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Papua New Guinea, Total ready to renegotiate terms of Papua LNG Gas Agreement

Papua New Guinea's Ministry of Petroleum has sent a team to Singapore to renegotiate with French major Total SA the terms of the Papua LNG Gas Agreement, which was signed by the country's previous government in April.

The deal, seen by the government as disadvantageous to Papua New Guinea, is key to the development of the country's second LNG export project, the 5.4 million-tonne-per-year Papua LNG, which is expected to take a final investment decision in 2020 and start operations in 2024.

"Success in the discussions could lead to an early progress of the project. By the same token, failure could have very serious ramifications. But failure must not be ruled out and must remain within our contemplation," Kerenga Kua, Papua New Guinea's minister for petroleum, said in an Aug. 15 statement.

Kua said the new government has taken the view that the Papua LNG Gas Agreement is disadvantageous to the state and the country's citizens.

The team being sent to Singapore — which is a state negotiation team authorized by the National Executive Council — is expected to return to Papua New Guinea early next week, the minister said.

Peter Botten, Papua LNG project participant Oil Search Ltd.'s managing director, expects the negotiation process to yield a more detailed picture going forward. "We look forward to further clarity on the state's position regarding this agreement and ways forward for the project," Botten said.

Along with operator Total and Oil Search, Exxon Mobil Corp. is also involved.

Papua LNG is planned to have three 2.7 million-tonne-per-year capacity LNG trains.

Abache Abreu and Nathan Richardson are reporters with S&P Global Platts. S&P Global Market Intelligence and S&P Global Platts are owned by S&P Global Inc.