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Total Team to Visit PNG This Week
by PNG Business News - December 16, 2020
Total senior management team will be in the country this week to talk about the next steps in the Papua LNG Project.
According to Petroleum Minister Kerenga Kua, the meeting between the government and the developer of this project had been planned last week but there were delays on clearances and protocols. They are to arrive this week.
The announcements for this project will be made on December 17.
Meanwhile, Prime Minister James Marape said that other groups such as the Oil Search Ltd and the ExxonMobil PNG would be attending the discussion to further the project into the next segment.
Marape said that the meeting between the government and Total was for the latter to “to tell us the exact timeline of the Papua LNG project”.
“The economy should be happy and excited that Papua LNG hasn’t been scraped off as far as direct foreign investment is concerned,” he said.
To start the project next year, Kumul Petroleum Holdings Ltd also hopes to work with the developer of the Papua LNG Project. According to managing director Wapu Sonk, they would like to start work on the front-end engineering design work and the financing and marketing work of the liquefied natural gas.
PNG Business News - February 26, 2021
Oil Search Shows Strong Performance
Oil Search has brought a strong financial year in 2020 with a core net profit after tax of US$22.0million (K77m), also reported to a full-year production of 29.0 mmboe and the strongest safety performance since assuming operatorship in 2003.The financial results were significantly lower realised hydrocarbon prices in 2020 as compared to 2019, which resulted in a full-year net loss of US$320.7 million (K1.1bn). This includes a post-tax impairment charge of US$260.2 million (K908.7m) that had been recognised in the interim financial results.For managing director Dr Keiran Wulff, “Oil Search emerged from 2020 stronger and more resilient as a result of its response to the Covid-19 pandemic, demand collapse and oil price downturn. Despite the material challenges, Oil Search achieved three important records for the year. The first is the strongest safety performance in PNG since becoming the operator of the PNG oil fields in 2003, with a total recordable incident rate of 0.78 per million hours worked, and no Tier 1 process safety events.”According to Wulff, the second is the strongest production reliability from its operations in PNG since the 2018 earthquake and, the delivery of record annual production from the PNG LNG project.He said that the company brought down some decisive actions. “We also undertook a major strategic review to prioritise activities and capital spend for a low carbon future,” he said. “This resulted in streamlining our portfolio and incurring a non-recurring, post-tax impairment charge of US$260.2 million (K908.7m). We are a more focused, leaner and lower cost resilient business in a strong position to commercialise our world-class resource base and leverage the oil price. We will continue to focus on maximising operating cash flow and delivering material growth projects which will be underpinned by resilient operations and disciplined capital management. We have set up a dedicated transformation team to embed a high-performance culture across the business.”
PNG Business News - December 03, 2020
Kua Provides Updates on Oil & Gas Projects
Petroleum Minister Kerengua Kua said that there will be an announcement next month if the Papua LNG will be a stand-alone project towards the design phase next year. He added that the Total senior management and the delegation of the government will be meeting on Thursday, December 10. “If the decision is made, it will be positive for PNG because we will begin to see some early work going on,” Kua said. “There will be cash flow for the country and it could have an impact on the gross domestic product for us. It’s a positive thing to look forward to so we will wait for the decision on Dec 10 or 11. We will make the announcement on whether we will delink Papua and P’nyang and make them separate stand-alone projects.”Kua noted that this was the status of P’nyang and that there was still time to negotiate.“The fact that we delink the two projects, it will not disadvantage P’nyang because whether you link it or delink it, the construction phase of P’nyang is still four to five years away down the track,” he said. “We have all the lead time here to negotiate a good contract, no need to rush because we don’t need a gas agreement for P’nyang for another four to five years yet. The construction for Papua has to start and complete before P’nyang connects so we still have a lot of time.” Kua said the dialogue with Exxon showed opportunities for negotiations and that there could be good deals. “There is still some promise there so we will continue to work on that,” he said.Kua said that Pasca was the only small project with less volume of oil and gas. He said that the construction is estimated to cost around K6.9 billion (US$2 billion) on a scale of PNG LNG which is K65bil (US$19bil) and Papua LNG which is K34.5bil (US$10bil). “In PNG US$2bil (K6.9bil) is a lot of money and negotiation is at a very advanced stage,” he said. “We will announce a gas agreement as soon as we can. Our concentration on the negotiations has been compromised by the disturbance of politics but we are monitoring it.”Kua said that investors are not leaving, adding that the state has wanted to reform legislation.
