Exxon Mobil Corp.’s $19 billion liquefied natural gas export project in Papua New Guinea may remain shut for six weeks after an earthquake rocked the country’s remote highlands, which are home to the venture’s upstream gas supplies, according to UBS Group AG.
The LNG plant, which accounts for about 3 percent of global production, lies roughly 600 kilometers (370 miles) from the epicenter of the earthquake and exported about 7.8 million tons of the fuel last year to buyers in Japan, China and Taiwan, according to data compiled by Bloomberg. There have been dozens of aftershocks since the 7.5 magnitude temblor struck early Monday.
“Given the location and magnitude of the earthquake, as well as the scale of the aftershocks, we anticipate at least a month’s downtime is likely” and six weeks is possible, UBS analyst Nik Burns wrote in a Feb. 28 note. Burns cut his 2018 earnings per share estimate for Oil Search Ltd., which has a 29 percent stake in the venture, by 15 percent.
Exxon is working with customers to minimize the impact on their businesses and it’s “inappropriate for anyone to speculate on timeframes at this stage,” it said in a statement.
The company said Thursday surveillance of the gas pipeline that runs about 700 kilometers from the upstream gas fields to the Port Moresby export terminal showed it hasn’t been damaged. Administrative buildings and living quarters were damaged near its Hides Gas Conditioning Plant, as were roads and other infrastructure, Exxon said earlier in the week.
The earthquake also wrecked a runway at the Komo airport near the upstream gas facilities, potentially hampering efforts to restore production. About three-fourths of the airstrip has been destroyed and Exxon is flying in specialists by helicopter to survey damage, Frank Kretschmer, the company’s senior vice president for Asia-Pacific LNG Marketing, said Wednesday.
Oil Search lost 4.5 percent in Sydney trading to close at A$7.21, the lowest since Dec. 7. Santos Ltd., which holds a 13.5 percent stake in the PNG LNG project, fell 1.4 percent to A$4.97.
–With assistance from Tsuyoshi Inajima and Dan Murtaugh
- Weather, Road Damage Slows Relief Efforts After Papua New Guinea Quake
- Earthquake in Papua New Guinea Causes ‘Massive Destruction’; Death Toll Rises
- Papua New Guinea Quake Kills at Least 14; ExxonMobil Shuts $19B LNG Plant
- Quake in Papua New Guinea Leads Exxon to Shut Production, Processing
Copyright 2018 Bloomberg.