Total welcomes govt decision to seal deal
TOTAL SA, the operator of the US$13 billion (K44.2b) Papua LNG, has welcomed the Government’s decision to honour the gas agreement signed in April.
“It is a positive signal for foreign investment in the country,” a Total SA spokesperson told The National yesterday.
“We welcome the decision of the PNG Government to honour the gas agreement.”
Former Petroleum Minister Dr Fabian Pok also welcomed the Government’s decision.
The Marape-Steven Government’s decision to stick to the initial agreements came after a month of discussions held both in PNG and abroad to revise the gas agreement that was signed by the previous O’Neill government.
Visiting academic Dr Marcel Schroder told The National that generally, either in the resource or non-resource sectors, stable policies were important.
“Economists argue that stable policies towards foreign investors are beneficial to developing countries, at least in the long run, regardless whether it concerns the resource or non-resource sector,” he said.
Pok, in a statement yesterday, said the fiscal terms and general economics of the agreement was one of the best project agreements signed on behalf of the State.
“Before negotiations for the agreement began, we made it clear to Total and other participants in the project that the interest of the State, the provincial government, and landowners needed to come first before all else,” he said.
Pok said the three key benefits that were an improvement from the PNG LNG Project included a two per cent production levy that would ensure revenue flow to the government as soon as export started; a better calculation of royalty for landowners and the provincial government; a portion (five per cent) of the gas set aside for domestic use at a low fixed price.
“On top of that, the operator of the project has agreed to carry the State’s equity costs. That removes the task of the Government seeking a loan on the international financial market,” Pok said.
“Given our current economic conditions, that would have been burdensome.”