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Oil and Gas
PNG Business News - May 10, 2021
Govt, Total Discuss Papua LNG Project
Deputy Prime Minister Sam Basil met with Total Chairman and CEO Patrick Pouyanné and discussed the Papua LNG project timetable as well as a potential investment in new petroleum prospecting licenses in Papua New Guinea. In a statement, Basil said, “Mr Pouyanné expressed his appreciation for the ongoing efforts by the Marape-Basil Government and confirmed Total is committed to completing Pre FEED and the national content plan in 2021, launching FEED in early 2022 and the Final Investment Decision by 2023”. “To secure commitments it is of the utmost importance for our Government delegation to meet with the Total Chairman and CEO face to face, as well as the French Government to stress the importance of the Papua LNG project to the nation of.” Basil said that the government has promised complete support for the project and that he is satisfied with the results of the talks, which culminated in consistent development plans and timelines. Pouyanné reiterated Total's contribution to delivering this critical resource project in Papua New Guinea following the conference. Pouyanné understood the Marape-Basil government's worries about ensuring greater local engagement, habitat restoration, and environmental protection. “It was agreed that Total and PNG Authorities will cooperate to create significant in-country value and to implement the Papua LNG project in an exemplary manner. It will also take into the highest consideration crucial biodiversity concerns, carbon dioxide emissions and environmental matters at hand, as well as the rights of local communities,” according to Mr Basil. “The Marape-Basil Government has made our National position clear throughout negotiations, and through the frankness of our discussions we will see stronger economic growth for our country through this USD$ 13 Billion dollar (KINA 46 Billion) CAPEX investment by TOTAL SE and Joint Venture partners.”
PNG Business News - May 07, 2021
France’s Total to Make Final Investment Decision on Papua LNG Project
After a one-year delay due to COVID-19, Total aims to make a final investment decision on the proposed two-train 5.6 million mt/year volume Papua LNG project in Papua New Guinea in 2023. Papua LNG, which will use gas from the Elk and Antelope gas fields, will begin front-end engineering and design (FEED) in early 2022, according to Total. "I confirm that this project is ranking very high in Total's portfolio given its proximity to growing Asian LNG markets and we will dedicate all necessary resources," Total CEO Patrick Pouyanne said in a statement. The announcement was made following a meeting in Paris with a delegation from Papua New Guinea headed by Deputy Prime Minister Samuel Basil. "After a year of delay because of COVID-19, the government of Papua New Guinea and Total are pleased to announce the remobilization of the project teams and of other required resources," Total said. "The objective is to launch the FEED early 2022 and to prepare for final investment decision in 2023.” The statement comes after the Papua LNG gas agreement was signed and reconfirmed in 2019, as well as the signing of a fiscal stabilization agreement and the award of a license extension in February of this year. Basil said that the government has pledged "absolute support" for the initiative. "I am pleased with the outcome of this meeting with clear implementation plans," he said. The Total-operated Elk and Antelope fields have been thoroughly appraised, and gas will be delivered via a 320-kilometre pipeline to the Caution Bay site, which is currently home to an ExxonMobil-operated PNG LNG facility with a capacity of 8.3 million mt/year. The Papua LNG plant, according to Total, will be combined with the current PNG LNG facilities in Caution Bay. Total controls the Elk and Antelope fields and, with a 31.1 per cent stake in the PRL-15 permit, is the biggest shareholder, alongside partners ExxonMobil (28.7%) and Oil Search (17.7 per cent). The government of Papua New Guinea has a 22.5 per cent back-in right. To further save billions of dollars, Total and its partners ExxonMobil Corp and Oil Search Ltd agreed to expand Papua LNG in combination with an extension of Exxon's PNG LNG plant in a $13 billion project adding three additional development units at the PNG LNG plant. However, Exxon has refused to agree to terms sought by the Papua New Guinea government for the P'nyang gas production, which was supposed to help fuel the expansion, as Prime Minister James Marape pressed for greater benefits for the region. Instead, Total's Papua LNG project will proceed with the construction of two new processing units at the PNG LNG site, which will be fed by the Elk Antelope gas fields, said Marape in February.