PNG Business News - February 01, 2021
Oil Search Boosts Performance
Because of its focus on performance, capital and cost allocation, Oil Search has resulted in a firm production. Managing director Keiran Wulff said the developments of Oil Search had regained momentum with the passing of the government in Parliament the remaining amendments to Acts for Papua LNG fiscal stability.He said that assurance reviews for the Pikka Unit Development were already finished and that the project is ready for design and front-end engineering in early 2021. “Despite the material challenges of 2020, PNG LNG continued to outperform in the fourth quarter, ending the year with its highest ever annual production of 8.8 MT,” he said. “The North West Moran oil field was also brought back online during the quarter following a shut-in due to the 2018 earthquake.”Wulff said that the continuation of production was a collective effort by everyone and brought about by a gross contribution of around 2500 bopd.“At our investor briefing in November, we shared our renewed purpose and ambition and laid out our new strategy to focus on delivering full value and enhancing our appeal to stakeholders through building resilience to lower and uncertain commodity prices,” he said.“We expect that 2021 will continue to be another challenging year and the company is focused on maintaining the operational discipline that resulted in excellent results in 2020, despite the difficult conditions. Oil Search is increasingly well-positioned to manage through uncertainty and deliver our projects in 2021 and beyond.”
PNG Business News - July 22, 2021
Oil Search Considering Merging with Santos
Santos, an Australian oil firm, announced its plan to combine with Oil Search Limited. Santos proposed a non-binding indicative merger last month with the goal of making the two companies the regional energy champions. The proposed merged entity has a market capitalization of A$22 billion (K56 billion), putting it among the top 20 ASX-listed companies and the top 20 global oil and gas companies. This means, among other things, that the merger will have a diverse portfolio of high-quality, long-life assets spanning Australia and Papua New Guinea, a solid balance sheet with ample cash to support expansion choices, and an investment-grade credit rating. The merger plan, if approved, would be conducted through a Scheme of Arrangement in which Oil Search shareholders would receive 0.589 new Santos shares for each Oil Search share held, according to Santos in a market disclosure to the Australian Stock Exchange. Following the scheme's acceptance, Oil Search shareholders would control 37% of the combined company, while Santos shareholders would own 63%. Based on Santos' closing price on June 24, 2021, the ownership ratio suggested a transaction price of A$4.25 (10.92) per Oil Search share. This was a 12.3% premium to the Oil Search closing price of A$3.78 (K9.72) on June 24, 2021, and a 9.8% premium to the Mubadala block trade selling price of A$3865. (K9.92). Kevin Gallagher, managing director and chief executive officer of Santos, said the merger will bring more alignment to PNG, allowing for the development of important projects such as Papua LNG, as well as the creation of new employment and support for the local economy. Santos, according to Gallagher, has proposed a true merger in which ownership of the combined firm is based on proportionate contribution and value. “The strategic rationale for a merger is clear and offers superior value to Oil Search shareholders rather than continuing on a standalone basis. “Santos continues to believe that the Merger Proposal represents an extremely attractive opportunity to deliver compelling value accretion to both Santos and Oil Search shareholders.” Oil Search stated in its ASX market update that it is open to receiving and engaging with any proposal that is in the best interests of its shareholders. While the company's board of directors agrees with Santos that combining the two firms makes strategic sense, the conditions must be fair to the company's shareholders, which the terms proposed by Santos are not. Despite Santos shareholders holding 70% more shares than Oil Search shareholders, Oil Search maintains that the proposed conditions provide just a 6.8% premium based on Friday's closing share prices for Oil Search and Santos. According to the firm, no such proposal has been made at this time. Reference: Post-Courier (21 July 2021). "Oil Search Open To Merger with Santos".
