Photo: An empty service station at 8-Mile in Port Moresby after the fuel bowsers ran dry. The Government is now in serious discussions with Kumul Petroleum Holdings Ltd (KPHL) and three multi-national petroleum companies to find solutions for the fuel shortage in the country, with a major announcement expected soon, Prime Minister Hon. James Marape has said. The Prime Minister said the Government has been holding talks with ExxonMobil, Total Energies and Santos, together with Mineral Resources Development Company (MRDC) and State-owned company KPHL, to look into the immediate import of fuel and a long-term solution in the construction of a locally-based refinery for downstream processing to secure the domestic market. Prime Minister Marape said today (February 19, 2023) Papua New Guinea, under his Government, was heading in the direction of downstream processing of its resources but Puma Energy’s actions of recent months have forced the Government to act now rather than later in this area. “Our fuel insecurity due to reliance on one or two suppliers is forcing the Government to urgently call on its State-owned Enterprises and major oil companies operating in the country to finding solutions,” said PM Marape. “The Government is now collaborating with Kumul Petroleum, MRDC, ExxonMobil, Total Energies and Santos to explore solutions that can ensure the country’s fuel security, including aviation fuel and general fuel. “We are leaving no stone unturned. What has happened under Puma must not be repeated. For far too long, this country has been victimised when, in fact, Papua New Guinea continues to export petroleum and gas to the world year after year. The irony is staggering. “I am, therefore, pleased to note the progress the Government is making with our national development partners – ExxonMobil, Total Energies and Santos. “I am also looking forward to the moment when we can make the announcement on the immediate solutions we have worked out to resolve this relatively long-standing issue.” Papua New Guinea was plunged into an acute shortage of fuel at the end of last year 2022 when Puma Energy PNG Ltd announced it could no longer source crude oil and finished products because of unresolved foreign currency issues. This affected its supply of fuel to PNG, especially to the aviation industry where Air Niugini was forced to ground its flights and left the travelling public stranded for days as a result. The matter raised huge concerns on supply monopoly and the country’s fuel security both for short and long term.

Photo credit: Twinza Oil Regulatory issues between the Government and Twinza Oil Ltd. need to be addressed before discussions on the Pasca A project in Gulf recommence, Prime Minister James Marape said. In a press conference, Marape stated that Papua New Guinea is governed by the Constitution, and there are laws that regulate the mining and exploration activities. The Prime Minister highlighted this in reminding foreign investors to comply with all the necessary mining and petroleum requirements. Marape made the statement when referring to the status of the Pasca A project in Gulf, after regulatory issues emerged between Twinza Oil Ltd and the State. He said some of the requirements for the exploration and mining licenses were not met by the investor to allow it to proceed with the project. “I just want to encourage all our foreign investors in our country, that we don’t run a banana republic, we have due processes in our country, and you have to comply with all requirements of law in our country,” he said. “If you acquire an exploration license then you have to deliver to the intent of that license. You have a retention license in the petroleum space, then you have to deliver to the conditions of that retention license,” the Prime Minister said. “When you are applying for development license and you’re in the APDL (application development licence) stage then you must comply with the rules and requirements of the process.” Marape said the Department of Petroleum has done its part towards the Pasca issue, meaning that now it only needs a review by the national government. “The Twinza and the Pasca project is a small low-hanging project within reach. The petroleum department have done their bit with the issues that have been outstanding, and now the project partner has given his view, which will be subject to a review,” he said. The Prime Minister said his government wants to tick off Porgera, Papua LNG, P’nyang and Pasca LNG projects, including the Wafi-Golpu projects, soon. Mr. Marape was not able to provide the actual commencement dates but is determined to provide a firm statement on these proposed multibillion-kina projects five months from now. Twinza’s Country Manager, Roppe Uyassi, said the company was ready to have the Pasca gas project in progress and was awaiting reengagement with the Government through the state negotiation team.

