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The Kumul Consolidated Holdings (KCH) today presented a cheque of K200,000 to take up Gold Sponsorship for the upcoming 2nd Papua New Guinea Special Economic Summit that will be hosted in Port Moresby from August 31st- September 3rd, 2025. The Minister for International Trade and Investment, Hon. Richard Maru, thanked the Managing Director for KCH, Professor David Kavanamur, and the Minister for State Enterprises, Hon. William Duma, for their support towards this very important Summit. Minister Maru said: “We are very happy to work with KCH. We look forward to receiving their Submissions for the Madang Integrated SEZ and the Portside SEZ so we can have them processed and approved by the NEC and the SEZ Authority will grant them licenses subject to KCH meeting all the regulatory requirements.” Minister Maru and Professor Kavanamur also gave an update on the establishment of the new cannery in Madang. “We are also happy to announce that for the cannery in Madang, following the clearance of the MOU by the State Solicitor, by tomorrow the Shareholders Agreement will be finalized between the three shareholders- KCH, Madang Provincial Government and RD Corporation to pave way for the launching of the tuna canning project within what used to be called the PMIZ but now the Madang Integrated SEZ. The Prime Minister, Hon. James Marape, will be invited to officiate at this launch will be held on Monday, July 7, 2025 in Madang. The Governor for Madang, Hon. Ramsey Pariwa, will be meeting with us to finalize the program for this historic launch.” “This project was initiated by the Somare Government has been delayed by over three Governments. The Marape-Rosso Government will finally deliver this very important project this year. It is going to be a very significant milestone as we celebrate 50 years of Independence. It will signal the start of the very aggressive push by the Government to have all our fish caught in our waters to be processed onshore. We are waiting for the National Fisheries Authority to bring the Domestication Policy, but work starts this year.” “It is our hope that in the next couple of years we will completely ban the unprocessed fish exports from PNG and in the process, we will create over 100,000 new jobs and revenue inflows will grow from less than K1 billion billion to over K5 billion from licensing of boats, taxes from companies, personal income taxes and GST. The new 300MT cannery project will cost K160 million. The State’s share of the equity funds is ready and will be released to the new JV Company to be called the ‘Kumul Fishing Limited’ as soon as the Project Agreement is signed,” said Minister Maru. The new Board and Management for the JV Company will be appointed in the coming weeks and the company will be ready to start the construction of the new cannery after the launch next month. Minister Maru thanked the Prime Minister and the Cabinet, KCH, RD, Madang Provincial Government and all the partners for all their support towards the establishment of the new cannery which will be owned by our Government and the Madang Provincial Government on behalf of our people. “I want to thank the Marape-Rosso Government for the foresight and the determination to finally deliver the PMIZ decision as part of our Take Back PNG initiative,” said Minister Maru.

Adyton Resources Corporation is pleased to provide an update on its ongoing 2025 drilling activities and share preliminary geological observations at its 100% owned Feni Island project. The 2025 drill program is designed to achieve 4 key objectives (refer Figure 1): 1) Test the depth extension of the existing Feni Resource with deep 400 m plus drill holes ; 2) Test the extent of mineralization in the gap area between the existing Kabang and Matangkaka Ore Zones; 3) Test and better understand the continuity of the previously identified copper mineralization, and; 4) Test the lateral northeast extension of the Matangkaka Zone under post-mineral cover, that has had no previous drilling Highlights: As at June 6, 2025, six diamond drill holes (1,876m) have been drilled with 4 drill holes completed and two in-progress; Sawn core samples from Holes 1,2 and 3 have been dispatched to the laboratory and are awaiting laboratory results; Target hole depths are typically 400m, with holes FDD003 and FDD004 ending at 421.7m and 453.2m, respectively. Hole FDD004 was terminated largely due to operational reasons with end of hole core observations indicating ongoing evidence of vein hosted and disseminated sulphide mineralization; Core logging observations indicate mineralization from base of tephra (post-mineral volcanic cover; ranging from 38m to 70m based on current completed holes) with local intercepts of semi-massive (20%-30% pyrite), along with significant lengths of disseminated, vein and fracture filled pyrite-chalcopyrite mineralization in hydrothermal breccia, polymictic breccia and the intrusive units. Hole FDD004 targets the untested gap between Kabang and Matangkaka. -Anhydrite-pyrite-chalcopyrite (est. 1%) ± minor bornite vein-related mineralization was logged from 383.9m to 453m (EOH). A porphyry style alteration assemblage of secondary biotite-magnetite-actinolite-chalcopyrite was logged from 383.9m to 424m with stockwork pyrite-chalcopyrite-magnetite veining from 383.9m to 397.5m and 402.3m to 424m. Hole FDD005 intersected semi-massive sulphides (20-30%) pyrite + chalcopyrite were logged from 89.7m to 96.0m (refer Figure 2) and intermittent (up to 100 cm thick) semi-massive pyritic sulphide intervals from 120.0m to 156.5m (refer Figure 3). Intense anhydrite veining associated with fine-grained pyrite + 0.5 to 1% chalcopyrite mineralization from 156.5m to 255.1m. From 255.1m to 340.0m, weak potassic alteration is associated with 1% (est.) disseminated chalcopyrite. Hole FDD001 intersected pyrite mineralized hydrothermal breccia from 75.8m to 151.50m. 151.5m to 168.6m is intensely fractured within hydrothermal breccia, with fine-grained pyritic sulphides filling breccia matrix. Over the interval 168.6m to 396.0m, logged units include intermittent hydrothermal breccia, intrusive units and tephra with disseminated and vein filled pyritic sulphides. Hole FDD002 intersected mineralized hydrothermal breccia from 45.9m to 125.0m. The interval 125.0m to 195.4m is intensely fractured with disseminated and fracture/vein filled fine-grained sulphides (pyrite). FDD002 was terminated in mineralization (at 195.4m) due to operational issues. Hole FDD003 intersected sulphide (pyrite) mineralized hydrothermal breccia