Oil and Gas
PNG Business News - August 26, 2021
Kua: P’nyang Ready for Negotiations
Exxonmobil PNG and the government have joined forces to ensure that the P'nyang gas project in Western Province is ready for negotiations in the coming weeks. The project's letter of intent was signed, paving the way for it to get off the ground. The P'nyang project has been on the table since 2019 when the State began looking into the possibility of signing a gas deal with ExxonMobil and its joint venture partners as project developers. According to Minister of Petroleum Kerenga Kua, these negotiations were concluded in January of last year, allowing both the State and ExxonMobil to take a breather and rethink their respective strategies. “We are grateful that Exxon is now prepared to invite us to recommence our discussions one more time. “This time we intent on making sure that we cross the line bring all good faith and sincerity to the negotiations to enable us to reach some terms and conditions that are satisfactory to both sides so that the project can happen for all our mutual benefit,” Minister Kua said. He explained that negotiating a project agreement is difficult since developers have their own internal standards and the state has its own expectations. “I can only be hopeful and encourage Exxon to attempt to understand where we are coming from to help us to realise some of the revenue returns back to the country. “This process will start very shortly. We are hoping that around 9th or 10th of September the parties can convene in one room and try to stress out terms and conditions to potentially develop this project,” he said. Peter Larden, managing director of ExxonMobil PNG, praised the Papua New Guinea government for taking this critical step ahead in the development of the P'nyang project. He stated that the initiative will benefit all stakeholders directly and will encourage continuing investment and growth in the nation, as well as increasing capacity and ensuring the social and economic well-being of Papua New Guineans. “The intent to develop the P’nyang field helps demonstrates the encouraging growth opportunities for our operations here in Papua New Guinea and together with our joint venture partners, we look forward to working closely with the government and the landowners to progress the P’nyang field development proposal and secure the license as needed to develop this resource,” Larden said. “I thank the PNG Government for its support and I look forward to progressing our discussions.” Reference: Yafoi, Melisha. Post-Courier (23 August 2021). “Kua: P’nyang On The Table For More Talks”.
PNG Business News - August 26, 2021
Papua LNG Project Ready to Go
Photo Credit: Oil and Gas Today By a vote of 79 to 0 in Parliament, the Oil and Gas (Papua LNG Project) Amendment Bill 2021 was approved, granting Total – the Papua LNG project's developer – unrestricted rights to proceed with the pre-FEED and FEED procedures before seeking a development license. The bill, which was introduced in Parliament by Minister of Petroleum Kerenga Kua, is in accordance with the conditions of the Papua LNG Project Gas Agreement, which was signed in April of this year. The Oil and Gas (Papua LNG Project) Amendment Bill 2021, according to Kua, explains the changes to the Oil and Gas Act 1998 made by the Oil and Gas (Amendment) Act 2020 (No. 11 of 2020), often known as the "2020 Amendments." According to Kua, the Oil and Gas (Papua LNG Project) Amendment Bull 2021 only affects the Papua LNG Project Gas Agreement and any application for a petroleum development license for the Papua LNG project, not any other gas agreement, project, or petroleum development in Papua New Guinea, and confirms that, in accordance with the spirit and letter of Clause 9.6 (a) of the Papua LNG Project Gas Agreementment. He stated that the Papua LNG project participants are now working on the technical modifications required so that the two Papua LNG Project liquefaction trains can operate independently of the previous third train at the PNG LNG project's Caution Bay location. He went on to say that after that's done, and once FEED begins, they'll file an application for a petroleum development license. He also stated that, due to the Papua LNG project's high capital intensity, it must be financed using a combination of loans from