Photo credit: PNG LNG The PNG LNG project has generated K16.5 billion for the state over eight years of production (2014-2022). This includes K7.5 billion to Kumul from the state's 19.4% equity, K1.3 billion paid to the Mineral Resources Development Corporation, K0.8 billion in royalty payments, K0.7 billion in development levy payments, and K6.2 billion in tax payments. David Manau, Secretary for the Department of Petroleum, stated: “The PNG LNG project remains to date one of the biggest capital-intensive investment projects ever undertaken in the history of the country at the capital investment cost of US$17.7 billion (K62.4 billion), injecting millions of foreign currency into the local economy at the time of construction.“ Manau added: “I am happy to say that the future of the petroleum industry looks very promising with the government of Papua New Guinea signing the US$13 billion Papua LNG Gas agreement in April 2019 to develop the Elk and Antelope gas fields in the Gulf Province of PNG.“ “The signing of the two gas agreements defined the fiscal framework and paved the way for the commercial development of the two mega projects in the country after the successful delivery of the PNG LNG project.“ Regarding the impact of these projects, Manau said: “The development of the two mega projects will certainly put PNG on the world map as the major regional LNG player, boosting PNG’s GDP, creating more job opportunities, increasing government revenue and injecting more foreign currency into the local economy in the years to come, while further elevating the country as a friendly foreign investment destination and attracting more interest in the industry.“

Photo: Santos Managing Director and Chief Executive Officer Kevin Gallagher. Photo credit: Attila Csaszar Santos Managing Director and Chief Executive Officer Kevin Gallagher said Santos delivered record annual production and sales revenue in 2022, as strong base business performance positioned the company to benefit from higher commodity prices. Free cash flow of around US$3.6 billion was also a record and reduced gearing to approximately 18.7 per cent at the end of the year. This strong free cash flow positions the company to provide higher returns to shareholders and in December, we announced a further US$350 million increase in the on-market share buyback to up to US$700 million. “Our increased LNG position in Papua New Guinea following the Oil Search merger has driven our record performance. The LNG business is expected to remain strong with energy security being a top priority for our trading partners in the region,” Mr Gallagher said. “We remain committed to supplying the domestic market at reasonable prices. Average realised price for east coast domestic gas for the quarter was US$7.74/GJ, less than half the average realised price for LNG. “Given the strong customer demand for our product now and into the future, we will seek to backfill and sustain our core assets to deliver the critical fuels the world needs into the 2040s. But we will also seek to decarbonise these critical fuels, in-line with our emissions reductions targets, and produce clean fuels as customer demand evolves.”   Official press release can be found HERE

Prime Minister Hon. James Marape says Puma Energy has said they replied to Bank of Papua New Guinea’s (BPNG) 13 queries in relation to supply of foreign exchange (FX), but is still in court in a BPNG initiated court proceeding. He said this resulted in Puma stopping its supply of aviation gasoline to Air Niugini, because it could not get the required FX to bring in fuel, resulting all in flights being cancelled last Thursday. PM Marape said this recently (January 8, 2022) after meeting with top executives of Puma Energy in Singapore. He was accompanied by Petroleum and Energy Minister Hon. Kerenga Kua and State-Solicitor Daniel Ropalgarea. “I made it clear at the meeting that there must never again be a repeat of such a situation in Papua New Guinea, where there is no supply of fuel to planes and ships, and that Puma and BPNG must resolve all issues,” PM Marape said. “I have asked Puma to come to a meeting with BPNG, with the State as arbitrator, for outstanding issues to be resolved. “When we return from Singapore, we will hold a meeting with the Central Bank, to find out exactly what are the issues with Puma so there is never again a repeat of what happened last Thursday.” PM Marape said BPNG had raised 13 issues against Puma, which the company had already responded to last September, however, BPNG twice took the company off the FX registry resulting in two stoppages of avgas to Air Niugini.” “This is not just a Puma-Central Bank issue, but one of FX required by our business community, especially for the import of products into PNG. “This issue points us to the fact that we need to relook at how Central Bank regulates and controls flow of FX to commercial banks and traders. We want ease of forex to our business community.” PM Marape said Puma also highlighted at the meeting that Kutubu crude oil from Southern Highlands was not supplied on a regular basis to its NapaNapa refinery. He has directed Minister Kua to liaise with Santos and ExxonMobil as to how this supply could be increased – either to NapaNapa or a new refinery to be set up. “Downstream processing of our natural resources, including oil and gas, is a major policy of this Government and our coalition partners,” he said. “Therefore, we cannot be energy-insecure, as we are producing oil that goes to refineries in Singapore and is then sent back to us. “We can reverse this arrangement if the cost structure is right. “Oil from Kutubu can be sold in Kina to NapaNapa refinery, or a new refinery to be set up, and processed in the country. “I will be having meetings with Santos, ExxonMobil, Kumul Petroleum Holdings Ltd and Mineral Resources Development Company – upon my return from Singapore – to look at producing petroleum products from our own resources instead of importing as we go into the future. “The whole idea is to ensure that we are energy-secure, instead of being wholly-dependent on one supplier, to save the country from grinding to a halt as we’ve seen last Thursday.”