from 57.0m to 110.0m. Intensely fractured intrusive with intermittent semi-massive, disseminated, fracture/veinlet filled pyrite – chalcopyrite (up to 1% est.) mineralization was encountered from 110.0m to 186.5m, 197.0m to 218.1m and 227.0m to 277.7m. Tim Crossley, Chief Executive Officer, stated: “Significant progress is being made at the 100% owned Feni Island project, with our drill programme now having completed 4 drill holes, with holes 5 and 6 underway, and over 1800m completed. Holes FDD001 and FDD002 were drilled in a geothermal area with challenging drilling conditions, characterized by intense alteration, hot springs, and highly fractured and altered ground. Despite these difficulties, the team performed exceptionally well, still achieving excellent core recoveries. We are encouraged by the visual logging results of the holes, particularly, Hole 4 and the ongoing Hole 5. With the extent of drilling underway across all our projects, including on Fergusson Island, we are well-positioned to provide the market with regular updates as assay results become available in the coming months.” Dr Chris Bowden, COO and Chief Geologist, commented: “We are encouraged by what we are seeing in the drill core from this round of drilling at Feni. Whilst assay results are still pending, visual observations are showing long intercepts >100m of hydrothermal to intrusive breccias that are evidencing mineralisation with sulphides (pyrite ± chalcopyrite) and intensely altered (sulphide ± silica-clay) – the sulphides being the typical host to the gold stage of mineralisation at Feni as evidenced from previous drill campaigns, correlation to historical assays and historical petrography.”   The press release and figures can be found HERE

ExxonMobil recently appointed Dinesh Sivasamboo as its new Chairman and Managing Director of ExxonMobil PNG Limited. This appointment will be Sivasamboo’s second leadership position with ExxonMobil PNG Limited, having previously served in PNG from 2016 to 2019 as its Vice President for Production. Sivasamboo has held numerous, global senior leadership positions over the course of his 30-year career at ExxonMobil. Most recently, he held the position of Chairman and President of ExxonMobil Exploration and Production Malaysia Inc. Prior to that role, he was the President and Managing Director of ExxonMobil Kazakhstan Inc., and held positions in Qatar and the United States. “I am honored to be returning to PNG as Chairman and Managing Director of ExxonMobil PNG Limited. The PNG LNG Project has – through the strength of its partnerships – achieved so much during its first decade,” said Sivasamboo. “I look forward to both leading it into its second decade, as well as building upon its success to help deliver the next phase of LNG projects for this country.” Sivasamboo becomes the company’s fifth Chairman and Managing Director, joining an esteemed list that includes his immediate predecessor, Tera Shandro, as well as Peter Larden, Andrew Barry and Peter Graham.

Prime Minister Hon. James Marape has announced a key Cabinet reshuffle, following the swearing-in of Hon. Peter Isoaimo, Member for Kairuku, as the new Minister for Energy. Minister Isoaimo replaces Kerema MP Hon. Thomas Opa, who has been appointed as Minister for Finance, while outgoing Finance Minister Hon. Miki Kaeok retains his Transport portfolio. Prime Minister Marape thanked Minister Kaeok for his tenure at Finance Speaking after the swearing-in ceremony at Government House, Prime Minister Marape praised Mr Isoaimo as a seasoned leader and dedicated member of the government coalition, noting his long political service since entering the National Parliament in the 9th Parliament through a by-election and his earlier years in the Central Provincial Assembly. “Minister Isoaimo has been a loyal and humble servant of this government,” Prime Minister Marape said. “He brings with him a wealth of experience, having previously served as Vice Minister for Works and Highways, and has consistently demonstrated patience, loyalty, and sincerity—qualities we value as we build the next generation of Papua New Guinean leadership.” Mr Isoaimo’s appointment also restores Cabinet representation for Central Province following the departure of Hon. Walter Schnaubelt, National Alliance Party leader, who moved to serve as Governor of New Ireland Province. PM Marape acknowledged the continued partnership with the National Alliance Party, a coalition partner of Pangu Pati since 2019. “We are keeping faith with the coalition arrangement. This was not just about politics—it was the right choice based on experience, region, and merit,” said PM Marape. The Prime Minister emphasised the growing importance of Central Province in the national energy and development agenda, pointing to strategic projects including Papua LNG, the Wildebeest gas fields, and the reopening of Tolukuma Gold Mine. He highlighted the underutilised agricultural land across Central and Gulf provinces as a major frontier for national development. “Minister Isoaimo’s Kairuku electorate lies between Port Moresby and Gulf, at the heart of emerging LNG, mining, and agricultural corridors. He is well placed to drive the energy portfolio in this critical time,” the Prime Minister added. On the reshuffle, PM Marape explained that the changes were part of a broader performance review aimed at enhancing service delivery ahead of the 2025 Budget and beyond. “All departments and ministers are under review,” PM Marape said. “This is about ensuring the right people are in the right portfolios as we head into our 50th anniversary and beyond. We’re doing this for the country—not for our districts or friends.” Incoming Finance Minister Hon. Thomas Opa was praised for his integrity and capability. Mr Marape, himself a former Finance Minister, urged him to maintain strict financial discipline and ensure that public funds are managed transparently and effectively. In his first remarks as Energy Minister, Hon. Peter Isoaimo thanked the Prime Minister and the coalition for his elevation. “I did not see this coming,” Mr Isoaimo said. “But I am humbled by the trust placed in me. I thank the National Alliance Party and Governor Walter Schnaubelt for their confidence, and I pledge to serve the government and our people to the best of my ability.” Minister Isoaimo reiterated his commitment to the Marape-Rosso Government and the national development agenda, expressing readiness to support the country’s energy ambitions. “God bless Papua New Guinea,” he said. “This is a proud moment for me and the people of Kairuku.”