lenders and equity from the project's sponsor. “Prompt passage of the proposed bill during this parliamentary session will demonstrate to sponsors, LNG buyers, and financiers the State’s continued full commitment to the Papua LNG Project, contract sanctity and the fiscal and regulatory regime contemplated by the Papua LNG Project Gas Agreement. “This is why we are proposing this bill for approval.” This oil and gas (Papua LNG Project) Amendment Bill 2021, according to him, is restricted to: In respect to the Papua LNG project Gas Agreement and any application for a petroleum license for the Papua LNG Project, restoring the Oil and Gas Act 1998 provisions impacted by the 2020 Amendments to apply as if they had not been modified. Makes the Papua LNG Gas Agreement and any application for a PDL for the Papua LNG Project inapplicable to the Oil and Gas Act 1998 provisions impacted or introduced by the 2020 Amendment. Minister Kua stated that there must be some give and take in any commercial deal and that this law provides assurance to the Papua LNG Project sponsors and financiers so that the project may proceed to FEED in accordance with the mutually agreed timeline announced in May 2021. “This is pivotal to progressing a timely development of Elk and Antelope gas fields that delivers maximum benefits to recognized landowners, the project-affected communities, the Independent State of PNG and of course the project’s developers and financiers,” he said. Prime Minister James Marape stated that under the benefit agreements, the government would get 51% of the project's proceeds, while the developer would receive 49%. He said that, in addition to the 51 percent, the country may gain from more local content, domestic market requirement, and third-party access, among other things. According to Marape, the bill's approval includes an essential change that is excellent news for the treasurer because it is part of his economic forecast for 2002 and beyond. The opposition has also endorsed the bill, claiming that it is the greatest and most outstanding initiative available. Reference: Elapa. Jeffrey, Post-Courier (23 August 2021). “Papua LNG Good To Go”.
PNG Business News - August 23, 2021
Santos Enters Next Phase of Oil Search Merger
According to an official, Santos Ltd will stay disciplined and cost-conscious as it enters its next phase of expansion and progresses with the proposed merger with Oil Search Ltd. Despite lower average LNG prices, Santos managing director and chief executive officer Kevin Gallagher said this following a half-year report of a free cash flow of US$572 million (approximately K2 billion). “The proposed merger is a compelling combination of two industry leaders to create an unrivalled regional champion of size and scale with a unique diversified portfolio of long-life, low-cost oil and gas assets,” he said. “The merged company would have strong cash generation from a diverse range of assets which provides a strong platform for sustainable growth and continued shareholder returns.” The combination, according to Gallagher, would strengthen their industry-leading commitment to environmental, social, and corporate governance. This is accomplished by combining Santos' net-zero 2040 strategy, which includes industry-leading carbon capture and storage projects, with Oil Search's distinctive social programs in PNG, all of which are backed by a solid balance sheet to support the transition to a lower-carbon future. “I am pleased with the progress we are making on due diligence and look forward to the signing of a binding merger implementation deed in the coming weeks,” Gallagher said. Meanwhile, the half-year results included a record production of 47.3 mmboe (million barrels of oil equivalent), record sales volumes of 53.8 mmboe and an underlying profit of US$317 million (about K1.1 billion). “These results again demonstrate the resilience of our cash-generative base business and strong operational performance across our diversified asset portfolio,” he said. “Consistent application of our low-cost disciplined operating model continues to deliver cost reductions and efficiencies despite cost challenges across the industry and the Coronavirus (Covid-19)-related cost impacts in the base business.” Reference: The National (18 August 2021). “Firm Enters Next Phase In Merger”.
