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Barker: More Positive Economic Outlook
by PNG Business News - May 12, 2021
According to Paul Barker, executive director of the Institute of National Affairs, there are more optimistic economic signals in the wind right now.
“Commitments with Barrick on Porgera, and with Total over Papua LNG will provide some boost to business confidence, and should see restoration and operations commence at Porgera during 2021 and restored production and exports. The recent fiscal stability agreement and the new agreement between the Government and Total on project terms and timelines should see some restoration of the disbanded project team and other preparatory work, albeit that the task of financing and any construction and development remains well into the future.”
Barker also noted that some commodity prices had improved, citing some PNG extractive and agricultural products, as well as oil and gas, gold and some agricultural crops, and vegetable oils, as well as coffee, which was just beginning what seemed to be a successful harvest.
“This will provide a useful reprieve, including for the majority who depend upon the agriculture sector and will also work its way through in improved revenue to the State in due course. PNG cannot simply await improved prices for enhanced incomes,” he said.
“It needs to be able to invest and diversify its economy, build-up its human capital, both skills and work discipline and standards, stop driving prices up for businesses and the cost of living for households by disrupting markets, or signing up over-priced infrastructure projects, including for power.”
PNG Business News - May 07, 2021
France’s Total to Make Final Investment Decision on Papua LNG Project
After a one-year delay due to COVID-19, Total aims to make a final investment decision on the proposed two-train 5.6 million mt/year volume Papua LNG project in Papua New Guinea in 2023. Papua LNG, which will use gas from the Elk and Antelope gas fields, will begin front-end engineering and design (FEED) in early 2022, according to Total. "I confirm that this project is ranking very high in Total's portfolio given its proximity to growing Asian LNG markets and we will dedicate all necessary resources," Total CEO Patrick Pouyanne said in a statement. The announcement was made following a meeting in Paris with a delegation from Papua New Guinea headed by Deputy Prime Minister Samuel Basil. "After a year of delay because of COVID-19, the government of Papua New Guinea and Total are pleased to announce the remobilization of the project teams and of other required resources," Total said. "The objective is to launch the FEED early 2022 and to prepare for final investment decision in 2023.” The statement comes after the Papua LNG gas agreement was signed and reconfirmed in 2019, as well as the signing of a fiscal stabilization agreement and the award of a license extension in February of this year. Basil said that the government has pledged "absolute support" for the initiative. "I am pleased with the outcome of this meeting with clear implementation plans," he said. The Total-operated Elk and Antelope fields have been thoroughly appraised, and gas will be delivered via a 320-kilometre pipeline to the Caution Bay site, which is currently home to an ExxonMobil-operated PNG LNG facility with a capacity of 8.3 million mt/year. The Papua LNG plant, according to Total, will be combined with the current PNG LNG facilities in Caution Bay. Total controls the Elk and Antelope fields and, with a 31.1 per cent stake in the PRL-15 permit, is the biggest shareholder, alongside partners ExxonMobil (28.7%) and Oil Search (17.7 per cent). The government of Papua New Guinea has a 22.5 per cent back-in right. To further save billions of dollars, Total and its partners ExxonMobil Corp and Oil Search Ltd agreed to expand Papua LNG in combination with an extension of Exxon's PNG LNG plant in a $13 billion project adding three additional development units at the PNG LNG plant. However, Exxon has refused to agree to terms sought by the Papua New Guinea government for the P'nyang gas production, which was supposed to help fuel the expansion, as Prime Minister James Marape pressed for greater benefits for the region. Instead, Total's Papua LNG project will proceed with the construction of two new processing units at the PNG LNG site, which will be fed by the Elk Antelope gas fields, said Marape in February.