Prime Minister Hon. James Marape has commended the National Agricultural Research Institute (NARI) for unveiling plans to establish a state-of- the-art Information and Data Centre at its Bubia headquarters in Morobe Province. This initiative aligns with the government’s commitment to modernise Papua New Guinea’s agriculture sector through innovation, data-driven decision-making, and inclusive development. Announced during the 14th NARI Agricultural Innovations Show on 28 May 2025, where Prime Minister Marape delivered the opening address, the proposed two-storey facility will serve as a national hub for agricultural knowledge, data management, and public access to research materials. It aims to support farmers, researchers, policymakers, and development partners by providing timely and relevant information to enhance productivity and resilience in the agriculture sector. Prime Minister Marape stated, “As we celebrate 50 years of independence, initiatives like NARI’s Information and Data Centre exemplify our nation’s progress towards a smarter, more innovative future. This facility will empower our farmers with the knowledge and tools necessary to transition from subsistence to commercial agriculture, fostering economic growth and food security.” The Morobe Provincial Government has pledged K2 million in seed funding for the project, with an additional K4 million requested to support full implementation. The centre will feature modern amenities, including accessibility features for persons with disabilities, and will house archives, a library, meeting rooms, and offices dedicated to publications and visual resources. NARI Director-General Dr Nelson Simbiken emphasised the centre’s role in transforming PNG’s agriculture sector, stating, “This is more than just a building; it’s a commitment to evidence-based planning and smart farming. By centralising agricultural information and data, we aim to support better decision-making and drive innovation across the sector.” Prime Minister Marape reaffirmed the government’s support for such transformative projects, highlighting their importance in achieving the nation’s Vision 2050 goals. “Investing in agricultural research and infrastructure is crucial for our country’s sustainable development. We will continue to support initiatives that enhance our farmers’ capabilities and contribute to our national prosperity,” he said.

Resources & Investment Finance Limited (RIFL) has gained a strong reputation for its fast and flexible finance solutions. RIFL’s new General Manager - Business Development, Russell Evans, has set his eyes on smarter, sustainable finance to empower businesses in Papua New Guinea (PNG). In an exclusive interview with PNG Business News, Evans shared his vision for driving inclusive financial growth, digital innovation, and ethical lending to unlock economic potential across the country. This core strength is set to evolve further with technological investment and a deeper client-centric approach as customer-centric service -- and is at the heart of RIFL’s promise. RIFL services range from providing equipment finance for commercial and consumer purposes, including motor vehicles, trucks and earth moving machinery, mining and construction equipment. It also specializes in funding technology assets like information technology and office equipment, software, and telecommunications. The focus is on four core financial aspects: Asset Finance Insurance Funding Financial Leasing Personal Loans “RIFL are looking into web-based solutions for even quicker turnarounds,” Evans explained.  “We are taking more time to understand and work with our clients to build long-term relationships and being the preferred supplier of choice. In turn, this will help us provide quick, bespoke financial solutions.  But as our greatest asset is our staff, we continue to invest in continual training and a continuous improvement model.” Client Relationship a Priority He emphasised the importance of face-to-face engagement with a clear commitment to client relationships, which involves taking the time to understand clients’ needs and work with them to create tailored solutions. “While the lending process is regulated and often document-heavy, once we have the required paperwork, things move quickly and we pride ourselves on becoming a true extension of our clients' businesses,” Evans explained.  “Email communication cannot equal the value of meeting clients in person. We pride ourselves on becoming a true extension of our clients' businesses.” As the financial services industry undergoes rapid digital transformation, Evans is careful not to lose the human element. “My focus is on striking the right balance between efficient digital solutions and the personal touch, because sometimes, you just need to speak to someone.” Evans assumed the General Manager role at a time when financial services are being transformed by technology as he shares the digital strategies he sees as priorities for RIFL. “Peter Boutcher has done an incredible job leading RIFL to this point, and I’m excited to build on that foundation by leveraging my skills to enhance our digital customer experience. My focus is on striking the right balance between efficient digital solutions and the personal touch because sometimes, you just need to speak to someone. At RIFL, we guarantee that when you call, our team will answer with enthusiasm and be ready to help.”   Evans, a finance executive and CPA, joined RIFL with a conviction that finance should be a tool for empowerment. “Through my career in finance, I have always had a passion for making companies perform better, and RIFL offers solutions to solve cashflow limitations through finance.  “RIFL allows companies to take advantage of opportunities with our quick turnaround and truly making a positive difference in helping companies through our financial solutions.” As RIFL expands in asset finance, a close watch is set on digital transformation, diverse industries, and the rise of green financing. Evans said PNG is the land of opportunity, therefore RIFL is investing in automation and analytics to enhance decision-making and customer experience. “By being open to all industries we aim to stay agile and competitive. Our goal is to offer smarter, faster, and more sustainable finance solutions for both commercial and consumer markets,” he added. Supporting SMEs Access to credit remains a barrier for many small and medium enterprises (SMEs) in PNG, a challenge that Evans says RIFL is uniquely positioned to tackle. “That is exactly where RIFL can make a real difference. We understand that every business has a story, and sometimes it’s not about ticking every box, but about taking the time to listen,” he said. “Our role is to provide practical, well-structured solutions that help SMEs grow, without making the process feel burdensome. When we back a small business, we back it with intent and we work hard to be the finance partner that genuinely understands local needs.” Evans is passionate about nurturing economic inclusivity, commenting on the importance of RIFL contributing to the nation’s development. “I’m not here to make a few people rich; I want to help bring up the middle class and help PNG turn from a developing country to a thriving one,” he added. Balancing Lending and Investment Services RIFL’s dual offering of lending and investment solutions allows for holistic financial growth, which is a balance Evans believes more PNG businesses can tap into. “As a CPA, one of my biggest frustrations is seeing businesses leave cash sitting in the bank earning just 1%, when that money could be working harder in a RIFL term deposit earning up to 6%.” “Our focus is on helping clients realise that cash is an asset just like a truck or excavator, it should be generating returns. Balancing lending and investment is about education and opportunity, and we’re here to show our clients how they can grow both sides of their balance sheet with us.” “Cash is an asset, it should be generating returns.” Evans says the key lies in education and opportunity, and RIFL is here to show how clients can grow both sides of their balance sheet. He also spoke of the ethical lending and leadership in uncertain times. As financial institutions face greater scrutiny, Evans underscores RIFL’s commitment to ethical practices. He said: “Growth means nothing if it comes at the cost of integrity. Ethical lending is not just a buzzword, is about making sure finance actually helps and not hinders, a client’s progress.” “We are not here to push loans, we are here to build long-term relationships based on trust, transparency, and doing what’s right for the customer.” When it comes to leadership, as the General Manger, Evans leans on three guiding principles: clarity, consistency, and empathy.  “In a sector like finance, where uncertainty is part of the game you need to make decisions quickly, but always with purpose,” he said. “I believe in being upfront with my team, backing them when it counts, and staying calm under pressure. If we can lead with integrity and keep the bigger picture in mind, even tough calls become easier to make.” Evans’ connection to PNG goes beyond boardrooms. Recalling his time in the cocoa industry, he shared a poignant reflection: “From my previous role at Elliven in Cocoa, some of the most memorable and meaningful conversations I had were not in boardrooms or over email. They were in plantations scattered around your beautiful country, sitting under the shade of a Gliricidia tree, talking cocoa with local farmers. Those moments reminded me that life isn’t just about making money or chasing success.” “One of the truly special things about the people of PNG is their ability to find happiness and joy, even with what many expatriates might see as very little. It has taught me that wealth means nothing unless it’s earned honestly, with good intentions, and in a way that uplifts those around you.” For Evans, RIFL is not just a finance company, it’s a platform to build a more equitable and vibrant economy. “RIFL gives me the opportunity to fulfil my motivation to help grow the middle class and create a thriving PNG,” he said. More information on RIFL can be accessed on the RIFL LinkedIn Page and the RIFL Website.