PNG Business News - May 07, 2021
Pasca A Project now Expected to Start in 2025
The Pasca A offshore oil and gas project in Gulf faces further delay to its start-up which is now expected in 2025, says developer Twinza Oil Ltd. The project will continue to be postponed until a deal is signed, according to Roppe Uyassi, who added that the project's delay would likely be compounded by the project team's departure. “This is really unfortunate for PNG, following the lengthy delays we have already seen from resource projects in PNG such as Papua LNG and Wafi-Golpu,” Uyassi said. Only prior to signing the deal last month, the government made it clear that it wanted a 6% export tax before it could sign it. According to the developer, it was 4% more than what had been settled upon previously. While the window for negotiations was still open, Petroleum Minister Kerenga Kua said it was critical to secure the best offer for the region. Oil and gas discovery and production, according to Uyassi, is a "highly dangerous but potentially lucrative market." “There needs to be a balance that recognises the risk taken by private investors and the development goals and aspirations of PNG, and the best deal would be one that maximises revenues to PNG,” he said. “This could be in the form of payments to local businesses and employees, or taxes and royalties to the Government to fund the country’s development priorities in health, education, security, infrastructure etc. “Importantly, it must also provide an incentive for private investors from all over the world to provide their money to develop the Pasca A Project on the promise of profits that will reward them for taking the risk to invest in Papua New Guinea. “We firmly believe that the deal agreed to between the State and Twinza strikes the right balance and provides a win-win outcome for both parties, delivering the highest State take of any resource development in PNG, be it on a discounted or nominal project value going to the State. “We understand that the outcomes of over 65 per cent discounted and 52 per cent nominal State take were even verified and benchmarked independently by Deloitte after being consulted by the State. “The agreed terms also included domestic market obligation (DMO) for the supply of gas being provided from the first year of production for the first time in PNG’s history, plus an increased percentage of domestic market gas supply to 10 per cent of production.” According to Uyassi, the Pasca Project would need at least K5 billion in additional funding in the coming years. “Even the State nominee carrying the State’s 22.5 per cent equity on the project going forward would require project financing to move this project forward into production, meaning that whatever terms we agree with the State must also be viable for the State nominee to raise financing. “The worst-case scenario would see Twinza sign an unviable gas agreement deal, only for the project to fail as it can’t attract investment from financiers who are more conservative than oil and gas project proponents such as Twinza.” Twinza had already started standing down the Pasca Project team due to the continuing delays in signing the deal, according to Uyassi, as the timetable of the gas agreement's implementation remained unclear. “This will continue, however, I will point out that as a foreign investor, Twinza has invested more than K350 million in the Pasca field over the past 11 years and will remain committed to PNG long-term,” he said. “The Pasca Project is ready to move into the Feed phase of project development soon after a successful gas agreement signing.” According to Uyassi, the project has been on hold since 2020, pending the start of the Feed process. “We remain hopeful that the development of PNG’s first offshore oil and gas field will commence soon,” he said. “We are committed to Papua New Guinea and remain hopeful this is something PNG will have to address for the long-term good of the industry and the many local businesses that depend on the industry.”
