'nyang field, managed by ExxonMobil.

Subject to approval by the PNG government, the partners intend to commence engineering and design work in the second half of this year.

The preliminary cost of building the PNG LNG plant was pegged at $19.5 billion, while the expansion cost is projected in the range of $12-$14 billion for the additional capacity of 8 million tons per annum (mtpa), or $1,600 per ton.

The cost estimate for this expansion is significantly lower than Chevron Corporation’s (CVX - Free Report) Gorgon LNG plant in Australia.

Among other major LNG plants in Australia is the Woodside-operated North West Shelf, having annual production of below 16 mtpa.

The partners in Papua New Guinea are trying to commence operations of the new trains by the mid-2020s, when the LNG market is anticipated to slip into deficit, thanks to rapidly growing demand in Asia and a lack of new projects. Per Oil Search, the expansion plan is expected to make financing easier.

Q4 Price Performance

ExxonMobil’s shares have lost 5% during the quarter against the industry’s 1.4% rally.



 

Zacks Rank & Key Pick

ExxonMobil has a Zacks Rank #3 (Hold).

A better-ranked player in the same sector is EOG Resources (EOG - Free Report) , which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Houston, TX-based EOG Resources is a major independent oil and gas exploration and production company. The company delivered an average positive earnings surprise of 40.94% in the preceding four quarters.

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