Barakau, a picturesque Motuan village just 25 minutes outside Port Moresby in Papua New Guinea, is making waves in environmental conservation through the Eda Davara Marine Sanctuary Project. Named after the phrase “Our Sea” in the local language, the initiative is driven by passionate youth advocating for traditional indigenous practices and sustainable marine conservation. Founded by Dikatauna Kwa and her university colleagues, Eda Davara began with mangrove research and restoration before expanding into broader ecological and community engagement efforts. With visits to Barakau Primary School, the village ward councilor and a strong network in several universities in Port Moresby, the sanctuary project grew from strength to strength throughout the years. Over the years, it has flourished into a multi-faceted program with six specialized teams: Administration, Marketing, Science, Policy and Governance, Tourism, and Community Projects. A key achievement of the initiative is the EcoScholars Internship Program, which currently involves 13 students from universities across PNG -- University of Papua New Guinea, Pacific Adventists University, and the Institute of Business Studies University. These young leaders bring expertise from fields such as economics, law, science, and tourism, ensuring a holistic approach to conservation. Beyond its local impact, the Eda Davara Marine Sanctuary Project has established international partnerships that enable Papua New Guinea to participate in global environmental dialogues. Its recent selection as a recipient of the Young Pacific Leaders (YPL) Small Grants highlights its growing influence in the region. Eco-tourism plays a crucial role in supporting the project and the local community. Monthly Kohua Beach Tours offer visitors guided hikes, mangrove cruises, and opportunities to engage with conservation activities. Locals serve as tour guides and vendors, selling arts, crafts, and food, making eco-tourism a sustainable source of income. To further its mission, the project organizes an annual Gala Night to raise funds for conservation efforts, including building a Research Wet Laboratory in Kohua. Last year’s event was a success, and organizers are looking forward to another impactful year. For those interested in supporting the Eda Davara Marine Sanctuary Project, contact them via email at edadavara@gmail.com or call 675 7835 4067. With a busy six months ahead, the team continues its dedication to marine conservation and community empowerment, solidifying Barakau as a beacon of sustainable development in Papua New Guinea.

 Michael McWalter picks up his prior discussions of petroleum sector reform (Issue No. 3 2024) and describes in more detail exactly what a Production Sharing Contract, or what a PSC, is all about. In my commentary of PNG Business News, Issue 2, 2023 entitled: Petroleum Sector Reform for Papua New Guinea, I wrote about the need to apply better governance to the sector to achieve optimal outcomes for the State. In particular, I spoke of the need for the petroleum revenues arising from petroleum resource development to be deployed wisely for the benefit of the people of PNG on capital formation activities like: education, health, social welfare, infrastructure, etc. – all of which should promote the National economy to grow, and thus improve livelihoods.  This translation of the value of resources with appropriate management into sustainable development is often called the value chain, and each aspect of the chain needs most serious and competent management.   There is little point in mobilising one’s natural resources to make an income for the State, if that money is not put to good purpose, but rather wasted one way or another by folly or malady.  Those resources may only be produced once, and not again; they are finite and have value now at such time as that kind of resource is sought after in global markets. We must remember that there may come a day when oil and gas are no longer consumed with such avid demand as today. This might eventuate as more investments are poured into the development of renewables sources of energy and advancements are made with cleaner nuclear fission and sustainable thermonuclear fusion. Oil and gas might become a quixotic, antiquated and outmoded source of energy, and thus attract considerably less value.  So, if a government is going to foster investment in petroleum exploration and development, it needs to embrace such grave and important responsibility to ensure that the Nation’s petroleum business is conducted most professionally and with total accountability. Government must ensure that the resultant revenues from subsequent production are appropriate, reasonable and respected as being derived from the overall patrimony of the people of the Nation.  This requires investment by the State in professional excellence to manage, moderate, administrate and regulate the sector and its operations firmly and fairly.  The oft cited National Petroleum Authority (NPA), which was first defined in the Government’s 1976 White Paper on Petroleum Policy and Legislation by two of our greatest leaders, Sir Michael Somare and Sir Julius Chan, has been repeatedly conceived, only to be still born. Into that vacuum, Kumul Petroleum Holdings Ltd, PNG’s de facto National Oil Company (NOC) has steadily and bravely taken the lead and embraced National development in the oil and gas sector, and all that it entails. Meantime, the Department of Petroleum and Energy has valiantly tried to keep up with ever increasing core and essential petroleum sector functions, like licensing, operational approvals, and data collection, whilst otherwise becoming absorbed, and perhaps overwhelmed, in the peripheral though, absolutely essential tasks of dealing with project area landowners, their benefit claims and their many other concerns and worries. Plans for a NPA have been formulated in great detail several times over in the last few decades, only to be forsaken, lost, sidestepped, and derailed time and time again. The whole notion of the NPA was to bring together a cadre of PNG excellence to lead the petroleum sector as the guardian of PNG’s petroleum resources. The members of that cadre were to have been well-paid for their experience and important responsibility, and as an Authority of the Government, the NPA might have been able to retain and attract some of PNG’s finest graduates in such exciting and challenging work.   I also discussed the vital need for the commerciality of petroleum developments without which investment by the industry in field development would be withheld.  I discussed how the 2020 amendments to the Oil and Gas Act imposed a test on a proposed petroleum development project that the applicant’s proposals should reflect a minimum expected return to the State over the life of any recovery of petroleum. However, that minimum expected return to the State is not specified in law and is only examined and determined by the Petroleum Advisory Board (PAB), and then considered by the Minister at the time of application for a development licence.  This leaves investors with great uncertainty and unnecessary risk throughout the period of exploration, appraisal, development planning and the application phase of petroleum resource development.  There is thus now no absolute certainty of development if a discovery of commercial extent is made. Either the PAB or the Minister may set a threshold minimum expected return to the State during the consideration of an application for development. This is at a very late stage in the cycle of petroleum resource development investment and comes just before the investing companies have to elect to develop their discovered petroleum accumulation, or not. If a field development is marginally economic, the setting of such a minimum expected return to the State might in some circumstances make corporate consideration of development uncommercial, and as a consequence the field might be left undeveloped. In any normal distribution of petroleum accumulations, there are a few large fields, a fair number of medium size fields and many smaller fields. It would not be wise to disadvantage the development of smaller and often smaller marginally economic fields, which tend to be developed after the larger fields have been found and produced, and which can readily sustain a domestic petroleum industry populated by smaller, and likely, local companies with smaller investments.  