PNG starts nickel exports

THE Chinese-built $US1.5 billion Ramu nickel cobalt mine in Papua New Guinea has finished loading its first export shipment since construction was essentially completed about two years ago.

While one Chinese worker was killed and others were injured over various incidents during the construction phase, the mine’s deep-sea tailing placement infrastructure triggered a wave of legal challenges that only ended in its favour roughly 11 months ago.

Commissioning work for the three high-pressure acid leach autoclave circuits has continued throughout the year, with the wet nickel laterite mine focusing on an intermediate mixed nickel-cobalt-hydroxide product for its first exports.

Mine partner Highlands Pacific revealed the first shipment of 576 dry tonnes of this material was being exported to a Chinese customer and it amounted to 217 tonnes of nickel and 19t of cobalt.

“This is a major milestone for the project and will be the first of many shipments to follow,” Highlands managing director John Gooding said.

“This maiden shipment from commissioning is only a relatively small amount however as the project builds to its full capacity the shipments will increase.”

The mine is expected to hit full production of 31,150 tonnes per annum of nickel and 3300tpa cobalt in mid-2013.

For this calendar year it produced about 9.465t (dry) of the intermediate product which equates to about 3,563t nickel and 332t cobalt.

While most of the mine’s exports are destined for China, the joint venture has previously indicated that some output will be sold to other markets to ensure there is competitive pricing.

Located 75km west of the provincial capital of Madang, the Ramu operation is 85%-owned by China Metallurgical Construction Company.

Highlands owns 8.56% and through its JV has an option to increase its stake to 11.3% once the project development debt is paid off.

Other stakeholders are state-owned Mineral Resources Ramu (3.94%) and landowner company Mineral Resources Madang (2.5%).

PNG LNG chief explains blowout

PETER Graham, managing director of ExxonMobil’s Papua New Guinea subsidiary Esso Highlands, has responded to recent criticism by saying that PNG LNG-scale projects are all experiencing cost increases. PNG’s shadow public enterprises minister Tobias Kulang recently implied to the local Post-Courier newspaper that Exxon deliberately timed its recent cost blowout announcement ahead of the national budget next week “to force” the government to reduce its 19.6% stake in the project. “This is a scam, concocted by ExxonMobil, knowing absolutely well the vulnerable position PNG is in,” he reportedly said. In a letter to the editor of this newspaper, Graham placed the $US3.3 billion cost blowout in a different light. “Projects of this size elsewhere in the world are experiencing cost increases, and such increases should be considered in context,” he said. “In PNG LNG’s case, the rising value of, in particular, the Kina and Australian dollar in relation to the US dollar is the single biggest contributing factor for the anticipated cost increase for the project. “Other projects in Australia are facing similar foreign exchange or ‘forex’ issues.” Graham also chimed in on the uniquely Papua New Guinean difficulties, which were worse than previously expected. “Forex impacts have been compounded by delays from work stoppages due to community disruptions and land access issues as well as challenges due to much higher than normal rainfall which increased construction and associated logistics costs.” The PNG LNG chief further discussed return on investment factors. “The economic impacts of the PNG LNG Project will reach well beyond the direct investment in PNG and the tax and equity returns to the state. Job creation and the impact on infrastructure are significant, while building the skills of Papua New Guinean workers through training will leave a lasting, positive legacy,” Graham said. “The PNG LNG Project is proud to be part of national efforts to build a strong economic foundation for growth.” The new $US19 billion price tag is up 21% from the last blowout and 27% up from the original $15 billion capital expenditure estimate of several years ago. The PNG LNG project is targeting two trains for a combined 6.9 million tonnes per annum of capacity, although there are investigations underway for a third train expansion.

Oil Search signs five deals with Oil and gas giant Total

Oil and gas giant Total has signed five licensing agreements with Oil Search to operate for the first time in Papua New Guinea (PNG).
The deal means both companies will hold equal interests in each of the five licences in the onshore and offshore Gulf of Papua New Guinea region of PNG.

"The completion of this transaction will mark the first entry of Total Exploration and Production into PNG," Oil Search said in a statement on Tuesday.
Sydney-based Oil Search said the focus of the transaction was to explore and develop the prospective offshore gulf and eastern forelands area.
The sale is conditional on approval from the PNG Minister for Petroleum and Energy and other conditions.
The company's shares were 3.7 per cent higher, or 28 cents, to $7.82 at 12.40pm.
Oil Search and Total have also agreed to form a strategic partnership to look at other licences.
Total's senior vice president of exploration and production in the Asia-Pacific, Jean-Marie Guillermou, said the acquisition represented an opportunity for Total to enter upstream search and recovery processes in the resource-rich Papua New Guinea.
"We are convinced that our partnership with Oil Search, a well-established oil and gas player in this country, is a very positive foundation for our future success in this venture," Mr Guillermou said.
The deal reinforced Total's exploration portfolio in the foothills and carbonates plays, and was in line with the company's strategy of strengthening its presence in the Asia Pacific, particularly in the gas and LNG sectors.
Oil Search's managing director Peter Botten said his company would continue as the operator, supplemented by expertise from Total.
"In the event of exploration and appraisal success that leads to an LNG project, Total would develop and operate the downstream facilities of any development," he said.
The transaction was the culmination of a bid selection process with international oil and gas players.
An offshore drilling program is expected to start in the first quarter of 2013.