PNG Business News - June 01, 2021
Papua LNG Expected to Make First Sale in 2027
Photo credit: Total (2019) By 2027, the first gas from the Papua LNG Project is planned to be sold. As a result, the government will receive an additional 7% free carry in equity from the project. The pre-FEED phase of the Total E&P (PNG) Limited-led joint venture project in Caution Bay will be completed by the end of this year, followed by FEED in 2022, FID in 2023, and first gas in 2027. According to Petroleum Minister Kerenga Kua, the government dispatched a delegation to Paris recently to meet with Patrick Pouyanne, Chairman and CEO of TOTAL ES, after completing the Fiscal Stability Agreement, which is a condition for completing the subsequent obligations under the main Gas Agreement. According to the conventional gas project management timeline, the EPC callout will occur following the completion of FEED, which will take roughly four years, followed by construction and commissioning. Kumul Petroleum Holdings Limited said the methodology for the Papua LNG project will be a milestone for a project of this size. For some of the main Engineering Procurement Construction ticket items, particularly fabrications, more emphasis will be placed on National Content, establishing in-country competence, training, and capacity. This will provide jobs and economic opportunities for Papua New Guineans that will be sustainable in the future. For Papua LNG, the order of magnitude cost estimate is US$13 billion in CAPEX and US$12 billion in OPEX. Meanwhile, the regulator has yet to file an application for the awarding of a Petroleum Development Licence (PDL) over the Elk and Antelope finds, which only cover four of the nine blocks covered by PRL 15. The Gas Agreement and the succeeding Fiscal Stability Agreement pledged a total of 10.3 tcf of foundation volume. “Indeed, it is a very exciting era for PNG as the country fully commits to the second-largest LNG project thus bringing the total LNG production capacity up from 8.1 MTA to 13.5 MTA. “Currently PNG is ranked out of 20 LNG Exporting Countries with Qatar at the top, having 77.8 MTA of LNG production. “Once, Papua LNG comes online, PNG will displace Oman (10.3MTA), Algeria (12.2 MTA), Trinidad & Tobago (12.5 MTA) and move up closer to Indonesia (15.5 MTA). Australia sits in second place with LNG Production of 75.4 MTA. “PNG still has the potential to displace Indonesia if P’nyang LNG Project (2.7 MTA) negotiations can be included sooner and be integrated with Papua LNG and PNG LNG,” Kua said. Reference: Post-Courier (21 May 2021). “First Sale from Papua LNG Expected In 2027”.
PNG Business News - May 10, 2021
Govt, Total Discuss Papua LNG Project
Deputy Prime Minister Sam Basil met with Total Chairman and CEO Patrick Pouyanné and discussed the Papua LNG project timetable as well as a potential investment in new petroleum prospecting licenses in Papua New Guinea. In a statement, Basil said, “Mr Pouyanné expressed his appreciation for the ongoing efforts by the Marape-Basil Government and confirmed Total is committed to completing Pre FEED and the national content plan in 2021, launching FEED in early 2022 and the Final Investment Decision by 2023”. “To secure commitments it is of the utmost importance for our Government delegation to meet with the Total Chairman and CEO face to face, as well as the French Government to stress the importance of the Papua LNG project to the nation of.” Basil said that the government has promised complete support for the project and that he is satisfied with the results of the talks, which culminated in consistent development plans and timelines. Pouyanné reiterated Total's contribution to delivering this critical resource project in Papua New Guinea following the conference. Pouyanné understood the Marape-Basil government's worries about ensuring greater local engagement, habitat restoration, and environmental protection. “It was agreed that Total and PNG Authorities will cooperate to create significant in-country value and to implement the Papua LNG project in an exemplary manner. It will also take into the highest consideration crucial biodiversity concerns, carbon dioxide emissions and environmental matters at hand, as well as the rights of local communities,” according to Mr Basil. “The Marape-Basil Government has made our National position clear throughout negotiations, and through the frankness of our discussions we will see stronger economic growth for our country through this USD$ 13 Billion dollar (KINA 46 Billion) CAPEX investment by TOTAL SE and Joint Venture partners.”
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PNG Business News - June 15, 2021
PNG Vanilla Company Partners Expo2020 Team
Dr. Nancy Irwin (left) with the Deputy Commissioner General for Expo2020 and Head of the PNG Expo2020 Secretariat, Mrs. Jacinta Warakai-Manua began the partnership to tell the PNG Vanilla story in Dubai, by exchanging ideas in Port Moresby last week. A vanilla production and export company is partnering with the PNG Expo2020 Team to promote their products in the Dubai World Exposition that starts in October this year. KAMAPIM, a company working with landowners in the Madang and Morobe Provinces produces top quality vanilla beans and is already exporting to the EU market. The Managing Director of the company Dr. Nancy Irwin, met with the PNG Commissioner General to Expo2020 Ambassador Joshua Kalinoe and his Deputy Mrs. Jacinta Warakai-Manua in Port Moresby last week to firm up the arrangements. Dr. Irwin said Kamapim (pidgin for develop and to improve) concentrates its efforts in producing the best quality bean for the international market through quality assurance production methods. “PNG farmers can grow anything, they have instinctive ability to grow well any crops. When I first started the project, the quality of the beans were poor, full of fungus due to lack of processing knowledge. We saw huge potential of the organically grown beans and started working with landowners through a cooperative production and marketing structure to improve quality” “The company provide extension services to farmers and buy the beans directly, ensuring farmers are paid a fair price for their efforts”, she said. Dr Irwin said the beans are tested internationally and are consistently classed as the top-quality A grade level. “While PNG has a good perception of growing environment friendly organic vanilla beans, the challenge is for the relevant Government authorities to work with farmers to improve quality. I believe the cooperative production methods applied by our company, Kamapim, could be used nationally as one of the models to improve quality for the export market as well as to maximize revenue gain for farmers”, Dr. Irwin said. She said the company is looking forward to partnering with the PNG Expo2020 Team to tell the PNG story and to connect with niche importers in Dubai and the Arab world in general. Dr. Irwin said the company would promote its products in specially branded PNG Expo2020 containers to create visibility for the country as well as to preserve quality at the company’s cost.