PNG Business News - May 03, 2021
Kumul Petroleum Holdings Seeking Funds from Abroad
According to managing director Wapu Sonk, Kumul Petroleum Holdings Ltd (KPHL) will seek funding from abroad to build gas fields in the Kimu, Barikewa, and Uramu in Kikori, Gulf. He stated that funding would be determined by the form of construction chosen by the group. Sonk was answering questions two weeks after KPHL received the petroleum retention licenses (PRL) 48, 49, and 50, which included the gas fields of Kimu, Barikewa, and Uramu. “As a good business practice, KPHL will look to invite potential investment partners into the licences to share the risk and then develop the fields together,” he said. “Again, the economics of the type of development option drives who join as partners to KPHL. “There are no other State-owned enterprises (SOEs) in oil and gas business except Kumul Petroleum so we will source funding from overseas mostly from different sources depending on size and type of development. “The potential partners that join KPHL will also bring the capital, which is a pre-requisite to the partnership for development.” Those licenses, previously 8, 9, and 10, were owned by Oil Search Ltd, Santos, and other operators, according to Sonk during the handover of the license earlier this month. “They held the licences for 15 years which is the maximum amount of time you can hold on to a licence under the ‘retention licence’ provisions in the Oil and Gas Act,” he said. “Once it expired, the licence goes back to the Department of Petroleum. “The department put out a Gazette notice which is like advertising that the licences had become available, that’s when other interested parties apply. “We don’t know who applied at that stage, but we applied at that time and was awarded the licences.” KPHL was among those who asked for the licenses before they expired, according to Petroleum Minister Kerenga Kua. He explained that the petroleum advisory board made suggestions to the government, which approved and signed off on the licenses to KPHL after thorough deliberation and consideration. Kimu and Barikewa areas are onshore, while Uramu is offshore in Kikori's deeper waters. The three fields are expected to have a 2C reserve of slightly more than 2TCF (trillion cubic feet) of gas and 50-60 million barrels of condensate.
PNG Business News - April 26, 2021
Kua Sees Bright Future for PNG Oil and Gas Industry
Petroleum Minister Kerenga Kua sees a bright future for the Oil and Gas industry. According to Kua, the price of a barrel is currently over US$60 (K207.63). “The outlook for the industry is still good and positive and the industry is still in very strong shape,” he said. The Covid-19 pandemic, he said, remained a challenge to the industry. However, the operator of the PNG LNG project, ExxonMobil PNG Ltd, took a professional approach to deal with the issue. Globally, US oil prices are down 42 cents (K1.47), or 0.7 per cent, to US$62.71 (K219.89) a barrel, after rising 6.4 per cent last week as a result of the revival of Covid-19 cases around the world and countries imposing tougher sanctions that would hurt economic growth. Oil Search Ltd, a partner in the PNG LNG project, recently said that the increase in Covid-19 cases in PNG has had no impact on its operations and production. “To date, there has been no impact to production in our Oil Search operations in PNG as a result of the recent surge in the Covid-19 cases,” Kua said. “The increase in confirmed Covid-19 cases in PNG has prompted Oil Search to enact its crisis and emergency management plans. “The health and safety of our employees remain the highest priority and teams have been assembled in PNG and Sydney to deploy additional support to protect our people and to ensure the safety and reliability of our operations. “At our PNG field locations, we continue to operate under precautionary protocols established in 2020, which includes redeployment of non-essential personnel, restriction of access and travel to field locations and implementation of strict preventative measures and quarantine zones.”
PNG Business News - April 23, 2021
Kua: State Ready to Continue Talks
According to Petroleum Minister Kerenga Kua, the window for talks on the Twinza's Pasca A gas project is still open. Mr Kua was referring to Twinza Oil Limited, saying that the current terms of the arrangement are not suitable for any investor and that the firm has asked its Pasca A project team to stand down. Although he acknowledges Twinza's reservations about the Pasca A agreement being signed, he believes it is the government's prerogative to negotiate better terms. In a letter to Twinza in February, the Minister said that “the Prime Minister’s policy directives come amid an impasse between the State Negotiating Team (SNT) and Twniza Oil Limited (TOL) in reaching a closure on the Gas Agreement”. “He has further instructed me to direct the SNT to re-negotiate certain fiscal terms with TOL to achieve his policy directives and conclude a Gas Agreement signing on or before the 21st February 2021.” According to the corporation, the state has requested a 6% Production Levy in order to sign the deal, which is 4% higher than the Production Levy that was agreed to as part of the substantive terms ('Agreed Terms') for Pasca A, signed by the State Negotiating Team and confirmed by Prime Minister James Marape on September 24, 2020. The additional levy demanded, according to Twinza, would make the Pasca A Project unfinanceable for any investor. Mr Kua, in response, said: “Until the signing takes place, the window for negotiation is still open. As Minister for Petroleum, it is imperative for me to seek the best outcome for PNG. “I understand that Twinza negotiations have taken several months to reach this point and the company has invested heavily in time and resources. But given the uniqueness of the project related to other existing oil and gas projects in the country it would be negligent for the State not to demand more benefits from this deal.”