Oddly, as I said in 2023, the potential introduction of Production Sharing Contracts (PSCs) would obviate such a risky situation because the terms of development are normally locked into a PSC when originally negotiated and agreed between the State and the investing companies as contractors to the State at the outset. Being a contract, any capricious demand by the State for unexpected returns on petroleum development pursuant to a PSC would end up with the contract being the substance of legal proceedings.  I now want to pick up on my themes of a year ago and discuss optimal and necessary arrangements for petroleum development in the light of some creeping petroleum policy change in recent years, and a keen desire by the Government to change the PNG petroleum regime and to adopt the use of PSCs. I particularly wish to demystify PSCs. Figure 2: Much has been written on PSCs. Celebrated analyst, Daniel Johnston, is prominent with his simplified mapping of fiscal and commercial regimes. King & Spalding, an American multinational corporate law firm, has also written a most comprehensive book on the topic, ex libris McWalter.   WHAT ARE PRODUCTION SHARING CONTRACTS?   The notion of a Government sharing the production of oil and gas arising from the development of a successful petroleum exploration campaign by companies as part of a commercial venture was first developed and employed in Bolivia in the 1950s. A Production Sharing Contract (PSC) is an arrangement between a host Government and an international oil and gas company (IOC) for the division and allocation of the oil and gas produced between those two parties under a contract which provides for the exploration for and the development and production of petroleum resources. The allocation of a share of the production to the IOC serves to recompense the IOC for its investment and to provide a reasonable reward for its success. The Government, as owner of the resources, also provides a mechanism called a cost recovery allowance to the contractor for its work, but keeps the rest of the petroleum produced. The PSC was introduced in Indonesia in 1966, and PSCs of this kind or variants of the same are used extensively to agree the arrangements for oil and gas exploration, development, and production with oil and gas companies. PSCs of one kind or another are used in over 40 countries, throughout the world.   The PSC is not the only manner by which a government may grant oil and gas exploration, development and production rights to commercial investors and gain a share in the value of successful petroleum production.  Prior to the development of the PSC, exploration and production of oil and gas was typically governed by way of a licence or a concession agreement, and such regimes still remain in effect in many different places around the world. In many developing nations, the PSC is now the most common means by which a government allows corporate investment in the oil and gas industry. It provides a company or consortium of companies the right to explore and produce oil and gas.  In many jurisdictions, there are political or nationalistic reasons for the adoption of PSCs as they perceptibly provide the Government with greater and more direct control over its resources and the ability to exert National sovereignty over the industry more readily.   After gaining independence in 1945, Indonesian’s concessions regime came under attack by certain nationalist groups leading to the nationalisation of Royal Dutch Shell’s assets. Indonesian Law 44/60 abolished the old concessionary system and specified that: “Oil and gas mining shall only be carried out by the State and implemented by State enterprises,” and further that, “the Minister may appoint other parties as contractors of the State enterprises.” Alas, a decline in foreign investment in Indonesia’s oil and gas sector inevitably ensued. To mitigate this decline, the government eventually negotiated and agreed in 1962 with the Pan American Indonesia Oil Corporation, a subsidiary of Standard Oil of Indiana (later to become Amoco), a new contract based on legislation that was much more favourable to the Government.  The other large foreign petroleum investors, Caltex (a venture of Chevron and Texaco), Shell, and Stanvac (a venture of Socony [Standard Oil of New York] and Vacuum Oil and Standard Oil of New Jersey, later to become Exxon) followed by signing Contracts of Work in September 1963. These early PSCs were widely considered to be less controversial than the previous concessions system, as they enabled the government to maintain formal ownership of the resources until sold, while permitting the IOCs to exploit them for and on behalf of the Government. These contracts provided for the recovery of the costs of the contractor up to an agreed percentage of overall production plus an agreed, but often scaled, share of the produced oil and gas as a reward for its investment. Although often cited as the example of the use of PSCs, in 2017, in a somewhat odd twist, the Indonesian Government established a new form of PSC called the Gross Split PSC. This completely abolished cost recovery systems pioneered in the classic PSCs of the 1960s. Instead, this new arrangement simply relies on an agreed split of the actual production between the Government and the IOCs, typically 43% to the contractor for oil and 48% to the contractor for gas production, with the balance of production going to the Government. Due to a loss of faith in Pertamina (Indonesia’s national oil company) in the late 1990s (an audit had shown that Pertamina had allegedly lost about US$6.1 billion from inefficiency and corruption in 1997 and 1998) the Indonesian Government took steps to rein in control of the industry at the Ministry level, but they had no financial ability to manage the proceeds of the sale of oil and gas which were remitted to the revenue account of the National government.  Without any retained funds, this then entailed the Ministry having to seek parliamentary appropriations to pay the cost recovery allowances to the IOCs, but then the Indonesian Parliament questioned these payments. This brings home the need to think through the implications of changes in regime and the management of any given regime, especially if one is contemplating changing from a licence or concessionary regime to a contractor-based one. What is a PSC? In a PSC, a government makes a contract with an IOC to provide the necessary and requisite financial, technical, management, environmental, social, planning and logistical skills in order to explore for, and hopefully, if successful in finding oil and gas accumulations, to produce the oil and gas. The host State (that throughout most of the world, normally owns the subterranean resources) will usually be represented by the Government or a Government Petroleum Ministry, Department, Authority or quite often some other type of agency of the State, such as its National Oil Company (NOC), which will take delivery of the State’s share of production and generally manage the commercial aspects of the PSC. The IOC is typically granted an exclusive time-limited right to explore for petroleum accumulations, appraise any discovery, plan and execute development and produce oil and gas within a defined area, generally known as the contract area. Under the PSC arrangement, the IOC bears the entire risk of the project, both technical and financial. If a commercial discovery is declared, the IOC becomes entitled to a portion of any subsequent petroleum produced as an effective payment for its efforts, in addition to recouping all its costs from the production. Conversely, if no discoveries are made, the IOC receives nothing. The Government retains ownership of all the oil and gas produced, save for what oil and gas is allocated to the IOC as cost recovery petroleum, or is the subject of sharing between the IOC and the NOC as profit petroleum. This causes the Government to be involved in selling its share of the produced oil and gas.  