PNG Business News - August 23, 2021
Aitsi: Pasca A Talks Should be Made Public
The government and Twinza Oil Limited are in the process of negotiating the conditions of the proposed Pasca A project. According to Transparency International PNG chairman Peter Aitsi, the oil and gas project in the Gulf should publish a quarterly update to keep the public informed on the status of talks. Twinza and the Government will sign a secrecy and non-disclosure agreement, according to Petroleum Minister Kerenga Kua, which will prevent the parties from disclosing material to the public while discussions are underway. This came after Twinza issued a statement expressing their dissatisfaction with the state negotiating team's modifications to the Pasca project gas deal. The secrecy and non-disclosure agreement, according to Kua, will ensure that a statement is issued only once a final decision has been taken. A non-disclosure agreement, on the other hand, according to Aitsi, is a commercial contract that allows parties to keep their talks private and establishes a level of confidence between them. He said that if they didn't, they'd be "leaking economically important information." “On Twinza, as a publicly-listed company, they have a strict obligation to keep their shareholders and the stock market updated on any transaction or events impacting the company that could have a material impact on the share price or performance targets,” Kua said. Reference: The National (13 August 2021). “Talks over Pasca A should be made public: Aitsi”.
PNG Business News - August 16, 2021
Twinza and State to Sign Non-disclosure Agreement
Photo Credit: Petroleum Exploration Society of Australia A non-disclosure agreement between Twinza Oil and the state will be signed soon to keep information about the Pasca A project private until a final decision is reached. Following a recent public announcement by Twinza stating that the state has not honoured its pledge for the offshore gas project, State solicitor Daniel Rolpagarea proposed this suggestion. When responding to Gulf Governor Chris Haiveta about the status of this gas project agreement, Minister for Petroleum Kerenga Kua told Parliament that negotiations are an important aspect of projects like Pasca A, which require the analysis of relevant government agency heads to advise government through the State Negotiating Team before signing. Kua also expressed regret to the developer for the state's failure to achieve the project's planned schedule, revealed last month. He stated that the state and developer have already agreed on the conditions, which include the state's stake, which is the most important aspect of the discussions, but that the details of those agreements would be handled later. “That’s where the lawyers become involved and they write up the full draft agreement and then does a page turn and agree on each paragraph and page and settle the whole document,” he said. “Last Friday the SNT received the agreement a week early and consulted the BPNG Governor, IRC Commissioner and get advice from Treasury Secretary among others to analyse and send advice to the state solicitor, state solicitor will see their comments and relay that into the gas agreement.” Twinza was supposed to sit down with the agreement and go back to the SNT to discuss their issues from the draft agreement, according to Kua, but instead, the developer took their gripe to the media. “I have written a letter on Prime Minister’s request to send to Twinza today. “Again encouraging them to move away from the media. “We met with SNT and state solicitor general Daniel Rolpagarea who was present and the state solicitor proposed that he will prepare confidentiality and non-disclosure agreement that must be signed between Twinza and the state. “This is so that people won’t run to the media while the negotiations are in progress,” he said. “Once we have a final product now, that’s when the announcement will be made so state solicitor is preparing that to be signed as the negotiations pick up again. “We have given them 6 days for them to get into serious discussions (SNT and Twinza) by the 16th of August 2021 they must make some meaningful progress because if they don’t after the 16th we will decide whether we continue the negotiations or we suspend or terminate it.” Reference: Yafoi, Melisha. Post-Courier (12 August 2021). “Twinza, State To Sign Non-Disclosure Pact”.
PNG Business News - August 16, 2021
Papua LNG Project on Track
The US$12 billion (K41.28 billion) Papua LNG project is on track, according to Petroleum Minister Kerenga Kua. Pre-feed (front end engineering design) work has already begun, Kua informed Parliament. The real feed will begin at the end of this year and last until 2022. In 2023, there will be a Fid (final investment decision) and a building phase. Kua said the Government was guaranteed that the project will be completed after meeting with Total E&P Ltd's vice-president this week.“is a top priority for the company”. “They have already started work on the pre-feed process,” Kua said. “The actual feed process will start around October and November. “And that will take another four months or so to complete. “It will take up 2022. “And by 2023, they will be in a position to go into a final investment decision. Once they cross that line and secure financing, construction will begin slowly in 2023.” Social mapping and landowner identification, among other steps, must be accomplished, according to Kua, in order to reach the development forum level. “A big part of that process has been completed and we are ready. “But there is a court injunction in place stopping us (from continuing) with the process for landowner identification and social mapping.” Kua stated that his agency has applied to the National Court to get the injunction lifted. Reference: The National (12 August 2021). “LNG project ‘on track’”.
