From Australia (RW): Cott Oil & Gas has decided to surrender an interest in an onshore Papua New Guinea permit to concentrate on development of the Pandora (SEN, 31/4) gas field in the Gulf of Papua.

Cott reached agreement with Kina Petroleum and partner Heritage Oil to relinquish its 20% interest in the permit in return for an undertaking that Cott will not be asked for further funds for the exploration programme.

Cott has 40% of the Pandora licence and has stated it is confident that the stranded gas field can be a commercial development via an floating LNG facility or a land-based LNG plant on the western shore of the GoP.

Cott is the largest stakeholder, but Talisman Energy operates (25%) for Kina (25%) and Santos (10%).

Cott also said that it had renegotiated an agreement with International Exploration Services to reduce its stake in the lease. The initial agreement, signed in December last year, said that Cott would provide IES with rights up to 25% of the permit in the event that the field was developed. IES is continuing to supply Cott with technical assistance.

Following the recent sale of its shares in Kina and its withdrawal from the onshore licence, Cott has elected to pay IES $A1.66mn in return for reducing IES’s rights to 23.3% of the lease which will occur if Pandora is deemed a commercial project.

Pandora, in 120m, was originally discovered by the Lundin Group company International Petroleum Corp in 1988. It was successfully appraised in 1992. Contingent resources in the 2C category have been put at 22bcm.

A number of development schemes were mooted, including a pipeline to Queensland, a concept suggested to Chevron to develop gas from the Kutubu, Juha and Hides fields in the PNG Highlands prior to its exit from PNG and ExxonMobil’s promotion of PNG-LNG project.

Pandora’s 1990s schemes could not clear the hurdle of significant H2S content. Cott is confident H2S can be handled on an FLNG vessel or on an offshore platform prior to piping gas to an onshore LNG facility.