Photo credit: Santos - Brett Darley PNG will continue to be a major focus of strategy as Santos works to decarbonize operations, according to the upstream chief of Santos. Santos president of Upstream Oil and Gas, Brett Darley, stated that Santos is still eager to keep that region as its primary investment priority. “More broadly as a company, Santos is developing our three-hub carbon capture and storage (CCS) strategy. As we seek to decarbonise our economy, carbon capture and storage will be critical in achieving that goal,” Mr Darley said. “Australia needs to get behind CCS, because we know net zero cannot be achieved without it. If Australia and the world is serious about net zero, then we must be serious about decarbonising existing energy sources as the market evolves over time for new clean fuels, such as hydrogen,” Mr Darley said. He said that there are countless chances in PNG, both professionally and socially. “People might be surprised to know that around 80 per cent of global primary energy today still comes from hydrocarbons – the same as 45 years ago. However, with less than 15 per cent of the population in Papua New Guinea having access to electricity, and those with access facing the challenges of temperamental supply, we must bring on new supply and continue to develop our product safely and sustainably, for years to come,” Mr Darley said. “We know global supply will be tight for years to come due to OECD supply constraints, government policy, and activism. Gas must become the baseload, alongside renewables in developed countries, otherwise the transition will be very messy. For this reason, the next 30 years calls for a structural shift in the way that the world generates energy. As an industry, we need to maintain supply while we innovate to transition to net zero emissions.” According to him, Santos's new plan is to backfill existing infrastructure and then maintain production across all of its assets until the mid-2040s and beyond. It also focuses on decarbonization and clean fuels. “While we backfill and sustain our core assets to deliver the critical fuels the world needs, we will also decarbonise these critical fuels and produce clean fuels as customer demand evolves,” Mr Darley said. “Santos is in a very strong position to be a leader in all three of these areas over the course of this decade and beyond. As a core region for Santos, our Papua New Guinean assets will be key in this strategy, and we are keen to maintain our investment focus there.”   Reference: Post-Courier (7 December 2022). “Santos Looks At Decarbonisation”.

Before we end the year, let us have a recap of Twinza Oil Limited’s presentation during the 2021 PNG Mining and Petroleum Conference and Exhibition. Although the report was presented a year ago, (2 December 2021), Twinza’s Executive Chairman, Stephen Quantrill, provided a remarkable forecast and insights on how their Pasca A Development Project will boost the economy of Papua New Guinea. Twinza Oil Limited is an upstream Oil and Gas company with assets in Papua New Guinea. Their principal asset is the Pasca A liquid-rich gas field offshore Papua New Guinea. According to their company website, “the Pasca A field development plan has been completed, the petroleum resources certified and the programme necessary to obtain the licenses for full field development is complete.” [1] “Once the necessary government approvals are received, the Pasca A development is poised to become the first offshore gas field development in Papua New Guinea.” The company foresees that the development of the gas field will encourage and lead more exploration of other fields in the Gulf of Papua.    With its main headquarters in Perth, Australia, Twinza is expanding their presence in Papua New Guinea to support the Pasca A Development. The company also has offices in Sydney, Brisbane, Port Moresby and in Singapore. “Twinza’s executive management team has a proven track record in the early identification, development and operation of highly prospective oil and gas projects.” During his presentation, Mr Quantrill described the Pasca A Development as a “Low Hanging Fruit”. To explain this, he enumerated the following highlights of the project, namely: investor pedigree, experienced team, GCA Resources Estimate of >120mmboe (or million barrels of oil equivalent per day), simple development, short time to production, and strong economics. He reported that Pasca A Development will boost the PNG economy. Moreover, the project delivers long-term investment, provides increase in government revenue, and supports economic growth. Here are more key points and numbers about Pasca A Development: 500 million Kina - Annual Tax levies, royalties 5 billion Kina, full development cost +6% increase in government annual revenue Forecast expansion of PNG Economy - more than double PNG's share of the project revenue 600 million Kina expenditure within PNG during construction Regarding Pasca A Project’s contribution to PNG’s Economy, Mr Quantrill reported, “Direct PNG revenues from the Pasca A Project are