PNG Business News - July 21, 2021
Study Says Sweet Potato Growers Have Received Significant Insights into Customers Buying Habits
In Papua New Guinea (PNG), sweet potato (kaukau) growers have received significant insight into customer buying habits, which is assisting them in identifying new market possibilities. The recent market analysis, which was supported by the Papua New Guinea-Australia Partnership and conducted by the Australian Centre for International Agricultural Research, revealed that an increasing number of consumers in Port Moresby prefer to buy fresh produce from supermarkets, citing convenience and safety as reasons. While this trend may result in fewer consumers at conventional farmer markets, PNG and Australian experts believe it may open up new marketplaces for rural people. “Farmers are looking for stable markets where they can receive more consistent prices for better-quality produce,” said Professor Philip Brown from Central Queensland University (CQU), who is leading the research project. “The research shows that consumer behaviour is likely to support an expansion in the supermarket sector in large urban centres and this is positive news for the farmers. This could allow commercial focused farmers to secure more stable market access.” The study of 353 customers was conducted as part of ACIAR-funded sweet potato research sponsored by CQU and the PNG National Agriculture Research Institute (NARI), which aims to improve sweet potato value chains by increasing the quality of harvested roots. Sweet potato quality and production are improving, resulting in increasing supplies to retailers eager to provide better fresh produce. “The project, with support from the Fresh Produce Development Agency and NARI, is helping farmers to build their business skills and connect with emerging supermarket opportunities,” said Professor Brown. Kirt Hainzer, a CQU researcher who collaborated on the survey alongside NARI researchers, said it was the first study to look at customer behaviour and see what role stores may play in the development of PNG's commercial sweet potato sector. “The research sought to better understand and compare how consumers buy staples from open markets and supermarkets and to explore the preferences for purchasing staple foods as supermarkets increase the availability of convenience staples like rice,” said Hainzer. “Although expanding formal sales represents a huge step forward in developing a commercial sweet potato industry, continued research on consumer preferences and the market for fresh produce will help better understand trends in staple food purchasing and what market opportunities exist for growers.” With over a hundred kinds of sweet potato in the nation, NARI economist Raywin Ovah said the study sought to find out which of these customers preferred. “Not all the varieties are preferred from a consumer point of view. There are only a few that consumers want to be based on the taste or health properties and that is what we want to also find out. Farmers can be provided with that information, so they produce those varieties that the market wants.” One of five initiatives under the Transformative Agriculture and Enterprise Development Program is a project to increase commercial sweet potato production and commercialization in the PNG highlands. The ACIAR program, which is funded by Australia in collaboration with the government of Papua New Guinea, aims to improve the livelihoods of rural men and women through private sector-led development, increased agricultural productivity and quality, and the development of individual and institutional capacity. Reference: Loop (20 July 2021). “Study looks into sweet potato industry”.
PNG Business News - July 21, 2021
Garry: MRA Evaluating K50 Billion Worth of Investments
According to managing director Jerry Garry, the Mineral Resources Authority is evaluating more than K50 billion in investments in the country. Wafi-Golpu, Frieda River, and Woodlark are among them. “We are also looking at the Central Lime and Cement,” he said. “If that project comes on-stream, it will be one of the first industrial mines ever built in the country.” Garry was speaking at a Port Moresby consultation session on the Mine and Works (Safety and Health) Bill 2021. PNG, he added, was home to some of the world's largest mines. “We have grown from strength to strength,” he said. “If you compare the Bank of PNG statistics, the mining sector alone, in terms of production, has exported over K17 billion in 2020 and 2019. “So it’s a huge industry that we are trying to regulate and manage.” Garry expressed gratitude to the industry for making safety a primary priority. “They have been taking health and safety at the workplaces very seriously,” he said. “We must not only consider (the workers) and the environment but also people living around the (areas) we operate in. “And if we are using any hazards, we must also take responsibility.” The newest mining methods in Wafi-Golpu, known as block cave mining, are one of the new things to expect, according to Garry. “New mining hazards will come with this new mining method,” he said. Reference: The National (20 July 2021). “Authority assessing investments worth K50bil”.