PNG Business News - August 09, 2021
Extension of License Terms
Photo Credit: Post Courier / Department Secretary David Manau According to a department official, the petroleum and energy department is getting several requests from holders of petroleum prospecting licenses (PPLs) to prolong the term of their licenses. It suggested, according to Department Secretary David Manau, that it was difficult for the enterprises to conduct business in the country at this time. There are separate licenses for exploration, petroleum development, petroleum retention for found gas reserves that are considered sub-economic, pipeline, and petroleum processing facilities, Manau said during a media workshop in Port Moresby. “There are four main licenses under the Oil and Gas Act. “During the Covid-19 period, most of the license holders applied for an extension of time. “It is an indication that there is difficulty in doing business currently in the petroleum industry. “We have also had surrenders. Surrenders (indicate) that it is difficult to do business in PNG.” He said there had been 100 PPLs throughout the years. “Now, 58 are currently under tenure. “In terms of retention license, there are 11 active ones. “Three were awarded in 2021,” he said. “Even though during the Covid-19 period, there were seven PPL awarded. “All other licenses remain the same.” Reference: Mauludu, Shirley. The National (6 August 2021). “Requests for extensions”.
PNG Business News - August 02, 2021
Papua New Guinea Seeks Strong Ties with Exxonmobil
Photo Credit: PNG LNG Project Kerenga Kua, Papua New Guinea's petroleum minister, wishes to see the PNG government, ExxonMobil PNG, and the PNG LNG project enhance their beneficial relationship. Peter Larden, the new managing director of ExxonMobil PNG, was greeted by Kua, who said, “We look forward to working with him on a wide range of economic and social programmes that continue to transform the lives of Papua New Guineans”. Natural resource projects play a vital role in the future of this country’s economy and the development of its people,” Kua said. “The PNG LNG project remains an industry leader not just in creating revenue for the country, but in providing opportunities for Papua New Guineans to grow as technical specialists and business leaders. “PNG citizens including 20 per cent women now make up 91 per cent of PNG LNG’s total workforce – a fantastic achievement. This is a testament to EMPNG’s commitment to national content.” Andrew Barry, who has been with the PNG LNG project for over six years, has been promoted to vice-president of Global LNG Marketing for ExxonMobil in Singapore. Reference: Pacific Mining Watch (26 July 2021). “Papua New Guinea Minister wants strong relations with ExxonMobil”
PNG Business News - August 02, 2021
Petroleum Minister Kua Congratulates Landowners On Projects Resumption
Photo Credit: PNG LNG Project The landowners of Hela's Angore region, as well as ExxonMobil PNG, have been hailed by Papua New Guinea Petroleum Minister Kerenga Kua for the resumption of the Angore Project. Following the outbreak of the Covid-19 pandemic in 2020, the project was temporarily halted. The Angore pipeline was created as a link between the PNG LNG facility and the pipeline. The building of a new well pad, accompanying infrastructure, and a pipeline linking the Angore gas deposit to the Hides gas conditioning facility is part of the original PNG project development plan. “The Angore tie-in project will support future revenues to the State as well as royalties to local landowners once completed,” Kua said. “The Covid-19 continues to impact local businesses and the economy, thus it is fantastic to see the Angore works progress.” Kua expressed gratitude to the residents of Angore for their support of the initiative. He emphasized the necessity of maintaining a long-term degree of social stability in the neighbourhood so that the project may be completed on schedule and benefit the community. “ExxonMobil PNG is meeting its commitments not only to the Government but also to the people of Angore,” he said. “As a minister, I call upon all of the leaders in Angore as well as provincial and national officials and other stakeholders to work together with ExxonMobil PNG to make this a success.” During the building phase, the project will provide local employment and commercial possibilities, as well as a variety of community investment projects in the Angore region. Reference: Pacific Mining Watch (26 July 2021). “PNG Petroleum Minister Kua praises landowners for restart of project”.