expected to exceed US$2.5bn (Kina 8.7bn) and increase PNG's real GDP by over Kina 18bn.” He also discussed the Economic Multiplier Effect of the Pasca A Project. "Pasca A Project will have a positive benefit on PNG's overall economic performance as a result of the flow-on to other industry sectors.” He gave the following key points, such as the "Multiplier effects" of the project is 2x to 3x the direct benefits. The project also entails investment in physical assets (marine facilities) and social assets (education and health). Additionally, the project will generate employment benefits such as hiring more than 100 full-time workers during development, and/or total PNG operating workforce of 400 to 500. For the macro-economic benefits in Papua New Guinea, it forecasts an increase in real GDP by K18.1 billion and an increase in real income of K4.6 billion. Aggregations could further enhance State revenues by more than 3x. [2] Below is Pasca A Project development timeline. The Pasca A project also supports PNG's energy transition initiatives. The company sees this as an excellent opportunity to provide a bridge to electrification to 70% of PNG population by 2030, or a 12 to 15 year bridge to renewable power. The Pasca A gas condensate field is a carbonate pinnacle reef that was discovered around 50 years ago. However, for almost 30 years, this was dormant with no further technical follow-on work. Then, in 2011, Twinza Oil Limited acquired the field. By 2018 they drilled a new exploration well. “Improvements in drilling efficiency, production technology, and development engineering have transformed the technical and commercial viability of the Pasca A gas condensate discovery.”[1] Hopefully, once government approvals are complete, the first offshore gas field development in Papua New Guinea will move forward and eventually fulfill their goal of helping the country’s economy. This year, the 16th Papua New Guinea Mining and Petroleum Investment Conference and Exhibition will be held on the 5-7th December at Hilton Hotel Sydney. PNG Business News is media partner of this event.   Reference: [1] Twinza Oil Limited company website - https://www.twinzaoil.com/ [2] Quantrill, Stephen (2 December 2021). “Twinza Oil Limited - Pasca A Project - Gulf of Papua”. A presentation during the PNG Mining and Petroleum Conference, Port Moresby and Brisbane Photos and charts: Credit to Mr Stephen Quantrill, Twinza Oil Limited

The Petroleum Sector National Content Policy is anticipated to be finished by the end of this month and presented to the National Executive Council the following month, according to Department of Petroleum and Energy Secretary David Manau. Manau stated that this strategy will also establish an office to look at the practical elements of assisting the sector in profiting from national content during the Chamber of Mines and Petroleum workshop in Port Moresby. “If successful, a national content policy intervention may increase national job creation, boost the domestic private sector businesses, facilitate technology transfer and build a competitive national workforce,” he said. “Main challenge worldwide is that national content goals are often unfulfilled and the opportunities are not captured and not tangibly measured. “National content in the petroleum sector should firstly aim at the landowners who give access for the investor's licenses to gain access into their regions to operate. “And the circle spreads to the local level, district, provincial, and the national level, “Each of the stages also looks at the different magnitude and impact of the project, for example in the early exploration stages in the petroleum sector, you will only focus on the bull's eye, so your social licensing is you deal with the landowners on the ground, you have access to them, and then you give them some services, some businesses. “At the next level, now if Papua LNG and P’nyang come on in the next 5 years, the national content plan in the petroleum sector should also look at the national level down to the host communities. “So you look at the national level, you are talking Steamships, Curtain Brothers, however, if they can participate with local level company through a JV arrangement participation, that is even better, the local content policy works for all.” Manau said that the national content requirement will affect upcoming projects in the pipeline, such as: The PNG LNG already has a national content strategy in place that has been effectively completed and executed, and it may eventually coincide with the national content policy. The difficulties for us are that they provide reports on their corporate image, which we require in order to measure; FEED for Papua LNG begins in January 2023; first gas is expected in January 2024; Construction on P'nyang will begin in 2026 or 2027 (project sequencing will transfer trained labour from Papua to P'nyang); Pasca offshore Gas Project; PDL 10 Stanley Gas; and, Future oil/gas projects.   Reference: Esila, Peter. The National (17 October 2022). “All eyes on petroleum policy”.

