Papua New Guinea’s Minister for Petroleum, Jimmy Maladina, has unveiled sweeping legal and institutional reforms to modernise the country’s petroleum sector, with the formal introduction of a Production Sharing Act (PSA) that will serve as the legal and fiscal foundation for all new petroleum projects.
The announcement was made during the PNG Petroleum Sector Update at the 2025 PNG Resources Summit on 31 July at APEC Haus, Port Moresby, and signals a decisive policy shift aimed at improving state revenue, investor clarity, and regulatory oversight.
“Earlier this year, Parliament passed the National Petroleum Authority Act 2025, which established the National Petroleum Authority (NPA) as the new statutory authority to regulate the upstream petroleum sector in Papua New Guinea,” Maladina stated.
He clarified that the new PSA regime will operate independently of the existing Oil and Gas Act, and that it will apply only to future petroleum projects. Existing projects — including PNG LNG, Papua LNG, P’nyang LNG, and Pasca A — will continue to operate under the Oil and Gas Act, retaining their current licences and contractual terms.
National Petroleum Authority: New Central Regulator
The NPA replaces the former Department of Petroleum and will act as the single, dedicated regulator for upstream, midstream, and downstream activities in the petroleum sector. Minister Maladina said the transition to the NPA is currently under way, with the inaugural board undergoing vetting by the Public Services Commission.
“The NPA is designed to be technically strong, commercially responsive, and administratively independent,” he said. “It will be self-funded through a 0.5% levy on the total export value of petroleum products under the PSA regime, ensuring stability, autonomy, and sustainability.”
The NPA will focus on faster and more transparent decision-making, improved coordination between the state and operators, and more rigorous oversight of licensing and revenues. The authority will also work closely with other government bodies such as the Treasury, Internal Revenue Commission (IRC), and state nominees to ensure alignment on project development and revenue collection.
Key Fiscal and Ownership Features of the PSA Regime
The Minister outlined the core fiscal structure of the Production Sharing Framework. All petroleum resources and infrastructure developed under PSA terms will be owned by the state, with acreage awarded via competitive bidding rounds using a standardised PSA template adapted to PNG’s needs.
“Contractors will be entitled to full cost recovery from gross production. After this, the remainder of production becomes profit petroleum,” he noted.
The state will receive a First Petroleum Levy, a fixed share of gross revenue, paid directly into consolidated revenue.
Key features of the PSA regime include:
· Development levies to be paid to provincial and local governments.
· Landowners to receive royalties at 2% of gross sales, without deductions.
· The state’s share of profit petroleum to be paid at the gross level.
· The contractor’s share to be taxed at corporate rates likely between 20–25%, with deductions allowed for levies and qualifying costs.
“This model reflects global best practices. It aligns national interests with commercial incentives and delivers early, equitable, and transparent revenue to the state and the people.”
Tailored Approaches for Diverse Projects
Acknowledging Papua New Guinea’s complex geography and resource diversity, the Minister emphasised that flexibility will be a hallmark of the PSA regime.
“There will not be a one-size-fits-all approach to commercialising petroleum assets. This became very clear during recent due diligence visits to Indonesia and Malaysia,” he noted.
Each project will be assessed according to its specific technical and commercial context, the Minister said.
Among the key provisions to be embedded in future PSAs are:
· Clearly defined roles for contractors and state nominees.
· Mandatory social mapping and landowner identification.
· National content targets with enforceable penalties for non-compliance.
· Domestic market obligations to secure PNG’s energy supply.
· Decommissioning funds to manage end-of-life site obligations.
· Arbitration of disputes under PNG law, with proceedings to be held in Singapore, selected for its neutrality and global standing in commercial arbitration.
Licensing Rounds and White Paper Imminent
Minister Maladina confirmed that once the PSA framework is finalised, PNG will open competitive bidding rounds for new petroleum acreage.
“We aim to attract technically qualified, financially strong developers who can partner with the state to responsibly unlock our resource potential,” he said.
The NPA is expected to release an Industry White Paper shortly to support public and industry consultations. Finalisation of the PSA policy will precede the launch of bidding rounds, which will employ clear technical and financial evaluation criteria to assess bids.
Project Updates and Investment Pipeline
The Minister reaffirmed that several petroleum projects are progressing or entering new phases:
· Papua LNG continues to move forward with strong international support.
· P’nyang LNG negotiations remain active, with fiscal and social terms being aligned to ensure bankability.
· The Pasca A project is undergoing commercial restructuring, with renewed discussions between the state and the developer.
· Mailu Prospect, an offshore target, is scheduled for exploration drilling this year and is seen as a sign of renewed investor confidence in PNG’s frontier geology.
· Wildebeest Prospect, located in Western Province, is undergoing early-stage assessment and shows long-term potential.
· TWL Energy Ventures continues to advance the Western Energy Project, regarded as a new frontier for resource development.
“These projects reflect billions in potential investment and long-term value for Papua New Guinea,” the Minister said. “The message is clear — institutional reform is under way, fiscal reform is imminent, licensing discipline is being restored, and projects are advancing.”
Commitment to Transparency and Growth
Minister Maladina concluded by reaffirming the central role of the petroleum sector in PNG’s future and the government’s commitment to reforms that deliver greater national benefit.
“This government is building a modern, transparent, and investor-aligned petroleum sector,” he said.
He also thanked the PNG Chamber of Resources and Energy for convening PNG Resources Week and sustaining national dialogue on how to strengthen and grow the petroleum and energy sectors for the benefit of all Papua New Guineans.
