PNG LNG Project Delivers Record Revenues to PNG
by PNG Business News - May 22, 2022
Photo credit: PNG LNG
The PNG LNG Project has paid over PGK 14 billion to the State since the start of LNG production. In 2021 alone, the State earned record revenues from the Project, with over PGK 2.2 billion delivered to the government.
Revenues delivered by the PNG LNG Project include PGK 7.1 billion flowing to Kumul Petroleum Holdings Limited and an estimated PGK 4.5 billion in various taxes paid to the Internal Revenue Commission.
“The revenues and associated benefits from the PNG LNG Project provide the PNG government the opportunity to promote sustainable, long term economic development. We are extremely proud of our performance in contributing to the PNG economy,” said ExxonMobil PNG Managing Director Peter Larden. “Since 2014 we have delivered over PGK 14 billion to the country, including some PGK 4.5 billion in taxes. This includes the April payment of PGK 1.1 billion in estimated tax for the first four months of 2022 linked to increased global oil prices and sustained volumes. This is one of the largest single tax payments by the PNG LNG Project to date. We are pleased to see this increased revenue going to the State.”
Revenues from the PNG LNG Project are delivered through different mechanisms, including corporate and payroll taxes, equity (through State participation), development levy and royalties. As a founding member of the PNG Extractives Industry Transparency Initiative (PNG EITI), revenues and benefits from the PNG LNG Project as well as the broader petroleum and mining industry are reported and made publicly available. Further detail on the types of direct and indirect benefits to PNG as well as the process through which revenues are delivered to the State, provincial government and landowners can be found at https://www.pngeiti.org.pg/.
ExxonMobil PNG Limited (33.2%), a subsidiary of Exxon Mobil Corporation, constructed and operates the PNG LNG Project on behalf of joint venturers: Santos Limited (42.5%), Kumul Petroleum Holdings Limited (16.8%), JX Nippon Oil & Gas Exploration Corporation (4.7%), Mineral Resources Development Company Limited (2.8%). Petromin 0.2% was incorporated into Kumul Petroleum Holdings Limited (KPHL) in 2016.
PNG Business News - July 08, 2021
PNG LNG Records Record Production and Best Safety Performance
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. Reference: 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 - November 08, 2021
PNG LNG Earnings to Reach K15 Billion in 2021
According to a projection, total earnings from the PNG LNG project would reach US$4.5 billion (K15.4 billion) in the fiscal year 2021. According to estimates recently released by JMP Securities, PNG-based equity and fixed interest markets broker/dealer, Kumul Petroleum Holdings Ltd (KPHL) will earn between US$750 million and US$775 million (roughly K2.5 billion and K2.6 billion) from the project this year, based on current high prices. It also estimates that total earnings from the PNG LNG Project to KPHL have been to the tune of US$5.1 billion (about K17.5 billion) since the project began operations in 2014. “This is an estimate of revenue only,” said JMP Securities. “We are not in a position to comment on the overall costs of operations associated with the project or the wider operations of KPHL,” “Given the current high international crude oil prices and the time lag between movements in oil prices and the pricing of LNG under long-term contracts, we expect continued benign trading conditions for PNG LNG in the coming months. “This will result in a strong performance for the 2021 financial year as a whole. “We estimate that the PNG LNG Project has sold LNG, condensates, domestic gas and naphta valued at US$30.27 billion between April 2014 and September 2021. “More than 80 per cent of revenues come from the sale of liquefied natural gas (LNG). “We estimate that the PNG LNG has sold the equivalent of close to 600 million barrels of oil since 2014. “Around 100 million boe (barrels) have been sold by KPHL. KPHL sells around 35,000 to 40,000 boe per day. “We estimate that the highest average quarterly gas export prices achieved by PNG LNG are US$14.41 (about K49.4) per mmbtu (metric million British thermal units). This was achieved in the June quarter of 2014 on modest volumes.” In the September 2021 quarter, PNG LNG achieved around US$10 (about K34.3) in average gas sales prices. “The lowest gas prices were achieved in the September quarter of 2020 – around US$4.2 (about K14.4) per mmbtu.” Reference: Pacific Mining Watch (2 November 2021). “Papua New Guinea expects K15 billion from PNG LNG in 2021”.