PNG Business News - August 02, 2021
Santos Agrees Proposed Merger with Oil Search
Photo Credit: JASON REED/REUTERS Santos and Oil Search have reached an agreement on the merger ratio under the proposed merger and the additional terms set out in this release (“Revised Merger Proposal”). Under the Revised Merger Proposal, Oil Search shareholders will receive 0.6275 new Santos shares for each Oil Search share held via a Scheme of Arrangement. Following approval of the Scheme, Oil Search shareholders will own approximately 38.5 per cent of the merged group and Santos shareholders will own approximately 61.5 per cent. The Board of Oil Search has confirmed that, subject to the completion of confirmatory due diligence and the agreement of a binding Merger Implementation Agreement, their intention is to unanimously recommend the Revised Merger Proposal, in the absence of a superior proposal and subject to an independent expert concluding that the scheme of arrangement is in the best interests of Oil Search shareholders. The Revised Merger Proposal implies a transaction price of A$4.29 per Oil Search share, based on the closing price of Santos and Oil Search shares on 19 July 2021 (being the day prior to disclosure of the first proposal). This represents a 16.8 per cent premium to the Oil Search closing price on 19 July and a 16.4 per cent premium to the one-month VWAP on that day. In addition, the proposal represents the opportunity to deliver compelling value accretion to both sets of shareholders. The merger of Santos and Oil Search would create a regional champion of size and scale with the following features: Diversified portfolio of high quality, long-life, low-cost assets across Australia, Timor-Leste, Papua New Guinea and North America with significant growth optionality Pro-forma market capitalisation of A$21 billion which would position the merged entity in the top-20 ASX-listed companies and the 20 largest global oil and gas companies Combined 2021 production of approximately 116 million barrels of oil equivalent Combined 2P+2C resource base of 4,983 million barrels of oil equivalent Investment grade balance sheet with more than US$5.5 billion of liquidity to self-fund development projects, whilst maintaining further optionality and flexibility to optimise the portfolio Target gearing of less than 30 per cent Strong ESG credentials including maintaining Oil Search’s social and community investment in Papua New Guinea and North America, including the Oil Search Foundation Substantial potential combination synergies. Santos has an excellent track record of integration and recently merged Quadrant Energy and ConocoPhillips’ WA and NT business unit into Santos, delivering more than US$160 million in annual synergies The combination would also create greater alignment in Papua New Guinea supporting the development of key projects including Papua LNG, deliver new jobs and help support the local economy. Oil Search shareholders would continue to participate in the merged entity and retain the opportunity to realise a premium for control as part of the merged entity. Santos Managing Director and Chief Executive Officer Kevin Gallagher said the potential merger of Santos and Oil Search is consistent with Santos’ disciplined strategy to grow around our core assets. “It represents a compelling combination of two industry leaders to create an unrivalled regional champion of size and scale with a unique diversified portfolio of long-life, low-cost oil and gas assets. “The merged company would have strong cash generation from a diverse range of assets which provides a strong platform for sustainable growth and continued shareholder returns. “The merger also builds on our industry-leading approach to ESG through the combination of Santos’ net-zero 2040 pathway, including its sector-leading CCS projects, and Oil Search’s unique social programs in PNG, underpinned by a strong balance sheet to fund the transition to a lower carbon future. “The Revised Merger Proposal represents an extremely attractive opportunity to deliver compelling value accretion to both Santos and Oil Search shareholders.” Santos and Oil Search have committed to conduct best endeavours due diligence subject to appropriate confidentiality arrangements over a period of approximately four weeks with the aim of entering into a Merger Implementation Agreement, which would contain conditions to completion of the merger such as regulatory approvals. Each party will be free to declare ordinary dividends in accordance with existing dividend policy through to signing of the Merger Implementation Agreement. Should a party declare a dividend outside its existing dividend policy before the signing of the Merger Implementation Agreement, there would be an appropriate adjustment to the merger ratio. Citigroup and JB North & Co are acting as financial advisers and Herbert Smith Freehills and Dentons are acting as legal advisers to Santos.
