CAPITAL: Port Moresby

MONETARY UNIT: Kina

REFINING CAPACITY: None

OIL PRODUCTION: 79,100 b/d

OIL RESERVES: 333 million bbl

GAS RESERVES: 5.44 tcf

Papua New Guinea (PNG) is one of the final frontiers for oil and gas exploration and development in the Australasia region, according to Wood Mackenzie Consultants Ltd.

It said although large areas onshore and offshore remain poorly explored, there was no doubt about the hydrocarbon potential of PNG.

"PNG`s petroleum industry was finely balanced with respect to both producing assets and fields in the stages of final development. In addition, upside exists in the form of technical reserves mooted for development and also potential for continued exploration."

It said most of PNG is virgin territory, with the main area of focus being the Papuan basin, which had yielded significant oil and gas finds.

OIL seeps were first reported in 1911, but the jungles, swamps, and mountains were so difficult that it was not until the 1973 Arab oil embargo, coupled with use of helicopters, that exploration began in earnest.

Wood Mackenzie said the 1986 Iagifu-2x discovery raised interest in PNG, resulting in 28 new exploration permits, but most were relinquished due to high exploration costs and a lack of success outside the main fold-belt region.

During 1987-90, wildcat drilling rose steadily to a peak of 13 wells in 1990.

After 1993, said the analyst, drilling switched mainly to appraisal, particularly of the Gobe and Moran finds.

The 250 million boe Iagifu-Hedinia discovery in 1986 and the later 50 million boe Agogo find were brought into production in 1992 as Kutubu field. Initial production was 80,000 b/d, and the field peaked at 147,000 b/d in 1993.

The 150 million bbl Moran oil field was discovered in 1996. Three reservoirs in the Gobe complex, discovered in 1991-94, had combined reserves of 100 million bbl of oil and condensate. A gas find, Hides, had estimated condensate reserves of 110 million bbl.

Wood Mackenzie estimated initial liquids in place in PNG, including noncommercial finds, at 894 million bbl. Depletion of Kutubu field left remaining liquids reserves at 682 million bbl, of which 40% was condensate in gas fields not lined up for development.

Wood Mackenzie said full development of Moran depended on results of appraisal drilling, but it could be fully on-stream by mid-2000.

A number of gas discoveries had also been made: Hides had estimated reserves of 5 tcf of gas; P`nyang, Juha, Kutubu, and Pandora A had combined reserves of 1-2 tcf of gas; and a number of finds had reserves of less than 500 bcf of gas each.

Exports

Wood Mackenzie said an LNG export program was planned for Hides field, based on a 3.5 million metric ton/year plant. But the project was placed on hold following downturn of the Asian economy.

Meanwhile, Chevron Corp. was leading a group considering development of a gas export pipeline from Kutubu, across the Torres Strait to Gladstone, Queensland.

The $1.3 billion proposed project also included an offshore liquefied petroleum gas processing and storage facility in the Gulf of Papua.

GAS demand of 300 MMcfd was required for project feasibility, said Wood Mackenzie.

Project go-ahead, with first gas achievable in mid-2001 or early 2002, would depend on development of a proposed alumina refinery and electric power plant near Gladstone.

Chevron Corp. and partners started production from Gobe Main and South East Gobe fields in 1998 and built to 50,000 b/d.

The production supplements that from nearby Kutubu field, which was producing 50,000 b/d.