PNG Business News - June 15, 2021
PNGEITI Praises Open Dialogue to Reopen Porgera Mine
The PNG Extractive Industries Transparency Initiative (PNGEITI) has praised the open stakeholder dialogue culminating in reaching consensus to re-open the Pogera Mine in Enga. Parties in April this year sanctioned a “Framework Agreement for the New Pogera Project” which spells out the roadmap to reopen the mine. Mark Bristow, CEO and President of Barrick Gold last week explained key elements of “Framework Agreement for the New Pogera Project” at a public forum at the Piam Oval in Pogera witnessed by PNG Prime Minister James Marape, landowners and other leaders. In the new agreement, PNG stakeholders will together own a 51 % equity stake in the mine while Barrick Niguini Limited (BNL), a joint venture company in which Barrick and Zijin Mining Group each own 50% will hold 49 %. BNL will remain the mine operator. At the end of the first ten year period, the PNG stakeholders will have the option to purchase BNL’s 49 % PNGEITI Head of Secretariat Lucas Alkan remarked that the open discussion throughout the negotiation process on the part of the mine operating lead, Government and landowners has culminated in this agreement signed happily by all parties. “We at the PNGEITI congratulate the Government and the project lead Barrick Gold and other stakeholders for reaching a consensus decision to reopen the mine. “Pogera has been an economic powerhouse for many years and people in the country have been waiting for the outcome. “We commend the Prime Minister, the President and CEO of Barrick Gold Mr. Mark Bristow for the leadership in ensuring that the negotiations were done in the transparent and open manner. “PNG Extractive Industries Transparency highly encourages such openness in the negotiating process for resources benefits and importantly the responsibilities that each stakeholder must take on to ensure smooth flow of proceeds. “We look forward to working with the Government and the project operator in the areas of transparency and accountability to help derive best value for all stakeholders. PNGEITI commitment to reporting on developments in the mining and petroleum space is becoming stronger with new reporting dimensions taking shape as we making progress in promoting transparency and accountability in the PNG mining and petroleum industry” Mr. Alkan said.
PNG Business News - June 14, 2021
BPNG Goes For Review
Treasurer Ian Ling-Stuckey has revealed the terms of reference for a review of the Bank of PNG, as well as the members of the review panel. Former Chief Secretary Robert Igara will lead the study, which was planned in the Supplementary Budget for 2020. Former central bank governor Sir Wilson Kamit and Australian professor Dr Stephen Howes are the two members. “These very eminent people, all of whom have detailed experience of the PNG financial system and reform, will be working to a term of reference approved recently by the NEC,” Ling-Stuckey said. “It is the first review of the central bank and the Central Banking Act 2002 since Sir Mekere Morauta’s financial system reforms when he was prime minister from 1999 to 2002. “Much has changed since then, and the effects of the coronavirus pandemic, along with substantial technological advances, have made the need for a review even more urgent. “The aim is to modernise the bank and the legislation in line with international developments, and make it more responsive to prevailing circumstances while preserving its independence.” The study is scheduled to be finished in time for Parliament's November session. “An independent advisory group was also established by the late Sir Mekere when looking at the changes that led to the Central Banking Act 2000,” he said. “Igara, currently the University of Papua New Guinea chancellor, was chief secretary at the time, and Sir Wilson was the governor of the Central Bank. “Prof Howes, head of the Development Policy Centre at the Australian National University, has long been involved in PNG research and advice and consultation, particularly in relation to national development.” Reference: The National (8 June 2021). “BPNG going for review”.