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
Gulf Province Government Wants More from Pasca A Deal
Photo Credit: Twinza Oil Ltd The landmark Pasca A Project agreement, in which the National Government will walk away with a 55 per cent interest in the first offshore gas project in the Gulf of Papua New Guinea, will see Gulf Province demand a considerably larger share of the profits. Twinza Oil and the National Government revealed the results of the talks, which include a 2% royalty to landowners through the provincial government (due to the project's off-shore location), a 2% development tax, 2% from net gross production, and a 2% development levy. “Our position is simple – and that is to take back a greater share of our resources for the province,” Gulf Governor Chris Haiveta said. He made the statement after the State Negotiating Team, chaired by Petroleum Secretary David Manau, and Twinza Oil reached an agreement. According to Haiveta, the National Government will gain greatly from the finished negotiations. “How we share the benefits will be discussed at the development forum but for headline items, this (deal) ensures the State a bigger stake of 55 per cent, which is more than the 51 per cent stake in the Papua LNG project,” he said. According to Haiveta, the previous administration set the production levy at 2%, but Prime Minister James Marape increased it to 5%. In terms of royalties, he added that under the new rate, the provincial government will receive greater advantages — unlike previous agreements for other project regions. The province administration, according to Haiveta, supports the Prime Minister and Twinza's national content strategy, in which landowners will be awarded food supply, security, and transportation contracts. These topics would be considered in the development forum, he added. “We will also talk about benefit-sharing on the development levy and equity,” Mr Haiveta said. Reference: Nicholas, Issac. Post-Courier (14 July 2021). “Gulf To Push For More From Pasca Deal”.
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 - July 15, 2021
Pasca A to Begin Soon
Following negotiations last week between the State and developer Twinza Oil Ltd, Pasca Ain the Gulf is likely to get underway shortly. Petrol Minister Kerenga Kua characterized the agreement between the State Negotiating Team (SNT) and Twinza as "by far the greatest" in terms of developing the country's petroleum resources. “We delivered an agreement within the petroleum space, which is a new precedent from the existing projects,” he said. The project is located 95 kilometres south of Gulf and is 100 meters below ground. The reserves totalled 0.4 billion cubic feet, according to Kua. “This project throughout its life will give us a total benefits package of 55 per cent, calculated on what financial modellers and economists called as nominal cash flow basis,” he said. “The project’s lifespan will be about 12 years.” The 55 per cent was calculated using a US$50 (K171.47) per barrel oil price, according to Kua. According to the Oil and Gas Act, 55 per cent is made up of a 2% royalty (1998). Because the resource is offshore, there is no identifiable landowner. The Gulf provincial government will get the benefits. “One thing about the 2 per cent royalty is that, unlike existing projects, it’s the net after other deductions, that landowners are given the remaining or nothing at all in a year,” Kua said. “This won’t happen in this project. “This 2 per cent will be from the gross production, not net of deductions.” Other benefits include: 5% production levy from gross revenue; 2% development levy on gross revenue; 15% additional profit tax at 15 per cent accumulated rate; 5%LPG for domestic market obligation; and, 30% corporate tax. The project's front end engineering design (Feed) should commence in the third quarter of this year, according to Twinza national manager Roppe Uyassi. “Final investment decision (FID) should be made in the fourth quarter of 2022 with the first production planned for the third quarter of 2025,” he said. Reference: Mauludu, Shirley. The National (14 July 2021). “Pasca A starting soon after talks”.
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”.