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Santos today announced that the PNG LNG project has started producing liquefied natural gas (LNG) ahead of schedule.

Production from the first LNG train will increase over coming weeks and the first cargo is expected to be shipped to Asian markets before mid-year.

Work on the second train is also progressing and LNG production from this unit is expected to start in the next several weeks.

Santos Managing Director David Knox said that first LNG production from PNG LNG represented a significant milestone for the project, following first condensate production in late March.

“I congratulate our operator ExxonMobil on the successful delivery of this major milestone ahead of schedule. We look forward to the continued ramp up of LNG production until the first cargo is ready to be loaded in the coming weeks.”

“Delivery of the PNG LNG project is a key step in Santos’ strategy to become a major LNG supplier to Asia. PNG LNG will quadruple Santos’ LNG production once the project reaches full output.”

“Our GLNG project also continues to make good progress and remains on track for first LNG next year, within the current budget,” Mr Knox said.

Sanctioned in December 2009, the US$19 billion PNG LNG project includes the development of gas production and processing facilities in the Hela, Southern Highlands and Western Provinces of Papua New Guinea, over 700 kilometres of pipelines and a two-train LNG processing and loading facility with a capacity of 6.9 million tonnes per annum located near Port Moresby.

Santos has a 13.5% interest in the PNG LNG project. Other co-venturers include affiliates of ExxonMobil (operator), Oil Search, National Petroleum Company of PNG, JX Nippon Oil & Gas Exploration, Mineral Resources Development Company and Petromin PNG Holdings Limited.

The PNG LNG project operator’s release is attached.