State achieved 51pc stake in Papua LNG gas agreement: Abel
The Papua LNG gas agreement saw the State achieve a 51 per cent stake on the net free cash flow from the project, former deputy Prime Minister Charles Abel says.
He said this was confirmed in Parliament last October by Petroleum and Energy Minister Kerenga Kua.
Abel said better conditions on resource projects could be achieved progressively and had to be within economic reality.
He said the improved terms were:
Carried financing on State equity input;
Additional royalty for State and landowners;
An improved royalty formula with no capital allowance deductions;
A Domestic market obligation for gas and at a fixed price (given normal inflation trends this is a declining price over time);
Third party access to the pipeline;
Fixed commitment to local content; and,
A minimum forex balance to be maintained in country.
“Revenue streams should go directly to Treasury, provincial governments and landowners; and a small proportion into a Sovereign Wealth Fund,” Abel said.
“The objective should be a more heavily weighted royalty system based on export value as it is much easier to monitor and is not subject to net profit as is dividends and tax.”
Recently, Prime Minister James Marape said the country was unfairly held to ransom by the Papua LNG project developers.
He said the Government would not tolerate such behaviour and was committed to ensuring the project was developed without delay.
The project agreement was signed last April with Total, ExxonMobil, Oil Search and Nippon Japan that had a total project outlay estimated at US$13 billion (K44.65b).