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PNG Business News - June 24, 2022
Creating decent income-earning opportunities for rural communities in Papua New Guinea under road maintenance programme
EU Funded UN Joint STREIT PNG Programme, as part of its mission to support efforts towards reducing rural poverty, is engaging local communities with a focus on struggling single parents as a support workforcefor maintenance of 18 selected farm-to-market roads in the Sepik region. Led by the International Labour Organization (ILO), the creation of these employment opportunities in remote communities where there are limited income-generating activities because of lack of accessible roads to markets is a relief to many disadvantaged households. This month the ILO team visited some of these beneficiaries who are employed in the Road Maintenance Groups (RMGs) working on a 17.7km-long Walkasa Mai-Wanwan road and an 8km-long Yiminum-Wilbowe road in the Nuku District of Sandaun Province. For the beneficiaries, this is a lifetime opportunity for a regular and steady income to support their and their families' everyday needs, and one important concern for the struggling families is paying for their siblings' and kids' school fees and associate costs. Among the struggling families are some widows like Marathia, aged 59, from Yiminum Village, who works on the Yiminum-Wilbowe road. "My husband died, and we were really struggling because our families have their own problems to take care of. Now, I'm very happy with this job which I joined last year. It helps with school fees for my children," said Marathia. Marathia was left with five children to support, including one who is attending final year studies at a vocational training nearby. With the income as an RMG, she was able to pay PGK 500 school fee last year and early this year she paid PGK 250. She said the community is also happy to see her contribution in a job they usually see as for men only. For youths like Jena Suwa this employment opens a new window to their life. She was not able to complete her studies after year 10 in 2018. "I'm very happy today because I was doing nothing in the house. I will now save some money to prepare to go back to school to become a nurse," said Jena. Sony Apo is another youth who completed Grade 8 in 2015 and is looking forward to some money to upgrade. He dreams of becoming a carpenter to continue the legacy of his late 'big daddy'. "Big daddy was the only skilled man we had in the family, and now I'm ready to become a carpenter as well," he said. The main works that encompass the road routine maintenance aspect to be undertaken by the RMGs include pothole patching, vegetation clearing, drainage and general cleaning along the road in preparation for engagement of a contractor to perform specific maintenance on these farm-to-market access and feeder roads. Safety gears and road maintenance tools like boots, gloves, vests, safety helmets, spades, hoes, wheelbarrows were also among the tools and equipment provided and distributed by the EU-STREIT PNG Programme among the RMGs' members. During the visits, the Programme's Community Facilitator, Rachel Bowie also shared with the RMGs to demonstrate commitment in their work to take ownership in the routine maintenance of these roads because it will serve them, their families and their fellow community members. The mission also conducted a drone survey of a 14km-long Nanaha-Tau LLG access road in the Ambunti-Drekikier District, East Sepik Province. In consultation with Ward Members, locals, including youths and women, were also recruited to form RMGs to conduct routine maintenance for this road that will also service Drekikier Secondary. Under the Programme selection criteria, one RMG comprises six members that must have at least two females. The group must also have representation from youths, single parents whose partners have died or have deserted them and traditional owners of land the road passes through. The Programme, in partnership with MiBank, a local financial institution, is implementing cashless transactions and banking for rural farmers by opening bank accounts for these RMGs, and their payment is deposited directly at the end of every month. This arrangement encourages rural farmers to save and grow their earnings, which can be used to access small loan benefits. Under this rural agriculture development programme, 18 rural roads in the Sepik region totalling close to 300 km in length are being maintained or upgraded with the help of RMGs to support the market access initiative implemented by the EU-STREIT PNG Programme for rural and farming communities to boost agriculture production and agribusiness activities pertaining to three targeted cocoa, vanilla and fisheries agri-food value chains for an improved income and cash flow for the rural communities. The roads will also support other agricultural, business, social and community activities and facilities like schools, aid posts and health centres that are in dire need of better accessible roads. The EU-STREIT PNG Programme, being implemented as a UN Joint Programme (FAO as the leading agency, and ILO, ITU, UNCDF and UNDP as partners), is the largest grant-funded Programme of the European Union in the country and the Pacific region. The Programme aims to help improve the lives of the people from East Sepik and Sandaun provinces, by focusing on increasing sustainable and inclusive economic development of rural areas through improved economic returns and opportunities from cocoa, vanilla and fishery value chains while strengthening and improving the efficiency of value chain enablers, including the business environment, and supporting sustainable, climate-proof transport and energy infrastructure development.