In some jurisdictions, the IOC is allowed to keep the physical oil for itself, and the IOC makes just cash payments only to the NOC, based on the sale of the NOC’s petroleum entitlements; in others, physical oil and gas allocations are used to reward the IOC. The extent to which the NOC is involved with the exploration, development and production process varies from country to country with some NOCs seeking to take a significant lead in the business other than a just managing the PSC, whilst other NOCs take only a small participating interest in the commercial venture, so as to be within the operating consortium and to learn from it. There are commonly four key financial aspects to a PSC: royalty, cost recovery petroleum, and profit petroleum, though many other relevant matters are agreed in the PSC. Figure 3: Contents of a PSC: A sample from Equatorial Guinea, after the Republic of Equatorial Guinea, 2006    Royalty Most often and foremost, the IOC is typically expected to pay a prescribed or agreed royalty as a percentage of the gross value of oil and gas production to the State as valued at the point of export from the contract area. The royalty is often, at the State’s option, taken as a physical share of production, or alternatively by way of a payment by the IOC equivalent to the sale price of the State’s royalty share of production. Sometimes, the percentage rate of royalty may be the subject of bids for a contract area by competing oil and gas companies when bidding for the same or similar areas.  Royalty is a payment made in kind or related to produced volumes and price without regard to the profitability of the business. Therefore, in times of low petroleum commodity prices it has the effect of digging deep into profitability.  However, for a host Government, royalty is an assured payment regardless of profitability, but proportionate to the value of the produced oil and gas. Cost Recovery Petroleum Following payment of any royalty, the IOC is normally entitled to a pre-determined maximum percentage of gross production from which it may recover all its genuine costs, with any costs not recovered being carried forward to the next accounting year. Such production is known as cost oil and cost gas, and again may be taken in cash or kind. Obviously, the IOC attempts to maximise cost recovery early in the cycle of production up to the agreed maximum percentage limit, so as to recoup its expenses soonest, and likewise the Government will scrutinise the costs submitted to it for recovery as to their genuine eligibility. That scrutiny involves approval of all procurements and sub-contracts of the IOC, and represents an enormous accounting burden for the Government.   Profit Oil The oil and gas remaining after the payment of royalty to the Government and the cost recovery allowance to the IOC by the host Government is known as profit oil and profit gas, and it is generally divided between the IOC and the Government in accordance with the production sharing provisions agreed and defined in the PSC. Quite often the Government’s share of profit oil and profit gas increases as the production rates increase. Income tax Finally, the IOC is quite often required to pay income tax on its share of net benefits which should strictly amount only to profit oil, as cost oil and cost gas represent only a recoupment and recovery of costs. However, the application of income tax varies from jurisdiction to jurisdiction and in some cases the IOC’s notional income tax due is often paid by the NOC, or the State on behalf of the IOC, such that there is no financial impact on the IOC, there being just a journal entry between different parts of the Government. An income tax superposed on the PSC regime without appropriate tax deductions can rapidly make a fair PSC regime become a very hostile one.  In the calculation of the net take to the State under a PSC, one has to include the results of any Corporate Income Tax and all and any other taxes, levies or imposts that affect the outcome of the overall PSC.  In some PSCs, there is simply no tax, and the royalty, cost oil and gas, and production share are deemed to be final fiscal devices. Figure 4: It must be noted that the production or profit oil split is not the same as the overall net take to each party, after Daniel Johnston in International Petroleum Fiscal Regimes and Production Sharing Contracts      Government Involvement The objectives of the parties when negotiating a PSC and its terms will generally be diametrically opposed.  An IOC will strive to negotiate for itself as much independence and control as possible over operations, and it will want any State intervention in the running of the project to be kept to a minimum. Naturally, it will be keen to keep its costs low, by negotiating the highest cost recovery allowance and the largest production share it can, and it will seek the full recovery of all its costs. The Government will wish to have an overall say in the development of its resources in an orderly and systematic manner that creates synergies for future development. The Government will also wish to make as much money as possible, reduce cost recovery allowances, and have access to an IOC’s resources and relevant expertise, without spending much time and money. The Government may also have economic priorities for domestic petroleum supply to its economy to mitigate energy import requirements and obviate foreign exchange requirements. Throughout the contract from exploration to development to production, the Government will want to ensure that the IOC is undertaking a technically appropriate exploration work programme with appropriate levels of investment and that the exclusive right to access land or the offshore area is being used efficiently. In addition, the Government will typically be concerned to secure as many rights and benefits for the people and local businesses, including affected local communities, as possible.  This is generally accomplished by the optimisation of jobs and training for local workers through requirements to use local goods, services and contractor and subcontractor services as far is feasible and practical – this is what is typically called local content. Figure 5: The main elements of a PSC, after Hassan Harraz, Tanta University, Egypt, 20106   Why the PSC Model? The obvious advantage of the PSC model for a government is the minimal risk on its part throughout the value chain of the enterprise. It is thus able to reap the benefits of its natural resources without having to spend its own time and money even for development. This is not to say that the State does not pay. It inevitably pays for its share of all and any costs of exploration, development and production through the cost recovery process payable to the Contractor. In most cases, the Government will not have the technology needed to explore for and produce oil and gas, and so contracting the help of an IOC that has the appropriate skills, capacities and technology is usually necessary in order for the Government to exploit its natural resources optimally, especially in the offshore areas. The same is, however, also true for licence and concessionary arrangements where even if the host Government has an equity option to take up a participating interest in a petroleum development project it will still pay for at least its pro rata percentage share of sunk and past exploration, appraisal and development planning costs up to the point of the establishment of facilities for development and the commencement of the recovery of the petroleum. As and when exploration proves to be successful, the Government can secure long-term supplies and/or exports of oil and gas in a PSC regime, which it can trade as it sees fit. The long-term nature of a PSC enables the Government to predict future levels of oil and gas for domestic use, export and to make provisions in the national budget accordingly. Alternatively, the PSC model can be most lucrative for the State, if it takes the option of taking its share of production as a cash payment, rather than in kind. It is also very common for PSCs to contain provisions that as the production rate increases, the proportion of the production attributable to the Government may also increase, meaning that a significant and increasing proportion of the value of profit oil is paid to the host Government and its representative entity defined in the PSC. In all cases, at the initial stage of petroleum resource development, the IOC bears substantially all the financial risk. If, and only if, exploration proves successful and the discovered oil and/or gas accumulations are developed and produced, the IOC may be able to recover its costs through cost oil and/or cost gas and an agreed share in the profits of the remaining quantity of oil and gas. As to whether the PSC model is more favourable to the State than to IOCs in contrast to the licence or concessionary system, ultimately depends on the rates used for the various fiscal and commercial parameters in each system. In a concessionary regime, costs are only recovered slowly as depreciation allowances against assessable income. The speed of the recovery of costs depends entirely on the terms set by law and those allowed to be negotiated in the framework of a PSC. It may or may not be possible for an IOC to negotiate the terms of a PSC with more, or less financially and commercially attractive terms for petroleum development than a licence or concession arrangement might otherwise have offered under a prior regime. It is all about the terms of the selected regime, whichever is applied. Figure 6: Some terms of the petroleum regime may still be contained in legislation whilst others will be negotiable depending on the particular regime, after Daniel Johnston in International Petroleum Fiscal Regime and Production Sharing Contracts.     