Photo credit: PNGEITI An undertaking by state owned Kumul Petroleum Holdings Limited (KPHL) to increase its PNGLNG equity through a conditional arrangement between PNGLNG partner Santos has raised concerns over the lack of transparency surrounding the whole arrangement and the partial financial transaction that already took place between the parties involved, according to the PNG Extractive Industries Transparency Initiative. (PNGEITI). KPHL has offered to acquire five percent (5 %) of Santos equity in the PNGLNG Project with asset valued at US$ 1.4 billion. This includes a proportionate share of project finance debt of approximately US$ 0.3 billion which is the condition upon which this commercial arrangement that has been made. PNGEITI Head of National Secretariat Mr. Lucas Alkan said following publication of this arrangement in the media this week . “While it is understood that the compromise between two major players in the PNGLNG project as purely commercial, the PNGEITI is concerned at the opaque nature of the environment in which such arrangements are being made, particularly when substantial amount of money belonging to the people of PNG entrusted under the stewardship of KPHL is involved. This deal can easily be likened to the controversial UBS transaction which recently ended up being investigated by a Royal Commission of Inquiry that cost the State millions of Kina in tax payers' money. We understand KPHL had already made partial payment of US$55 million and subsequent payments to finalise the transaction are expected to be made before the end of December this year. KPHL has a moral and corporate reasonability to be transparent and accountable to Parliament and the people of this country when conducting its business in this sector” Mr Alkan said. “The PNGEITI, a global best practice standard for the good governance of the extractive sector that PNG is a member of takes the position that KPHL must inform the public on where financing is being sourced to secure the purchase of the 5% additional equity for the State. The details of this transaction, whether it is being funded from KPHL’s budget, any external borrowing by KPHL on behalf of the State (if so, what asset is being used as collateral) or through the National Government Budget (this is not in the 2022 supplementary budget). Further, it is not clear as to whether NEC had approved for KPHL to execute this transaction to acquire additional equity from Santos. The public has the right to know these details and understand as to how KPHL’s balance sheet would be affected given that a US$ 0.3 billion debt would be inherited from Santos. The PNGEITI is not against KPHL’s proposal to acquire an additional 5% equity from Santos as it is consistent with the Government’s policy objective of having a greater equity interest in resources developments however, Santos’ intention to deal exclusively with KPHL regarding the sale raises a lot of questions.  We strongly urge KPHL and Santos who are both active members of the PNGEITI Multi Stakeholder Group (MSG) to demonstrate good corporate citizenship and uphold the principles of the EITI Global Standard by disclosing the commercial and economic nature of this transaction for the sake of transparency and accountability in this planned sale of Santo’s 5 percent share in the PNGLNG to KPHL,” Mr. Alkan said.

Photo: PM Marape in discussion with LNG Japan Corporation President and CEO, Kyo Onojima, in Tokyo. Prime Minister Hon. James Marape has told the LNG Japan Corporation that Papua New Guinea has about 20-trillion cubic feet (TCF) in stranded gas fields, apart from the major LNG projects, waiting to be developed. He said this in Tokyo on Tuesday (September 27, 2022) when inviting LNG Japan Corporation to invest more and diversify in PNG LNG. He made the invitation to LNG Japan Corporation during a meeting with President and CEO, Kyo Onojima, and his delegation in Tokyo during his one-day visit to attend the state funeral of former prime minister Shinzo Abe and bilateral meeting with current Prime Minister Hon. Fumio Kishida. PM Marape – who was accompanied by International Trade and Investment Minister Hon. Richard Maru, East Sepik Governor Hon. Allan Bird and PNG Ambassador to Japan H.E. Samuel Abal – said there were so many opportunities for LNG production in PNG as he invited LNG Japan Corporation. LNG Japan Corporation was formed on October 1, 2001 on the foundation of LNG business long established by Sojitz Corporation (formerly known as Nissho Iwai Corporation) and business network established through solid trust from customers by Sumitomo Corporation. “We have a lot of opportunities in upstream and downstream of LNG, as well as in stranded fields hanging around,” PM Marape told Onojima and his delegation. “We have up to 20 TCF of stranded gas fields, and are looking for investors who can partner Kumul Petroleum Holdings Ltd (KPHL) and Mineral Resources Development Company (MRDC), with both companies having a combined value of K10 billion. “MRDC represents the landowners, who are important