PNG Business News - April 23, 2021
Sonk: Kumul Petroleum Well Positioned to Manage Kikori Gas Fields
Kumul Petroleum Holdings Ltd (KPHL) is well-positioned financially and technically to manage the new gas fields in Kikori, Gulf, and is prepared to participate in other resource ventures such as Papua LNG. Wapu Sonk, the company's managing director, said this in response to the government's decision to grant the national oil and gas company wholly owned and operated petroleum retention licences 48, 49, and 50, which cover the gas fields of Kimu, Barikewa, and Uramu. Kimu and Barikewa areas are onshore, while Uramu is offshore in Kikori's deeper waters. “Kumul Petroleum is almost debt-free,” he said. “Our balances are very strong. We have a very strong cash flow that comes from the PNG LNG project and other projects including the power projects in Hides and the Port Moresby power station (NiuPower Ltd) as well. So we are stronger to operate the licences.” The Petroleum Advisory Board (PAB) had examined the company's financial situation and decided to issue them certain licenses, according to Sonk. He said that KPHL had released its financial accounts and analyses over the previous three years and that the board of directors had concluded that the firm was in good shape. “This is not a free gift from the Government,” he said. “It has gone through the proper assessment process by the PAB which is an independent body.” Sonk said PAB had also assessed the technical capabilities of KPHL “We have been here for 10 years building capacities and we got this on merit,” he said. “But it also fits into the Government’s overall policies.” Sonk also mentioned that KPHL will look at less expensive and more efficient ways to commercialize the fields, including downstream manufacturing, power generation, quicklime, and cement production, among other things. He said that KPHL will welcome potential parties to evaluate the gas fields and bring them into the drilling and production phase.
PNG Business News - April 22, 2021
Government Increases Its Demand for Pasca A Deal
According to project operator Twinza Oil Ltd, the government has raised its demand for the Pasca A Gas agreement once again, ahead of the scheduled signing. According to a statement from Twinza, the government told the firm last Friday that signing the agreement now demanded a 6% production levy. It read: “This is 4 per cent higher than the production levy that was agreed as part of the comprehensive terms (agreed terms) for Pasca A, negotiated by the state negotiating team and announced by the Prime Minister James Marape last Sept 24. “The additional levy requested would make the Pasca A project un-financeable for any investor. “The agreed terms would have delivered the highest State take from any resource development in PNG and were widely regarded as meeting all of the demands of the State, including early revenues, full royalty and development levy entitlement and a domestic market obligation of 5 to 10 per cent while satisfying the requirements of project financiers.” it said that the State had also attempted to amend the negotiated terms through a letter from Petroleum Minister Kerenga Kua on February 4. “The Government’s demand to raise the fiscal take to (between) 55 and 60 per cent nominal share, which is 75 to 85 per cent of the actual project value, would make Pasca A unviable for investors and financiers alike,” it said. “Notwithstanding the changing State positions, Twinza remains committed to PNG and progressing the Pasca A Project on the agreed terms.” Twinza gave an extra concession to the negotiated terms, raising the production levy to 4%, with a further rise to 6% at higher oil prices, in an attempt to close the deal. “This will provide 65 to 70 per cent of project value to the State or 52 to 54 per cent of nominal take,” it said. “The State take has been independently verified by Deloitte in a comprehensive report commissioned by the Department of Petroleum and delivered to the minister this month.” Twinza has kept its project team for Feed (front-end engineering and design) – readiness in the hope that the gas deal will be concluded by the end of 2020 after the negotiated terms were confirmed by Marape in September. The Pasca A gas agreement reached this month would have required the project to enter the Feed process right away, with a final investment decision expected in 2022 and first production in 2025. “Given the continued delays, Twinza will now stand down the Pasca Project team until there is clarity on terms and execution of the gas agreement.” Chairman and chief executive Ian Munro said: “Twinza was awarded the Pasca license nearly 10 years ago as a foreign direct investor. Since then, the firm has invested over K350 million in cultivating a field that was discovered more than 50 years ago but overlooked by other industry players. “It is disappointing that at the closing stages of a drawn-out 10-month gas agreement process, the State is now seeking to again revise terms to ones that are demonstrably unacceptable to any investor. “Consequently, while Twinza remains committed to progressing the Pasca A project on a fair and equitable basis, the company will streamline its costs while awaiting a gas agreement signing on acceptable terms. “We remain focused on developing PNG’s first offshore oil and gas field and opening up the Gulf of Papua to much-needed investment as soon as circumstances allow.”