PNG Business News - June 24, 2022
Santos welcomes new apprentices in higher-level program
Photo: Leon Buskens, Santos Country Chair PNG meeting the 25 new apprentices in Port Moresby before their departure to the Institut Teknologi Petroleum Petronas (INSTEP) in Malaysia. Joining Mr Buskens and the apprentices are members of the Santos Training and People & Culture Teams. Santos is helping to equip Papua New Guinea’s next generation of oil and gas technicians with international qualifications. Ten females are among 25 novices who have joined the Santos 2022 Apprenticeship Program following a rigorous selection process which will see them train at the Institut Teknologi Petroleum Petronas (INSTEP) in Malaysia – 900 applications were received for the 2022 Program. Upon completion of the technician training at INSTEP, the apprentices will earn a Pearson Business Education Technology Council Level 2 and Level 3 UK qualification. Santos Country Chair for PNG, Leon Buskens when welcoming the apprentices, said: “You have joined at an exciting time following the merger between Oil Search and Santos. As the inaugural batch under the merged entity, there are greater opportunities for you to advance in all aspects of your career both in PNG and abroad. I encourage you to do your best and importantly, maintain a positive attitude and uphold your values - this is what will take you far on this journey. “This is the beginning, but you should be proud of yourselves as we are of you for making it this far. Congratulations and welcome to Santos.” Joining Mr Buskens to address the new cohort were pioneering trainees Cornelius Soagai, Senior Government Affairs Manager and Lydia Warubi, Deputy Occupational Health & Safety Manager. Mr Soagai went on to become the first national Production Manager in the Operations and Maintenance Department while Ms Warubi made waves as the first national female process technician to work at the Central Processing Facility. Both leaders encouraged the apprentices to maximize on the career development opportunities available to them at Santos. Among the cohort was Judy Sasa who completed the Company’s pre-apprentice program at the Kumul Petroleum Academy (KPA) in 2020. Judy finished at the top of her class and attained an honourable achievement award. A grateful Judy thanked Santos for a further opportunity to broaden her knowledge in oil and gas production. “My dream is coming true as I have always wanted to work in this industry,” Ms Sasa said. The 25 apprentices along with the Santos training team departed PNG for Malaysia last weekend. Two permanent employees were also part of the travelling party to INSTEP where they will train to become dual Electrical & Instrumentation tradesmen. Article courtesy of Santos
PNG Business News - June 23, 2022
PM Marape says East Sepik can become ‘economic powerhouse’ of PNG
Photo: PM Marape addressing the crowd in Maprik Prime Minister Hon. James Marape says East Sepik has the potential to become the “economic powerhouse” of Papua New Guinea. He said in Maprik recently (June 22 2022) that because of this potential, and in memory of founding Prime Minister the late Sir Michael Somare, the next Government would be formed in East Sepik. Present with the Prime Minister were East Sepik Governor Hon. Allan Bird (National Alliance), Angoram MP Hon. Salio Waipo (National Alliance), Maprik MP and Minister for Agriculture and Livestock Hon. John Simon (Pangu) and Pangu candidate for Wosera-Gawi Ronald Asik. Sir Michael was instrumental in the formation of both Pangu and National Alliance “East Sepik has the potential to become the ‘economic powerhouse’ province of our country,” PM Marape said. “This is why I will bring Government formation to here: Firstly, in memory of Sir Michael, and secondly, in memory of Sir Pita Lus. “This will be the 11th Parliament, and the first Parliament without Sir Michael and Sir Pita being alive. “This will be symbolic that the nation is now being passed on to the next generation.” PM Marape said formation of the new Government in East Sepik would also inspire the new generation of leaders to hold on to the lofty ideals of the founding fathers like Sir Michael and Sir Pita. He said his Government, over the last three years, had passed major laws to fight corruption and promised the people of Papua New Guinea that some prominent leaders would be prosecuted after the elections. These include the Independent Commission Against Corruption (ICAC), Whistle Blowers’ Act and Undisclosed Wealth Act. “What would be the point of Allan Bird and I growing the economy of the country when corruption is still prevalent?” PM Marape said. “We have managed to stifle corruption in the big way with passage of the three bills during the last term of Parliament. “Over the last three years, we have spent over K56 billion, which has grown the economy by K30 billion.” PM Marape said East Sepik’s economic powerhouse potential was in agriculture, through the vast Sepik Plains, and challenged the province to start growing rice on a large scale to reduce the huge K900 million rice import bill. “Over the next few years, and into the future, we want to grow our own rice for domestic consumption as well as export to Phillipines, Indonesia and the rest if the region,” he said. “Sir Michael, before his passing, said he had helped groom me up and asked me not to forget East Sepik into the future. “The way to achieve this is through economic independence. “I want every Papua New Guinean to have money in their pockets: Grow rice, grow cocoa, grow vanilla, look after cattle, bring in tourists, stop consumption of home brew, stop marijuana and other bad habits. “We are ready to take the country to the next level. “I want East Sepik to be an economic powerhouse no longer dependent on Waigani. “This is why I ask the people of East Sepik to send Allan Bird, John Simon, Salio Waipo and my Wosera-Gawi candidate Ronald Asik, Ambunti-Dreikikier candidate Richard Rafa and Wewak candidate Jim Simitab to Parliament. “ Article courtesy of PM JAMES MARAPE News Page