stakeholders, and we also want to give them more opportunity to participate with investors. “I appreciate the fact that LNG Japan Corporation already has an agreement with KPHL in the upstream business, as well as possibly venture into midstream, given that the stranded gas fields need to be mobilised.” PM Marape said LNG Japan Corporation already had enough exposure to PNG’s LNG industry to know of business opportunities available in the country. He previously had a meeting with LNG Japan Corporation in December 2019 in Port Moresby with then President and CEO, Hiroshi Kawahara, who is now Chairman of the company. LNG Japan is studying feasibility of potential LNG-to-power projects in PNG, leveraging its long experiences in the LNG industry, including a small-scale domestic LNG sea transportation project in Indonesia. It is also looking at producing methanol as a raw material for plywood manufacture, hence, contributing to downstream processing of logs. LNG Japan, from the days of its predecessor, has over 40 years of experience in upstream development, financing, marketing, trading and shipping in the global LNG Industry. LNG Japan and Kumul Petroleum entered into a joint venture agreement on June 7, 2017 (amended on August 2, 2018) to set up as unincorporated joint venture for marketing of spot and short-term cargoes from PNG LNG. The company, together with JX Nippon Oil & Gas Exploration Corporation and Marubeni Corporation (Japanese consortium) and Kumul Petroleum entered into a memorandum-of-understanding on August 30, 2018, to jointly pursue any opportunities to participate in the Papua LNG Project, as equity participants and financiers   Article courtesy of PM James Marape News Page

Photo: The PNG and JX Nippon Oil & Gas Exploration delegations after their meeting in Tokyo. Prime Minister Hon. James Marape has encouraged major Japanese company JX Nippon Oil & Gas Exploration, which already has a 4.7 per cent stake in the PNG LNG Project, to also participate in upstream and downstream of Papua LNG (Gulf), P’nyang LNG (Western) and the exciting new Muruk LNG (Hela). JX Nippon Oil & Gas Exploration has been involved in the oil exploration and development projects at Kutubu and Moran as well as other oil fields in PNG since the early 1990s, and has a 4.7 percent interest in the PNG LNG Project. PM Marape made the invitation to JX Nippon Oil & Gas Exploration during a meeting with President and CEO, Nakahara Toshiya, and his delegation in Tokyo on Tuesday (September 27, 2022) during his one-day visit to attend the state funeral of former prime minister Shinzo Abe and bilateral meeting with current Prime Minister Hon. Fumio Kishida. The Prime Minister – who was accompanied by International Trade and Investment Minister Hon. Richard Maru, East Sepik Governor Hon. Allan Bird and PNG Ambassador to Japan H.E. Samuel Abal – said PNG’s economy would be powered by LNG for at least the next 30-40 years and JX Nippon Oil & Gas Exploration was welcome to increase its investment portfolio. JX Nippon Oil & Gas Exploration has been involved in the PNG LNG Project, which ranks as its third LNG project following those in Malaysia and Indonesia, from the business feasibility study stage. The project links Highlands’ production facilities with a liquefaction plant and exporting facilities outside Port Moresby through an onshore and subsea pipeline that extends for more than 700km. It began production in 2014 and supplies LNG to Japan and other Asian nations. “JX Nippon has been an active partner in our oil and gas sector space,” PM Marape told Toshiya and his delegation. “You are involved in the PNG LNG Project and we sincerely appreciate your presence there. “We have moved Papua and P’nyang, and we now want to ensure that Muruk is secured. “Our Government is moving to secure at least five per cent for domestic market use, and I invite JX Nippon and your other subsidiaries in the petro-chemical space, to venture into this as I want a robust petro-chemical business in PNG for domestic consumption as well as export. “I also ask JX Nippon to advocate for PNG LNG in Japan so that the gas we produce can be sold more on the Japanese market. “We’re looking at PNG being an LNG producer for the next 30-40 years. “JX Nippon has been part of the growth of PNG’s oil and gas industry and we invite you to go more into downstream processing, as well as upstream in partnership with Kumul Petroleum Holdings Ltd (KPHL) or as a stand-alone. “You know our culture and environment, having been here since 1990 in the petroleum business and are most welcome.”   Article courtesy of PM James Marape News Page

