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Kumul Petroleum Secures Additional 7% in Deal with Total
by PNG Business News - May 12, 2021
Kumul Petroleum Holdings Limited (KPHL) has secured a contract for an additional 7 per cent free carried equity in a historic deal with TOTAL SE.
Papua New Guinea's national oil and gas corporation, reported an increase in its aggregate equity in potential joint exploration ventures with Total SE following talks in Paris last week to remobilize the Papua LNG Project.
Wapu Sonk, KPHL's Managing Director, was delighted to confirm a promising agreement with TOTAL SE for an extra free carried 7% equity in any potential joint exploration ventures, on top of KPHL's 22.5 per cent back-in rights.
This ultimately raises the company's total equity to almost 30%.
Prospects such as the Deep and Ultra Deep Offshore Exploration Blocks in the newly awarded PPL 576 and PPL 589 Licenses, as well as future joint exploration ventures, will be affected by this agreement.
Kumul Petroleum will be able to engage as a JV partner and gain access to vital technical details without having to vote on financial matters, thanks to the 7% free carried equity.
The increase was discussed and agreed upon during the latest Papua LNG Remobilization discussions in Paris on May 3, 2021, between the PNG Government Delegation led by Deputy Prime Minister Sam Basil and the TOTAL SE Delegation led by Patrick Pouyanne, Executive Chairman and CEO.
Pouyanne praised the efforts of the Marape-led government to increase local involvement in their region.
TOTAL SE and the PNG Authorities decided to collaborate to build substantial in-country value and execute the Papua LNG Project in an outstanding manner as part of Total's strategic endeavour to continue cementing relationships with national stakeholders.
TOTAL and its joint venture (JV) partners describe the project as a much-needed and timely US$13 billion (PGK 48 billion) capital expenditure (CAPEX) project that will turbo-charge and fuel the PNG economy during this covid-19 pandemic-induced economic recession and add much more in the future.
Kumul Petroleum is looking forward to the secondment of its technical personnel to the pre-FEED, FEED, and Detailed Engineering Design phases of the plant, according to Sonk, as part of the increased collaboration between the two organizations.
Kumul Petroleum also expects to resume joint marketing activities for LNG entitlements from the Papua LNG Project, and intends to complete effective Sales and Purchasing Agreements (SPAs) in the LNG Industry, he said.
By the end of the third quarter of 2022, the parties hope to have completed these SPAs.
Another significant benefit of this collaboration with TOTAL, according to Kumul Petroleum, is that the company will be able to exploit their respective strengths for their joint-equity funding option.
“We recognise the financial stress and challenges induced by the COVID-19 pandemic and other intervening circumstances in the major markets and will endeavour to leverage our combined synergies to attract major global financial institutions to finance our equity shares.
“On this occasion, Kumul Petroleum acknowledges the visionary leadership and foresight of both Delegations, led by the Deputy Prime Minister of Papua New Guinea and Executive Chairman & CEO of Total SE respectively, in pushing the boundaries beyond the current Oil & Gas Act provisions, and securing the PNG government's wishes for greater national participation in resource development projects,” Sonk said.
TOTAL's determination and revised contribution to speeding up the Papua LNG remobilization works is also acknowledged by Kumul Petroleum, with the aim of committing the remainder of 2021 to Pre-Front End Engineering Design (Pre-FEED) work and launching FEED in early 2022 in preparation for a Final Investment Decision (FID) in 2023.
PNG Business News - May 03, 2021
Kumul Petroleum Holdings Seeking Funds from Abroad
According to managing director Wapu Sonk, Kumul Petroleum Holdings Ltd (KPHL) will seek funding from abroad to build gas fields in the Kimu, Barikewa, and Uramu in Kikori, Gulf. He stated that funding would be determined by the form of construction chosen by the group. Sonk was answering questions two weeks after KPHL received the petroleum retention licenses (PRL) 48, 49, and 50, which included the gas fields of Kimu, Barikewa, and Uramu. “As a good business practice, KPHL will look to invite potential investment partners into the licences to share the risk and then develop the fields together,” he said. “Again, the economics of the type of development option drives who join as partners to KPHL. “There are no other State-owned enterprises (SOEs) in oil and gas business except Kumul Petroleum so we will source funding from overseas mostly from different sources depending on size and type of development. “The potential partners that join KPHL will also bring the capital, which is a pre-requisite to the partnership for development.” Those licenses, previously 8, 9, and 10, were owned by Oil Search Ltd, Santos, and other operators, according to Sonk during the handover of the license earlier this month. “They held the licences for 15 years which is the maximum amount of time you can hold on to a licence under the ‘retention licence’ provisions in the Oil and Gas Act,” he said. “Once it expired, the licence goes back to the Department of Petroleum. “The department put out a Gazette notice which is like advertising that the licences had become available, that’s when other interested parties apply. “We don’t know who applied at that stage, but we applied at that time and was awarded the licences.” KPHL was among those who asked for the licenses before they expired, according to Petroleum Minister Kerenga Kua. He explained that the petroleum advisory board made suggestions to the government, which approved and signed off on the licenses to KPHL after thorough deliberation and consideration. Kimu and Barikewa areas are onshore, while Uramu is offshore in Kikori's deeper waters. The three fields are expected to have a 2C reserve of slightly more than 2TCF (trillion cubic feet) of gas and 50-60 million barrels of condensate.
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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”.