(Reuters) -Exxon Mobil Corp and its partners signed a deal with the Papua New Guinea (PNG) government, the U.S. energy giant said on Tuesday, paving the way for the development of the P'nyang gas field and ending years of uncertainty over the project.
Gas from the P'nyang field is slated to feed Exxon's liquefied natural gas (LNG) plant in PNG after its existing sources run out.
P'nyang gas field is PNG's third LNG project after PNG LNG and Papua LNG projects, and together, "these three projects will deliver production and tax revenue for PNG well beyond 2050," PNG Prime Minister James Marape said.
Last year, Marape's government resumed talks with Exxon Mobil (NYSE:XOM) on a deal to develop the P'nyang gas field after negotiations fell apart in late 2019 when the U.S. giant refused to agree to terms the government was seeking.
The state negotiating team has clinched a government take of 63% under the P'nyang gas field deal, compared with 49% in PNG LNG project and 51% in Papua LNG project, the Prime Minister's Office said on Tuesday.
"This is a massive win ... and also sets a new benchmark for future negotiations," the Prime Minister's Office said, adding that the deal execution with Exxon and its partners - Santos Ltd and JX Nippon - comes after more than three years of negotiations.
Exxon said it will work with the PNG government regarding their interest in additional equity in the project.
"The signing of the gas agreement marks a major milestone for the project, setting out the fiscal framework and supporting project scoping and evaluation," Santos Ltd, one of the project partners, said in a statement.
Exxon's unit Esso PNG P'nyang Ltd operates the P'nyang field, and together with Ampolex (Papua New Guinea) Ltd, has a 49% interest in the project. Partners Santos and JX Nippon have a 38.5% interest and 12.5% interest, respectively.
The P'nyang plant last year produced 8.4 million tonnes of LNG for export.