Photo: PM Marape and the PNG delegation (left) meeting with Sojitz Corporation President and CEO Masayoshi Fujimoto and his team in Tokyo. Prime Minister Hon. James Marape has invited leading Japanese company Sojitz Corporation into the upstream and downstream processing of liquefied natural gas (LNG) in Papua New Guinea. He made the invitation to Sojtiz during a meeting with President and CEO, Masayoshi Fijumoto, and his delegation in Tokyo on Tuesday (September 27, 2022) during his one-day visit to attend the state funeral of former prime minister Shinzo Abe and bilateral meeting with current Prime Minister Hon. Fumio Kishida. PM Marape – who was accompanied by International Trade and Investment Minister Hon. Richard Maru, East Sepik Governor Hon. Allan Bird and PNG Ambassador to Japan H.E. Samuel Abal – said the Government would make land available for Sojitz to come into PNG in a big way. PM Marape said Sojitz had been wanting to venture into downstream processing of LNG in PNG, as well as go into the upstream sector, and apologised for delays in making this become a reality. Sojitz Group, which has been in PNG since 1963 when it started exporting lumber to Japan, is engaged in a wide range of businesses globally, including manufacturing, selling, importing, and exporting a variety of products, in addition to providing services and investing in diversified businesses, both in Japan and overseas. It is particularly wanting to break into the petro-chemical industry in PNG – for which it already has an agreement with Kumul Petroleum Holdings Ltd (KPHL) – to produce ammonia. “You have been waiting patiently for the last six to seven years,” PM Marape told the Sojitz delegation. “Now that I am prime minister, we have no excuses not to progress these business intentions of Sojitz, an established company in Japan which is also involved in business in PNG since 1963. “I thank Sojitz for its continued presence in PNG since 1963 and we have a special place in our heart for you.” PM Marape said Minister Maru has been tasked with bringing in investors such as Sojitz into PNG and he would be a “one-stop shop” for all foreign investors. He asked Sojitz for a fresh expression-of-interest which would be fast-tracked by his Government as a matter of urgency. “This is consistent with the global trend into the cleaner energy space,” PM Marape said. “Going forward, the Government in keen on KPHL getting more gas for the domestic market, at an affordable process. “Sojitz is welcome to partner in downstream processing of gas. “If you can give me cheaper petrol and cheaper diesel, and even the ammonia that you want to process, you’re my friend for life. “Papua New Guinea needs to find solutions to the expensive petrol and diesel we are currently importing. “It is ironic that we produce oil and gas, however, continue to import expensive petroleum products PM Marape said there were also opportunities in the upstream for Sojitz to go into. “KPHL will now have first right to some of the smaller gas projects, and Sojitz is most welcome to join,” he said. “If you want to go into upstream by yourself, you don’t have to partner with KPHL, you can go in on your own as well as in the midstream and downstream.”   Article courtesy of PM James Marape News Page

Photo: Oil Search Santos advises it has received a binding conditional offer from Kumul Petroleum Holdings Limited (Kumul) to acquire a 5 per cent project interest in PNG LNG for asset value of US$1.4 billion, including a proportionate share of project finance debt of approximately US$0.3 billion (the Offer). Kumul is Papua New Guinea’s national oil and gas company and existing partner in the PNG LNG project. To secure the Offer, Kumul has paid an amount of US$55 million to Santos which will be held in escrow to be released to Santos as a deposit for part payment of the Offer price if it accepts the Offer. The Offer is conditional on Kumul obtaining the waivers of certain pre-emptive rights by each other PNG LNG project participant under the project operating agreement to allow the transaction to proceed The Offer is expressed to be irrevocable, except in limited circumstances, and will remain open for acceptance until 31 December 2022. Santos has agreed to deal exclusively with Kumul during this period regarding the sale of equity in PNG LNG. The proposed transaction will have an effective date of 31 December 2022 with Santos to retain all 2022 cash flows. Completion will be subject to customary conditions including necessary regulatory approvals and Kumul securing financing. The potential sale would increase the equity interest of the State to approximately 22 per cent supporting the PNG government objectives for the people of PNG to have a greater equity interest in the development of their natural resources. Santos Managing Director and Chief Executive Officer Kevin Gallagher said the potential sale of a 5 per cent interest in PNG LNG to Kumul represents an opportunity to build strategic alignment for the future development of PNG’s natural gas resources, including via PNG LNG infrastructure. “PNG LNG is a low-cost and low emissions intensity asset that contributes strong cash flows to the project participants and economic and social benefits to the nation,” Mr Gallagher said. “Following the transaction, Santos would maintain a 37.5 per cent interest in this world-class project. “Santos has been a committed partner in PNG for over 40 years, involved in more than 30 different licenses and has significant community partnerships and projects across the nation.” As part of the proposed transaction, Santos and Kumul will negotiate a Heads of Agreement to further collaborate on the development of Kumul’s regional capacity and capability, including carbon emission reduction opportunities to achieve net-zero operations. JB North & Co is acting as financial adviser and Allens is acting as legal adviser to Santos.   Article courtesy of Santos

