by PNG Business News - October 14, 2021

Photo credit: Richard Dellman - EMTV

Prime Minister Hon. James Marape has reassured Papua New Guinea of a better deal from the P’nyang Gas Project in Western than previous projects.

He gave this reassurance in Parliament (Tuesday Oct 12) when answering a series of questions from North Fly MP Hon.James Donald in relation to P’nyang, as well as execution of the Heads of Agreement (HOA) on P’nyang Gas Agreement along with an Equity Purchase HOA with ExxonMobil in the USA last month.

PM Marape said he, and Petroleum Minister Hon. Kerenga Kua, would give a detailed answer to all 13 questions posed by Donald later.

“The Heads of Agreement we signed in Houston was to set out a framework to guide us into a proper Gas Agreement with ExxonMobil as developer,” he explained.

PM Marape said when he became Prime Minister in May 2019, his first statement was that P’nyang would not be part of Papua LNG, as the previous O’Neill government had wanted.

He assured Donald that his people of North Fly, Western and PNG would get a better deal from P’nyang as the world moved towards cleaner energy.

“The State will get 63 per cent of total project economic benefits from P’nyang,” PM Marape said.

“PNG LNG sits at 49 per cent, Papua LNG sits at 51 per cent.

“I want to give a big thank to (Gulf) Governor Haiveta for leading the team as my special envoy.

“This (negotiation with ExxonMobil) was a National Government function, and as we move towards the Gas Agreement, there will be a time to call in the province and landowners.

“This will be a public exercise as we did with PNG LNG.”

PM Marape said his Government’s wanting to take back more for PNG included P’nyang, Porgera, forestry and other resources.

He thanked ExxonMobil for understanding the dynamics at play, including allowing for the Stae to acquire an additional 10 per cent equity.

PM Marape also noted the planned Oil Search-Santos merger, and said that in the event they offloaded part of their stake in P’nyang or PNG LNG, national interest – through Kumul Petroleum - would take precedence

The Gas Agreement HOA captures key fiscal, regulatory and licencing terms. The Equity HOA provides for the State to acquire at cost 10 per cent additional equity from ExxonMobil in the P’nyang Project.

The overall deal reflects a win-win for both sides. In addition to all the legal entitlements, the State’s take is at 63 per cent in this deal compared to 49 per cent in PNG LNG and and 51 per cent in Papua. This is made possible by increased production levy of 3 per cent and the State equity (including the commercial purchase) being 32.5 per cent compared to just 19.6 per cent in the PNG LNG and 22.5 per cent in Papua.

The deal makes P’nyang an investment grade bankable project, meeting the project partners’ investment thresholds and gives it the best chance of going into construction.


Article courtesy of Department of Prime Minister & National Executive Council

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Government Intends to Move on with P'nyang Gas Project

Photo credit: Santos The National Government is set to concluding all project discussions for the $US11 billion P'nyang gas project by the third quarter of 2021. This, according to Petroleum Minister Kerenga Kua, will provide project partners enough time to obtain Sales and Purchase Agreements (SPA) and achieve a Final Investment Decision (FID) by 2023, when the new LNG project opportunity window to absorb a large amount of LNG from within the area is still available. According to Kua, the project's development may serve as a catalyst for the development of marginal and stranded gas resources and prospects in the Western Papua Basin, which is located in the Western and Gulf provinces. He claimed that the P'nyang deposit, when coupled with the remainder of the stranded gas in the Western Papuan Basin, could provide up to 16 TCF of gas and 200 million barrels of condensate. “Since we have a good traction on Papua LNG project with Total E&P fully committing to it, the Government will now re-appoint a new State Negotiating Team to start reengaging with ExxonMobil,” Kua said. According to him, the initial intention is to build a third LNG train alongside the two Papua LNG trains, each having a capacity and specification of 2.7 MTA of LNG production. “However, the P’nyang gas development will have a huge impact on the monetization of other smaller stranded gas fields in the Western and Gulf provinces and can be aggregated as a stand-alone, used as a backfill for the PNG LNG project together with Juha and Muruk in the Northwest fold-belt as a utilised project, or deliver alongside Papua LNG as initially planned with reference to the set re-negotiation closing date,” Kua said. “The benefits of spreading the construction period for both Papua and P’nyang projects over an 8 years’ period shall be massive for the country.” According to the Field Development Plan and the Open Book Economic Model provided by ExxonMobil, the spread will be over a decade of continuous intense industrial activity before to and after construction, with total Capital Expenditure Investment for P'nyang alone estimated at $US11 billion. “P’nyang Gas Agreement is one of my KPIs as the responsible Minister, and once the new SNT and ExxonMobil agrees on the key fiscal and non-fiscal term sheets, then the Petroleum Advisory Board will be able to convene and make the final recommendation to the Minister off Petroleum either to grant or refuse the application for the Grant of Petroleum Development Licence,” Kua said.   Reference: Post-Courier (21 May 2021). “Government To Advance P’Nyang Gas Project.”