PNG Business News - April 19, 2021
Kumul Petroleum Holdings Limited Awarded Petroleum Retention Licenses
Kumul Petroleum Holdings Limited has been granted 100 per cent control of three Petroleum Retention Licenses (PRL) by the PNG government (KPHL). PRL 48, 49, and 50 of the Kimu, Barikewa, and Uramu gas fields have already been discovered. The three fields have the best estimation of contingent capacity (2C) of slightly more than 2 trillion cubic feet (tcf) of crude, with 50–60 million barrels condensate. Kerenga Kua, the Minister for Petroleum, delivered the licenses to Wapu Sonk, the Managing Director of KPHL, today. PRL 48, 49, and 50 refer to the Kimu, Barikewa, and Uramu gas fields, which KPHL plans to expand. Kimu and Barikewa are both onshore fields, while Uramu is located offshore in Gulf Province's Kikori waters. Minister Kua described the event as historic since KPHL was given sole ownership of the licenses after the previous licensee's contract expired. “This is an important step forward as we realise the potential of our world-class natural resources. It shows that our policies are working and allows the Government through the guidance of the Department of Petroleum to allocate assets and licenses to the right developers and in particular looking for a greater share of the benefits from our resources when the licenses expire and the rights return to the State.” After the original authorization for the fields expired, KPHL thanked the government for granting them the license. He said that KPHL has the financial and technological resources to grow the fields. “I thank the Petroleum Advisory Board (PAB) and Minister for coming to this decision, which demonstrates their confidence in the country’s National Oil and Gas Company, which is ready now to lead in the development of our resources after last Ten Years of being a passive investor in PNGLNG Project and other developments. “At Kumul Petroleum, we take seriously our responsibility to move forward quickly so the assets can begin generating returns for the nation. We are looking forward to getting them started but will only do so on good commercial terms, which deliver substantial benefits to Papua New Guinea and its people. “Our focus now is on developing commercial strategies for the PRLs, so we can work towards bringing them to market. “This is another milestone for our company and the country, as we continue to work to develop our excellent resources and support the world’s transition away from coal. Papua New Guinea has some of the world’s best natural gas assets, which KPHL is committed to developing with local people and businesses, the Government and global partners.” Wapu Sonk says KPHL will find cost-effective ways to commercialise the fields. “We will explore cheaper and more cost-effective ways to commercialise these fields not only in Production of LNG and coal, as well as downstream refining, power generation, quicklime and cement production, and so on. He added, “At Kumul Petroleum, we take seriously our responsibility to move forward quickly so the assets can begin generating returns for the nation. We are looking forward to getting them started but will only do so on good commercial terms, which deliver substantial benefits to Papua New Guinea and its people. “Our focus now is on developing commercial strategies for the PRLs, so we can work towards bringing them to market. “This is another milestone for our company and the country, as we continue to work to develop our excellent resources and support the world’s transition away from coal. Papua New Guinea has some of the world’s best natural gas assets, which KPHL is committed to developing with local people and businesses, the Government and global partners.” A PRL is valid for five years, with the option to extend for another five years.