One possible negative aspect of the PSC model is that it is an agreed and contractual arrangement, and not the product of binding and enforceable legislation. Thus, any breach of the PSC by either party will constitute a breach of contract for which civil relief may be obtained.  Pursuant to the PSC model, the State always remains the owner of the resources, with the contract establishing the applicable compensation arrangements and level of NOC or Government involvement in the asset. The negotiation of a PSC is up front before any investment is made in exploration by the IOC, so the terms are locked in.  PSCs tend to afford IOCs less freedom to run an asset, with Contractors being subject to restrictions and required approvals in addition to those contained in the applicable legislation and regulation. Commonly Used Alternatives to the PSC There are several substantial alternatives to the PSC model. The differences in these alternatives are mainly in relation to the level of control granted to the IOC, the level of involvement of the NOC, and the compensatory arrangements for the investment made. Licences Generally, under a licence arrangement, there is normally little scope for an IOC to negotiate specific fiscal or commercial terms in relation to its exploration and production rights. Licensing regimes and their terms and conditions are typically standardised and embedded in legislation, such that the terms of each licence are near identical. This regime is most common in developed countries, e.g. UK, Norway, the Netherlands, and Australia. The terms of licences may change from time to time as the Government seeks to restrain or encourage sector investment.  The IOC is typically granted complete control over the contract area and complete ownership over any oil and gas that it successfully produces. Unlike PSCs, where ownership of the resources always remains with the State, in licence regimes ownership generally passes to the IOC at the wellhead, with the IOC’s profits from the sale of the oil and gas produced being the subject to general tax legislation, or specific petroleum taxation legislation. Like in PSCs, if the IOC fails to find commercially producible oil and gas within the limited terms and periods of their licence, they go home empty handed.  In some jurisdictions, the Government has an entitlement to join in at the development stage when the risks of finding oil or gas have been mitigated and it may either chose to pay its proportionate share of costs of exploration and development and participate alongside the IOCs, or be carried in some form or another. This can be a very profitable feature for the Government, but it essentially takes a slice of the venture away from the IOC venture at the proportionate sunk costs only, without any regard or compensation for the commercial value of any oil and gas discovered by the IOC. Concessions A concession arrangement is generally subject to a greater level of negotiation than a licence. The IOC is typically granted proprietary rights over the contract area and complete ownership over any oil and gas that it successfully produces, subject to the payment of a royalty and income tax, each of which may vary in rate depending on the level of production as negotiated and agreed. There may be specific taxes like the Additional Profits Tax (APT) which progressively applies further amounts of tax, the greater the rate of return of the production project. In some jurisdictions, licences have become more concession-like as the terms and conditions of the licences have increasingly become the subject of Agreements with the Government defining those agreed terms which are supplementary to or adjust the current and applicable legislation as sought by and agreed by both the Government and/or the IOCs. Service Contracts Under a service contract, the IOC provides its technical services to the State to explore and develop oil and gas resources, and therefore in so many ways, it is similar to a PSC. However, remuneration to the IOC is usually by way of a service fee or payments based on the value of oil produced in US$ per barrel for oil and other hydrocarbon liquids, or per million British Thermal Units (BTU) of energy for natural gas. The term of a service contract is often very short, leaving an IOC with considerable risk and no guarantee of a long production period Services contracts are common in Iran, Iraq and Kuwait and have also been used from time to time in Indonesia and the Philippines. The Overall Picture By and large, about half the world’s petroleum prospective Nations use licence/concessional systems and about half use PSC arrangements, though many of each of these are strictly hybrids involving features of one regime and the other. No particular petroleum regime is superior to any other and much depends on the degree to which the host Nation wishes to promote or reduce exploration investment according to the terms applied. Sometimes, the IOC will tolerate a slightly tougher regime, if they know that it will be stable and well-implemented in a professional and organised manner. Good subsurface prospectivity and a consequent high chance of finding accumulations of oil and gas can often be spoilt by self-imposed surface risks. Factors that may induce surface risk are Governments that: successively make petroleum regime changes, politically drive or make unqualified determination of fiscal and commercial terms without regard to the ultimate take to each party in the case of success, and the poor governance of the sector in general leading to untimely and late decision making. Indeed, a good regime whether it be a PSC-type or a licence/concessional one, will depend on the enforcement of its terms and conditions and the values agreed for those terms and conditions that determine economic outcomes.  The great difference between PSCs and other arrangements is that PSCs keep control over the produced oil and gas and its sale and disposal with the State, whereas licences and concessions leave such matters and the fate of the industry more to the will and imperatives of the corporates.  The intrinsic control of a contractor by the NOC under a PSC means the Government has to be better equipped, more efficient and more knowledgeable to operate such a regime than under a licence or concessionary regime. The State or its representative (usually its NOC) needs to make the PSC work in its favour as it is the manager of the entire enterprise and needs to lead the way. Any failure to step up to such challenges will result in a poorly planned development of the industry with delays, unrealised synergies leading to lost production, and overall loss of value from the resources. No matter what regime is applied to the development of petroleum resources, there is no doubt that resolute and appropriate petroleum policy formulation and firm and fair administration of the sector will pay dividends for any host Government willing to invest in such. The definition of a petroleum regime is not a new game; it has been done many times across the world by many Governments and there is very sound collective advice on the subject which is relatively inexpensive to access compared to the enormity of the task and the value of managing a Nation’s petroleum resources optimally. Figure 7: The IMF has some excellent specialists in its Fiscal Affairs Department who advise Governments on resource regimes and it has often commissioned books and studies on such matters as in the excellent handbook on Administering Fiscal Regimes for Resource Industries by Jack Calder, formerly of the Oil Taxation Office of the UK, ex libris McWalter.    