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PNG Business News - August 26, 2021

Kua: P’nyang Ready for Negotiations

Exxonmobil PNG and the government have joined forces to ensure that the P'nyang gas project in Western Province is ready for negotiations in the coming weeks. The project's letter of intent was signed, paving the way for it to get off the ground. The P'nyang project has been on the table since 2019 when the State began looking into the possibility of signing a gas deal with ExxonMobil and its joint venture partners as project developers. According to Minister of Petroleum Kerenga Kua, these negotiations were concluded in January of last year, allowing both the State and ExxonMobil to take a breather and rethink their respective strategies. “We are grateful that Exxon is now prepared to invite us to recommence our discussions one more time. “This time we intent on making sure that we cross the line bring all good faith and sincerity to the negotiations to enable us to reach some terms and conditions that are satisfactory to both sides so that the project can happen for all our mutual benefit,” Minister Kua said. He explained that negotiating a project agreement is difficult since developers have their own internal standards and the state has its own expectations. “I can only be hopeful and encourage Exxon to attempt to understand where we are coming from to help us to realise some of the revenue returns back to the country. “This process will start very shortly. We are hoping that around 9th or 10th of September the parties can convene in one room and try to stress out terms and conditions to potentially develop this project,” he said. Peter Larden, managing director of ExxonMobil PNG, praised the Papua New Guinea government for taking this critical step ahead in the development of the P'nyang project. He stated that the initiative will benefit all stakeholders directly and will encourage continuing investment and growth in the nation, as well as increasing capacity and ensuring the social and economic well-being of Papua New Guineans. “The intent to develop the P’nyang field helps demonstrates the encouraging growth opportunities for our operations here in Papua New Guinea and together with our joint venture partners, we look forward to working closely with the government and the landowners to progress the P’nyang field development proposal and secure the license as needed to develop this resource,” Larden said. “I thank the PNG Government for its support and I look forward to progressing our discussions.”   Reference: Yafoi, Melisha. Post-Courier (23 August 2021). “Kua: P’nyang On The Table For More Talks”.

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PNG Business News - September 09, 2021

‘Re-engagement on P’nyang, very positive for PNG’ - Smaré

President of the Papua New Guinea Chamber of Mines and Petroleum, Anthony Smaré, has applauded the Marape-Basil government, Petroleum Minister Kerenga Kua, ExxonMobil PNG, and their joint venture partners for agreeing to reengage in negotiations on the P’nyang project in Western Province. Mr. Smaré said “In light of the extremely challenging economic conditions in PNG, the P’nyang and Papua LNG projects, are projects that are desperately needed to be kick-started to kick-start the country’s stagnant economy creating jobs, bringing in foreign exchange and providing opportunities for PNG businesses, particularly SMEs in the impacted areas”. “I congratulate the Prime Minister, Minister Kua, the SNT and Exxon Mobil and its partners for restarting these negotiations, and strongly encourage them to secure a win-win outcome that sees the progress of the P’nyang project in the near term, and in turn helping PNG and our people.” In making the announcement of re-engaging in negotiations on P’nyang, on August 20###sup/sup###, Petroleum Minister Kerenga Kua highlighted the economic importance of these two projects alone. “The benefits of phasing the construction of both Papua and P’nyang projects over an eight-year period shall be a substantial boost to the economy and the country. “This tremendous investment would extend our gas pipeline infrastructure into the country’s Western Province and have a meaningful and lasting economic impact for Papua New Guinea and its people,” Minister Kua said. He also announced that there would be a series of workshops regarding the development of the P’nyang Gas Fields, and if these continued unhindered, an expected signing of a P’nyang Heads of Agreement could be expected by end of this month, with a Gas Agreement to follow. “While there continues to be misinformation on the true impact of resource projects in the country, the government remains fully aware that projects which remain in the pipeline, will not be able to effect much financial benefit, until they are negotiated and commissioned. “This announcement by government of re-engaging with ExxonMobil PNG and its joint venture partners on the P’nyang project, is an extremely positive step in the right direction,” Mr. Smaré said.   Article Courtesy of the PNG Chamber of Mines and Petroleum 

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