Government Announces its New Regime for Oil and Gas Sector at PNG Petroleum and Energy Conference

By: PNG Business News September 18, 2023

The Government of Papua New Guinea is set on establishing carbon-negative clean energy as its priority over crude oil and coal even as it takes its place among carbon-trading countries.

Prime Minister James Marape revealed this recently at the Petroleum and Energy Conference at Hilton Hotel along with planned major legislative measures as PNG is set to embark on the new trend of developments in the oil and gas sector.

“The world needs energy, it's just necessary as it needs food supply, which Papua New Guinea have in abundance including its natural forests,” Marape said.

“Papua New Guinea is positioning itself toward the global agenda of zero carbon emission and becoming a major energy competitor, that is why the National Energy Authority was created to develop policies to regulate meaningful energy development that will enhance the nation forward,” he said.

"Investors, be assured that Papua New Guinea have never missed a cargo of LNG (liquefied natural gas) shipment in the country, and it is committed to working with development partners in the petroleum and energy sector,” said the Prime Minister.

Marape also underscored the shift to a production sharing arrangement regime from the current concession base licensing system, which was introduced by the Minister of Petroleum and Energy Kerenga Kua in the forum.

Kua said the reform will not affect current projects including the PNG LNG Project, Papua LNG Project, and P’nyang Project with its developers Exxon Mobil, Santos, and Total Energy respectively.

“Most of the countries around the world are using production sharing arrangements for its oil and gas sector and therefore it is fitting for the government to do away with concession-based licensing system as it will avoid the crippling loan burden faced in the country,” Kua said.

"We want to achieve maximum benefits for our resources. Instead of being spectators, we want to negotiate and achieve maximum benefit for the nation. Therefore, before the end of the year, the government will be introducing a bill in parliament to establish the National Petroleum Authority that will manage the oil and gas act and administer the Production Sharing Regime,” the minister added.

“There will also be an organic law set in place before parliament for the Production Sharing Act and Domestic Market Obligation Act, alongside with the Government’s National Content Act for Papua New Guineans to be involved meaningfully in the oil and gas sector,” said Kua.

Minister for Trade and International Investment Richard Maru, who also attended the conference, acknowledged the shortfalls faced by the nation, including the inefficient supply of electricity services in the country.

He challenged the National Energy Authority to bring in strategies that will help relegate timely and low-cost power services in the country.

“Drastic measures should be taken with the appalling state of electricity problems in the country, especially in my province East Sepik, as we go out without power for weeks. If radical measures need to be taken, then so be it,” he said.

“I am challenging the National Energy Authority to look into low-cost electricity generation that will benefit the country, and my ministry is happy to work along with investors who would want to venture into this space,” said Maru.

The three big global players at the PNG Petroleum and Energy conference -- Exxon Mobil, Total Energy, and Santos -- were encouraged to invest in nature-based solutions to mitigate their global emission footprint, which they said are currently on track.

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