In today’s fast-paced digital world, technology is no longer optional—it’s essential. For organizations across Papua New Guinea and the Pacific, VirtualFlex Solutions Limited is at the forefront of making digital transformation both achievable and impactful. Founded in 2013, with operations in PNG established in 2020, VirtualFlex has rapidly become one of the region’s most trusted technology partners. With strong foundations in India, New Zealand, and Australia and a skilled local team in Papua New Guinea, VirtualFlex combines international expertise with deep local knowledge to deliver powerful, future-ready ICT solutions. Not Just an IT Company VirtualFlex Solutions Limited is more than just an IT company—it is a committed transformation partner, with a mission to empower governments, enterprises and institutions of all sizes by delivering advanced, tailored technology solutions that drive progress. With core expertise in ERP implementation, cloud computing, cybersecurity, data analytics, and digital transformation consulting, its team brings over 100 years of combined experience across key industries like healthcare, manufacturing, finance, and education. This experience allows VirtualFlex to build scalable solutions that evolve with the client organization’s needs. Driving Results That Matter Whether it’s implementing a full-scale ERP system, modernizing IT infrastructure, securing digital assets, or enabling intelligent decision-making through data, VirtualFlex supports every stage of the digital journey. Its end-to-end digital transformation services include: Enterprise Resource Planning (ERP) HRMS and Payroll Project and Asset Management Hospital and University Management Systems Data Analytics and AI/ML Solutions Website and Mobile App Development Electronic Document Management System (EDMS) E-Governance Solutions and much more. Built on a cloud-ready, modular, and secure architecture, its solutions support auto-scaling, multitenant environments, and seamless integration—allowing business to grow without ever needing to replace the system. Infrastructure: The Foundation for Transformation In addition to software and digital tools, VirtualFlex leads in IT Infrastructure Services, ensuring organizations have the solid foundation needed for secure, reliable, and scalable operations. Its infrastructure services include: End User Computing Datacentre Infrastructure Digital Security Solutions Data Protection & Disaster Recovery Network & SD-WAN Telephony & IP PABX Systems Audio/Video Solutions Power Solutions IT Specialization Training These services are designed to enhance uptime, reduce risk, and support mission-critical environments with future-ready solutions. Whether setting up a data center, securing a network, or training a team, VirtualFlex ensures the business is built for the future. What Sets It Apart Local Support with Global Reach: VirtualFlex deliver world-class solutions with the personal touch of a local partner—ensuring alignment with regional needs and priorities. Deep Experience and Industry-Specific Knowledge: With a seasoned team that understands public sector and enterprise needs, we bring practical insights and technical precision to every project. Scalable and Cost-Effective Delivery: Our solutions are built to scale, balancing high quality with affordability to help clients achieve long-term value and measurable return on investment (ROI). VirtualFlex Commitment VirtualFlex goes beyond providing IT services—it becomes long-term partners in transformation. Emphasizing transparency, collaboration, and ongoing support, its ensures that clients are empowered not just during the project, but long after deployment. “Together, we build smarter systems, stronger infrastructure, and a brighter digital future for Papua New Guinea and beyond,” the company said in a statement.

The Papua New Guinea Chamber of Resources & Energy (PNG CORE) proudly joined the 2025 Sir Anthony Siaguru Walk Against Corruption hosted by Transparency International PNG (TIPNG), fielding four teams in a strong show of support for integrity, transparency, and good governance. The theme for the 2025 Sir Anthony Siaguru Walk Against Corruption is “Integrity & Action Now.” PNG CORE marched in alignment with this theme, highlighting its commitment through the banner: “Integrity at the CORE: Strengthening PNG’s Resources for Generations,” which reinforces the Chamber’s dedication to ethical leadership and responsible resource development. The Walk Against Corruption is one of PNG’s most visible civic movements, bringing together citizens, civil society, and the private sector to stand united against corruption in all its forms. PNG CORE’s participation reflects the resource sector’s shared responsibility in promoting accountability and safeguarding national wealth for future generations. PNG CORE was among 186 teams and over 2,000 participants who took part in the Walk Against Corruption on Sunday in Port Moresby. Chief Operating Officer Mrs. Pansy Taueni-Sialis echoed TIPNG Chair Peter Aitsi’s sentiments, stating that all participants have clearly demonstrated their stance against corruption. “Saying no to corruption starts with us and is reflected through our actions. We are thankful to our family members, including students, who joined the PNG CORE team. This demonstrates that we heard the call and have answered it—joining forces with like-minded organisations to stand up and say no to corruption in Papua New Guinea.” PNG CORE was also a proud sponsor of the Best Dressed School Team category, which was awarded to Kopkop Lower Secondary School. The winning team received a prize pack consisting of mixed merchandise from the Chamber. The Chamber commends TIPNG for its continued leadership in fostering a culture of accountability and civic engagement. PNG CORE remains committed to working with all stakeholders to uphold the values of integrity, transparency, and sustainable development in Papua New Guinea.