PNG Business News - April 19, 2021
Provinces to Collaborate on the K41.38 Billion Papua LNG Project
Central Governor Robert Agarobe of Papua New Guinea said the (Central) government will support the Gulf in all aspects of the US$12 billion (K41.38 billion) Papua LNG initiative, especially in terms of community benefits. He said this at the unveiling of many impact projects in Ihu, Kikori, including the Ihu Special Economic Zone (Isez). According to Agarobe, the locals from the four impacted villages – Papa, Lea Lea, Boera, and Poerabada – earned royalties as a result of the PNG LNG initiative, but their standard of living remained poor. “It is good to know that this part of the country is full of resources,” he said. “But these resources will only benefit the people if it’s managed well. “I can only speak from experience and with the experience I have with the PNG LNG project is that when we are trying to measure the benefits or the success of any project, I can only measure it by going back to the affected villages to see how my people are actually living with the development going on. “If we go back to Central, where we have the four affected villages, we do get royalties as benefits and infrastructure development grants but in terms of standard of living of our people, it is still very poor.”
PNG Business News - April 08, 2021
Price of Oil Recovers in Spite of COVID
According to Oil Search, oil prices have risen steadily in recent months from the initial effect of the Covid-19 last year, when prices ranged about US$43 (K150) per barrel of oil (bbl), to levels above US$60/bbl (K210) since February this year. In response to questions, a group spokesperson said,“ To date, there has been no impact to production in our Oil Search operations in PNG as a result of the recent surge in the Covid-19 cases. The increase in confirmed Covid-19 cases in PNG has prompted Oil Search to enact its crisis and emergency management plans. The health and safety of our employees remain the company’s highest priority and teams have been assembled in PNG and Sydney to deploy additional support to protect our people and to ensure the safety and reliability of our operations. At our PNG field locations, we continue to operate under precautionary protocols established in 2020, which includes redeployment of non-essential personnel, restriction of access and travel to field locations and implementation of strict preventative measures and quarantine zones.” He added, “We have enacted additional risk mitigation measures include establishing ‘cocoons’ for our field teams and extending the quarantine period for employees and contractors. To date, there has not been a single positive case recorded in our operating sites outside of quarantine. We have also conducted more than 7,500 Covid-19 tests at our medical clinics and quarantine facilities in PNG. Beyond the safety of our own people and assets, Oil Search stands ready to work with relevant Government and health authorities to assist in PNG’s overall response to the Covid-19. This includes the dissemination of accurate information around the Covid-19 and vaccinations, supporting provincial health authorities to implement an effective vaccination programme, and providing logistics and cold chain support where required and as directed by the Government.”
PNG Business News - March 29, 2021
Oil Search Operating With Measures
Oil Search claims that stringent quarantine procedures, behaviour restrictions, and personnel roster guidelines put in place last year have secured the company's activities in the region. In a statement, Oil Search said that no cases of Covid-19 had been identified in their field operations. In addition to the number of Covid-19 cases around the world, the organization has increased its efforts to protect its employees and ensure secure and efficient operations. The instituted ways include: The organization is bringing its disaster and emergency response strategies into effect, with staff in PNG and Sydney closely handling and tracking the situation. PNG field sites are continuing to follow precautionary procedures placed in effect last year, which included redeploying non-essential personnel, limiting access and transport to field areas, and putting in place stringent preventative measures and quarantine zones; Imposing further RISK Reduction Steps, such as acquiring further monitoring facilities and expanding the quarantine duration for staff and contractors heading to the field; Reducing the Port Moresby office's workforce to a core community of medical, defence, and facilities workers, with regular checking of office employees; and, Procurement and distribution of nearly 500,000 pieces of personal security equipment to the National Government. Oil Search managing director Dr Keiran Wulff said, “The Covid-19 is a growing threat to the people of Papua New Guinea. “We are doing everything to ensure that our employees can continue to work safely, and to support their families as they do so.”
