With a final investment decision (FID) now out of the way, joint venture partners, encompassing Santos, ExxonMobil PNG, Eneos Xplora, Kumul Petroleum, and the Mineral Resources Development Company, will move forward with the development of a tie-in gas project in Papua New Guinea (PNG), Oceania.
Following approval by the PNG LNG joint venture, a final investment decision has been made to proceed with the Agogo Production Facility (APF) tie-in project in Papua New Guinea. The first gas is targeted for the second quarter of 2028.
Kevin Gallagher, Santos’ Chief Executive Officer and Managing Director, described the APF tie-in project as a highly value-accretive investment that meets the company’s capital allocation criteria and will support its long-term production profile with an approximate 12-year production plateau, and the potential to continue production beyond 2050.
Gallagher emphasized: “The APF tie-in project is a high-quality development with strong economics and a clear role in our strategy to build and grow portfolio production. The execution of this project will convert Santos’ 66 mmboe 2P undeveloped reserves into developed reserves, delivering incremental net production of ~54 /d with significant upside potential depending on reservoir performance.
“With an expected IRR of greater than 50 per cent and a payback period less than four years from FID, and approximately two years from first gas, the project is expected to be strongly value accretive, support our long-term production profile and sustain feed gas supply to PNG LNG.”
This development will deliver gas from the Santos-operated APF to the PNG LNG gas pipeline via a new 19-kilometre pipeline, together with two new wells and associated production facility modifications. The Australian giant’s share of capital expenditure is approximately $160 million out of the gross capex of around $400 million over three years.
Brett Darley, Santos’ Australia and PNG Chief Operating Officer, underlined: “Key regulatory approvals are in place, required land access has been secured and all material joint venture approvals have been obtained. Through the Santos Foundation and our broader community partnerships, we continue to invest in stronger, more resilient communities in the Highlands and long-term, cooperative relationships with landholders and local stakeholders.
“Our focus is now on progressing detailed design for the facility modification, awarding the two main construction contracts and progressing the temporary construction camp to drive towards first gas in the second quarter of 2028.”
Santos claims that the expected internal rate of return (IRR) is greater than 50% with payback period less than four years from the FID for this project, with incremental production capacity of around 135 /d.
With an investment value of over $19 billion, PGN LNG is said to have a relatively low greenhouse gas emissions intensity.