The Pasca A offshore gas project in the Gulf of Papua will focus to help transform the PNG energy sector and to boost sustainable growth in the country. Twinza Oil (PNG) Limited chairman, Stephen Quantrill said when in full production, the Pasca A Liquefied Petroleum Gas (LPG) project’s landed prices will be lower than the current LPG imports. He said that as a benefit to PNG once the project starts, Pasca A has pledged a 10% domestic market obligation (DMO). According to Mr. Quantrill, the promise is in line with PNG's goals for sustainable development, which include achieving complete carbon neutrality by 2050 and a 70% electrification objective by 2030. He asserted that accessible LPG might revolutionise the PNG energy industry and support long-term development. “The advantage of the LPG includes a low carbon substitute for burning fuel, oil and diesel, and it is profitable and affordable by land and marine transport system,” Mr Quantrill said. “It requires a low infrastructure investment to reach in diesel and is very accessible.” According to Mr. Quantrill, the Pasca A LPG component is a crucial commodity for providing energy to PNG. According to him, the project's schedule will allow PNG to reach its goal of providing 2% of the world's LNG supply. The PNG government consented to the parameters of the Pasca A project in 2021, and more investment and project funding are still required for the gas agreement and petroleum development licence (PDL). Once it is up and running, the Pasca A project will bring in K8.6 billion in income for PNG over the course of its existence, with K500 million per year. Additionally, the project will generate K18 billion in GDP throughout its lifetime, K400 million in local spending, 300 construction employment, and 500 permanent jobs in PNG as the yearly operating cost in the country.   Reference: Wohi, Lorraine. Post-Courier (26 September 2022). “Pasca A Project To Assist Transform Energy Sector”.

Photo credit: PNG Energy Summit - Wayne Kasou Santos has paid more than K1.21 billion in corporate tax since the merger, despite the current focus of considerable discussion on multinational corporations in the extractive industry to pay their taxes. A further K43.2million was also paid as direct taxes as an operator in the country. At the recent PNG Energy Summit 2022, Santos Senior Vice President for Stakeholder Management, Wayne Kasou, stated that the Group has also contributed more than K20.6 million in royalties, K10 million in development levies, K1.6 million in community development and social investment, K1.1 million in education support for landowner scholarships, K300,000 in community development programmes, and K1.3 million for sustainability projects. In his presentation of the company's update, Mr. Kasou claims that the merger was advantageous for Santos and its shareholders, particularly at a time when oil and LNG prices were much higher owing to the improvement in the world's energy demand. The 1000th export shipment of the Kutubu Oil Blend from the Kumul Marine Terminal in April, he added, was a significant achievement for the firm in 2022 and was made possible by a proud and committed team that consistently ensured there were no production interruptions. With the effective shutdown of major regular maintenance in Kutubu without any casualties, another significant milestone was also reached. The highest safety records in the company's history helped achieve this despite the backdrop of COVID-19 limitations, and in August, the PNG operations produced the most at a rate of 119-kilo barrels of oil equivalent per day. In commending the employees and contractors Mr. Kasou said, “Our employees and contractors who remained focused throughout the merger and integration activities. “Their resilience, courage, and ability to respond to change have resulted in the phenomenal results seen so far in terms of profit, safety, and production. “This was achieved against a backdrop of uncertainty, two years of COVID-19 lockdowns and restrictions, a year earlier – the 7.5 magnitude earthquake that severely impacted our local communities and operations, the changes in previous management, and recently, a merger.” The value that the PNG company has provided to the entire Santos organisation as well as the nation, according to Mr. Kasou, is deserving of celebration. “At Santos’ half-yearly announcement, PNG contributed 50 per cent of the value to the wider group. Our people are our greatest success story, and I am proud to recognise the team,” he said.   Reference: Yafoi, Melisha. Post-Courier (23 September 2022). “Santos Invests In PNG”.​​​​