Em Tv News 

Spill scare hits Oil Search revenue

Blair Price


WHILE there was good progress on the upstream front, Oil Search’s crude production in Papua New Guinea fell 26% to 1.33 million barrels of oil equivalent in the September quarter due to an environmental scare at the Kumul marine terminal.

Oil Search's offshore Kumul terminal in the Gulf of Papua

This fall from the previous quarter was due to several weeks of reduced production as Oil Search contracted a diving support vessel to investigate why a minor oil sheen of up to 8 litres was observed near its offshore export terminal.

No source of any leak was found.

Despite the need to shut in key producing fields during this time Oil Search still expects to hit its 6.2-6.7MMboe guidance range for 2012.

In other news, outside of the PNG LNG project’s third train-related news which is covered in a separate story today, Oil Search said the construction of the well pad for the Mananda 6 well in the Southern Highlands region was underway.

It is expected to spud in the March quarter to appraise the Mananda 5 well discovery – which clocked up 1000-1200 barrels of oil per day during an extended flow test.

Over to the Middle East, the 60% Oil Search-owned Taza 1 well in Iraq’s Kurdistan region is drilling ahead towards the primary oil and gas target.

A well on the Semda prospect in Oil Search’s wholly owned licence in Tunisia is scheduled to spud in this quarter while its operations in Yemen are still plagued by some difficulties.

Oil Search said its 34%-owned Block 7 tenement remained in a state of force majeure and it was monitoring the security situation while it was yet to finalise the sale of its 40% interest in Block 3 to French supermajor Total SA.

Managing director Peter Botten also commented on the recent joint venture deals with Total over its onshore and offshore Gulf area licences in PNG, with the farm-down transactions still subject to government approval.

“Total has extensive experience in developing major LNG projects and has similar aspirations to Oil Search in assessing and, in the event of success, developing an LNG project in the Gulf of Papua,” Botten said.

“Oil Search and Total have also agreed to form a strategic partnership to look at other licences in PNG, excluding the Highlands area.”

Their first offshore well for the non-PNG LNG project-related gas hunt is expected to spud in the Gulf of Papua in the March quarter – despite the contracted Stena Clyde semi-submersible rig subject to investigations relating to two recent fatalities on board.

In regards to the PNG LNG project (Oil Search 29%), the Hides field drilling program will soon have a second rig in action while Oil Search said significant progress was achieved at the LNG plant site in the recent quarter.

Oil Search ended September with a cash position of $US573 million and made $101.5 million in oil, gas and refined product sales for the quarter – almost half of the previous quarter’s figure.

The average oil price received in the recent quarter was $114.67 a barrel.

PNG nickel exports next month

HIGHLANDS Pacific expects the Chinese built $US1.5 billion Ramu nickel cobalt mine in Papua New Guinea to make its first export shipment in mid-November.

Basamuk refinery shot taken in March. Image courtesy of Highlands Pacific.

The wet nickel laterite mine is in its 32nd week of commissioning but is not expected to hit full production of 31,150 tonnes per annum of nickel and 3300tpa cobalt until mid-2013.

Covered in its recent quarterly report, Highlands said the first shipment of a mixed nickel cobalt hydroxide intermediate product would contain about 200t nickel and 20t cobalt.

This is a small portion of the 2655t nickel and 251t cobalt contained ore produced by the end of September, with most of it destined for China.

Failed legal challenges against the deep sea tailing placement aspect of the mine delayed production by years, while nickel laterite processing is also widely recognised for its complexities.

Located 75km west of the provincial capital of Madang, the Ramu operation is 85%-owned by China Metallurgical Construction Company.

Highlands owns 8.56% and through its joint venture has an option to increase its stake to 11.3% once the project development debt is paid off.

Other stakeholders are state-owned Mineral Resources Ramu (3.94%) and landowner company Mineral Resources Madang (2.5%).

OPPOSITION Leader Belden Namah’s claims the mid-year election was a failure have received some backing, with a winning candidate in East Sepik unseated by the Court of Disputed Returns for being too young and not on the electoral roll.

People’s Progress Party candidate Ezekiel Anisi won the Ambunti-Dreikikir Open seat by a fairly solid margin, but second-place getter Tony Aimo successfully challenged this victory in court.
 

According to the ABC, Judge John Kawi ruled that Anisi’s submitted birth certificate was doctored to show he was 25, the minimum age required, when he was 23.

Anisi was also not on the electoral roll, giving National Alliance party candidate Aimo a successful appeal on two counts.

Aimo reportedly spent 100,000 kina to fight the case.

Namah told parliament this week the 2012 election was a complete disaster and questioned why generic ballot papers were illegally printed.

“I have copies of letters from the Chief Electoral Commissioner directing the government printer to print generic ballot papers and I also have copies of these generic ballot papers,” he said.

“I demand an answer from the Prime Minister or his chief electoral commissioner.”

He also commented on the disarray, which denied “thousands of people” their constitutional right to vote.

“Election officials were ill prepared, resulting in numerous errors and omissions. Poor security preparations resulted in many illegal activities, including hijacking and illegal polling, particularly in the highlands areas, by election officials.

“The record number of election disputes, 108 in total that have been filed, will no doubt provide real insights into all the despicable things that happened during the election period.”

Industry News PNG 

Government approves funds for Credit Corporation

The government has approved an initial sum of 30 million kina to establish a Credit Corporation.
The corporation would be a separate organization under the department of commerce and industry.

It aims to allow more Papua New Guineans to venture into business.
This was announced Friday by minister for Trade, Commerce and Industry Richard Maru.