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PNG Business News - March 23, 2021
Minister Says Pasca Talks In Progress
Twinza's Pasca is the topic of negotiations. According to Petroleum Minister Kerenga Kua, a plant in the Gulf is currently underway. Kua predicted that reaching an agreement on the country's first offshore oil project would take some time. “(Project) still under negotiations,” he said. “Generally, it could take a few years to negotiate an agreed position. Once in a while, it takes less time. Patience is important to all sides.” Twinza has previously stated that the talks were over the fiscal terms for the construction of the gas-condensate field in the Gulf of Papua. “The company is committed to working collaboratively with the Government to deliver an agreement that allows the project to move forward toward development, while providing a higher state take than previous projects,” country manager Roppe Uyassi said. “Once the Pasca A gas agreement and the petroleum development license are in place, the project is well-positioned to enter the front-end engineering and design phase later this year.” Twinza was also excited to discuss significant non-financial prospects with the SNT, such as domestic business commitment, third-party access to infrastructure, and national material. “These matters were differentiated from land-based projects as Pasca A field is planned to be the first offshore development in PNG.” Meanwhile, according to company records, Twinza's main asset is the offshore Pasca A liquids-rich gas field. The Pasca A field development plan had been completed, the petroleum inventory had been approved, and the program to receive full-field development licenses had been completed. The Pasca A development will become the country's first offshore field development after all requisite government approvals are issued.
PNG Business News - March 11, 2021
Hela and Southern Highlands Sign MoU for PNG LNG Project
To set out how benefits from the PNG LNG project will be divided between two provincial governments, Papua New Guinea's Governors Hon. Philip Undialu (Hela province) and Hon. William Powi (Southern Highlands province) have recently signed a Memorandum of Agreement. In 2009, benefits from the PNG LNG Project to the provincial government and landowners were agreed during the UBBSA when the Hela region was still part of the Southern Highlands province, but three years later in 2012, the Hela region became a province. With oil and gas and wells supplying gas to the PNG LNG Project located in both provinces, leaders decided on a split of the benefits agreed in 2009, and instructed the Mineral Resources Development Company (MRDC) to work out the formula. “First and foremost, we want to thank and pay homage to Grand Chief Sir Michael Somare for delivering the PNG LNG Project, the single biggest investment ever undertaken in our nation’s history. The project remains a milestone achievement for the nation by the founding father, whose passing we are mourning at this moment. “We also thank and remember late Anderson Agiru, former governor of Southern Highlands and foundation governor of Hela, for his role in delivering the project, and negotiating the benefits for the landowners and the provincial government. “At that time, the Hela region was part of Southern Highlands province. Work had begun for the establishment of a new province, and it was agreed that the benefits to the southern Highlands province agreed under the UBBSA would be reviewed once Hela province was established. “MRDC undertook that exercise and worked out a formula for the split of the benefits between the Southern Highlands and Hela provinces, and we want to thank MRDC for almost their years of hard work put into this document we signed today. “Essentially, this Agreement allows benefits from oil and gas fields in Southern Highlands to be split 60% (Southern Highlands) and 40% (Hela). Likewise, benefits for oil and gas fields in Hela province will be split 60% (Hela) and 40% (Southern Highlands). “To illustrate, SHP will retain 60% of the benefits from PDL2 (Kutubu and Moran), which includes royalties, SSG funds, and development levies. “Hela will retain 60% of benefits from all gas fields, which includes royalties, development levies, and the Kroton Equity as well. “The Southern Highlands Provincial Government equity in Bank South Pacific (BSP) and Petroleum Resources Kutubu (PRK) will also be split, with 40% going to Hela province.” “We are proud and honoured to sign this agreement on behalf of our people. “This split ensures equitable distribution of benefits from this project to the two provinces so that vital social development projects that uplift the lives of our people can continue to be delivered.”
PNG Business News - March 08, 2021
MRDC Happy with World Oil Prices
The increase of oil prices above US$60 (K207.90) has made Papua New Guinea’s Mineral Resources Development Company satisfied. According to the company's managing director Augustine Mano, the average oil price last year was at “historical lows”. “This year is better than last year given the oil price is above US$60,” he said. “Last year, the oil price average was at a historically low and on average for the year around US$32 (K110.88). With the Covid-19 pandemic, companies around the world struggled. PNG was no different. If the price holds at US$60 for this year, it will be a strong recovery for the MRDC group.” Mano added that the revenues for Kumul Petroleum Holdings Ltd, MRDC and the petroleum sector would be important.