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PNG LNG Records Record Production and Best Safety Performance
by PNG Business News - July 08, 2021
Photo Credit: Oil Search Limited
Despite obstacles posed by the Covid-19 epidemic, the Papua New Guinea Liquefied Natural Gas (PNG LNG) project had its greatest production and best safety performance since its inception, according to departing ExxonMobil PNG managing director Andrew Barry.
Barry said that the team achieved record LNG production levels, delivering the company’s best safety performance since production commenced while continuing to meet environmental and social commitments.
“EMPNG has completed over 70 million hours of work since production began and had no lost time incidents for more than three years, with no significant process safety events for almost seven years,” he said.
“A significant milestone was achieved on Sept 1 with EMPNG’s first shift fully managed and operated by qualified Papua New Guineans workers.
“This included the Hides Gas Conditioning Plant and Pipeline operations supervisors, and control room, field and pipeline technicians.”
By the end of 2020, the PNG LNG workforce would have grown to 2,784 workers and contractors, according to the annual PNG LNG environmental and social report issued last month.
Due to the suspension of several upstream region projects as a consequence of travel and limitations caused by the pandemic, this number was decreased from 3,964 employees at the end of 2019.
The overall workforce of the PNG LNG project is made up of 91% Papua New Guineans.
In 2020, EMPNG contributed K8.4 million to local communities in the form of contributions, sponsorships, in-kind assistance, and community-based initiatives.
The PNG LNG project's contract with ANU Enterprise Proprietary Ltd was renewed, allowing the community lifestyle improvement project (Clip), which began in 2015, to continue.
Clip is assisting communities in Hides, Juni, Nogoli, Angore, and Komo in gaining financial independence and improving their living conditions by providing training and assistance in areas such as nutrition, financial literacy, and agricultural practices.
The five-year head starts conservation initiative, financed by EMPNG and administered by the Port Moresby Nature Park, was also completed last year.
Last year, 36,650 stakeholders participated in over 5,400 community interactions, including over 2,000 official and roughly 3,400 informal encounters.
Community interactions were conducted in line with Covid-19 safe practices, with the majority of the engagements focusing on boosting Covid-19 awareness.
Through the infrastructure tax credit projects, an additional K57.4 million was spent on local infrastructure.
Since construction began, more than K10 billion has been invested in community projects and local infrastructure.
Peter Larden, EMPNG's new managing director, congratulated Barry for his six years of leadership, which had left a legacy.
“I look forward to building upon the standards he and EMPNG have set to further cement PNG’s reputation as a world class LNG producer and to be able to contribute in a sustainable and meaningful way to enhancing the communities in which we operate and the nation of PNG,” he said.
The National (6 July 2021). “Project records highest output”.
PNG Business News - July 15, 2021
Marape Provides an Update on the Papua LNG project
Prime Minister James Marape said that the Papua LNG project in the Gulf will enter pre-Feed (front end engineering and design) in September. “Papua LNG will move into pre-Feed in September after the financial stability agreement was signed in February,” he said. “It is my expectation that as the country celebrates its 46th Independence anniversary on Sept 16, we will observe much progress in the Porgera mine, Papua LNG and Pasca A P’nyang and Wafi-Golpu projects.” The administration, according to Marape, is focused on improving the country's position in the P'nyang and Wafi-Golpu projects. “My Government has established the SNT (State negotiating team) for P’nyang and will be commencing talks with ExxonMobil and its partners later this month both here and in Houston (Texas) to progress this project,” he said. “For Wafi-Golpu, the Government has cleared the term sheets, and it is expected that parties will convene this month to establish negotiation pathways for formal negotiations with all stakeholders. “Without changing the laws or using proposed new laws we are getting far superior deals based on government policy-based negotiations with our investors. “For Porgera, we are getting 65 and to 35 per cent in favour of the State in the first five years, we are getting an average 55 per cent to 45 per cent in favour of the State upfront. The last agreement any government has secured stopped at 51 per cent project economic, gains to PNG for the Papua LNG project by the O’Neill government.” Marape said that the new government had gotten a better bargain for the Pasca A project in Twinza. “The production levy was negotiated up to a new level at five per cent for the petroleum sector, royalty and development levy calculations have now shifted positively for PNG to two per cent straight on the gross revenue with no deductions, five per cent of liquid petroleum gas (LPG) is secured – which is sufficient to replace the current volume of LPG imported for the domestic market – and the project’s National Content Plan will be tied into the Pasca A project gas agreement.” Reference: The National (14 July 2021). “Marape gives update on progress of Papua LNG project”.
PNG Business News - April 19, 2021
Bekker Says Contract Reviews Are Important
According to PNG Power Ltd, renegotiation and reviews of current contracts with independent power producers (IPPs) make the business healthier and more competitive (PPL). PPL managing director Flagon Bekker made the statement in response to questions raised by IPP industry groups (IP3) about PPL unilaterally reviewing and renegotiating current contracts and contractually negotiated prices to supply electricity to the grid. IPPs, according to Bekker, must be adaptable enough to evolve as fiscal, technical, and environmental factors change with time. “We asked IPPs to respond to a survey late last year where we asked them for their suggestions and next steps in dealing with the current commercial status quo,” he said. “In fact, we offered four or five alternatives to renegotiation. None responded.” According to Bekker, analysis shows that in terms of pricing, spending, and the overall economy, it is best to keep IPPs' share of the total market minimal. “Egypt is the best example of countries that have kept IPPs to a smaller share of the total (market) and found it easier to weather macro-economic shock and have greater freedom in deciding where to source finance for power investment in the future,” he said. “The IPPs not only make the macroeconomy weaker, but they are also the cause of their own problems. “PPL is leading to change this. “IPPs should not resist. “They should partner by suggesting solutions for the future. “PPL will send the survey out again and we hope they respond this time.” According to Bekker, there was a lot of analysis and support focused on post-negotiation evaluations, which shows that the renegotiation process contributes to the discovery of lessons and eventually the execution of those lessons. “Off the top of my head, here is a list of countries that have renegotiated PPAs in full or in part over the years: Philippines, Brazil, India, Argentina, Mexico, Turkey, Poland, China (among others),” Bekker said.
PNG Business News - March 31, 2021
PNG Ports Explains Their Decision to Deal with Covid-19
COVID-19 had a major impact on Papua New Guinea's exports and port movement, but the PNG Ports Corporation had taken political decisions to handle the situation. In recent months, the world has seen and continues to see a significant shift in everyday lives, which has had significant implications for industry, commerce, and transportation. The pandemic's emergence altered both economic and trade forecasts for 2020. New predictions have reduced forecasts to negative 4.9 per cent, down from an estimate of 3.6 per cent increase in container trade worldwide in the fourth quarter of 2019 to 2.5 per cent in January 2020. PNG Ports chairman Kepas Wali clarified that the company's earnings were the result of tight cost-cutting steps and prudent decisions taken by management. Last year, he said, the closing of borders and prohibitions surrounding the COVID-19 pandemic struck PNG Ports hard, which is dependent on trade. Despite COVID-19, PNG Ports has continued to operate all of its ports. “When COVID-19 hit the country and the world, the management of PNG Ports worked quickly and instituted certain protocols and prevention measures just so we can maintain our ports operations,” he said. “The management’s quick response to the situation has made it possible for all ports to operate during the hit by the pandemic through until now.” He said the pandemic's consequences on the company were expensive, but PNG Ports is happy with the positive results obtained by their management's swift reaction and aims to continue this going forward.
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”.