Papua LNG Agreement Shaping Up

By Meriba Tulo, EMTV News, Port Moresby

The National Government has now granted approval for Papua LNG project to proceed with the implementation of the Project Gas Agreement, following an NEC sanctioned review.

Prime Minister James Marape, and Petroleum Minister Kerenga Kua addressed the media this afternoon, outlining the State’s position on several issues including National Content, Petroleum Pipeline Third Party Access, Pipeline Ownership, and LNG Tankers.

The Prime Minister expressing his reluctance to sacrifice the greater interest of the country in the haste of getting projects secured or undertaken.

“Our minister has undertaken in the last 90 days the fullest appreciation of the court agreement in totality the context of law we have, and ah has made greater approaches to the project partners to ensure that we secure what needs to be secured within the context of what is our rights and entitlements. Respecting the agreement that was signed before we took office.”

The Petroleum Minister explaining the importance of engaging PNG owned and operated companies under existing and future agreements

“Citizen-owned PNG-based companies who’ve been here during hard times, good times, bad times, they should now be given an opportunity to contract to the project and ensure they will make sure that some of these constructions span is kept in this country and we’ve gone for as much as we can and uh total has agreed they agreed with the spirit and intent of that approach however that approach however the appropriate time to discuss that approach will be after the project designs have been finalized which is what they call FEED then we can assemble a technical team on both sides and we can use a pencil to mark out what should go to the contractor, the operator to engage and what should be contracted out to Papua New Guinean-based companies”

“And so they’ve agreed that in principal the states participation will be maximized and that spirit will be respected so that commitment to keep an open mind and an open heart about maximizing opportunities for Papua New Guinean companies, landowner companies, provincial government companies during the construction phase is left open and we will approach it with that spirit in mind.”

These agreements now pave the way for the State to realize increased National Content during the construction phase, future pipeline ownership, and future shipping ownership, which the leaders say are substantial gains

Go to this link for more: https://emtv.com.pg/papua-lng-agreement-shaping-up/?utm_source=dlvr.it&utm_medium=twitter

Papua New Guinea sticks to gas deal with Total for $13 billion project

By Sonali Paul - Reuters

MELBOURNE (Reuters) - Papua New Guinea said on Tuesday it will honor a gas deal that Total SA signed with a previous government for a $13 billion plan to expand gas exports, after securing minor concessions from the French company.

The decision removes uncertainty over the plan to double liquefied natural gas (LNG) exports from the Pacific nation that arose after new Prime Minister James Marape came to power in May promising to win more benefits for the impoverished country.

The Papua LNG gas agreement is one of two agreements needed for Total and its partners, Exxon Mobil Corp and Oil Search Ltd, to go ahead with the LNG expansion plan.

“The government has now cleared Total to proceed full steam ahead with the implementation of the Papua Gas Project,” Petroleum Minister Kerenga Kua said in a statement.

Doubts about the gas deal escalated in August, when the government suddenly called for talks to revise the agreement.

Kua said Total had made some concessions, promising to prepare a detailed plan outlining how much local equipment and services would be used in the project and to negotiate with any third party wanting access to the project’s petroleum pipelines.

It would also be willing to negotiate for Papua New Guinea to take a stake in the pipelines after the state has repaid all its loans and costs on the project, and would consider buying LNG carriers in a joint venture with the state. “Most of these are substantial new concessions on potential future benefits,” Kua said.

The companies had insisted that the Papua LNG gas agreement that Total signed in April should be honored, and Oil Search warned in August that costs on the project could rise if it was delayed by prolonged talks.

An analyst said the government had capitulated to Total, winning only non-committal offers to consider future steps that might benefit the country.

“This is a big win for the industry, but they can’t say that, because they need to let the prime minister and Kua save a little political face,” said the analyst, who declined to be named due to the sensitivity of the issue. The three companies welcomed the government’s decision.

“We are looking forward to working with the Government of PNG to conclude the required gas agreement for the P’nyang project,” Exxon Mobil said in an emailed comment, referring to the second of the two agreements needed.

Oil Search’s Managing Director Peter Botten said the project would “help deliver billions of kina in value to the PNG economy, support local businesses and provide greater employment opportunities for thousands of Papua New Guineans,” referring to the PNG currency. Shares in Oil Search, which have dropped over the past three months amid uncertainty over the gas agreements, closed 2.1% higher shortly after the government’s announcement in a flat broader market.

“There should be a handsome re-rating,” Adrian Prendergast, an analyst at Morgans, said a day ahead of the announcement.

“In the time the political developments have been happening it (Oil Search) has really derated more than the total value that we place on this expansion.” At Monday’s close, Oil Search shares were down about 14 percent since the previous prime minster stepped down.

Go to this link for more: https://uk.reuters.com/article/uk-papua-total-lng/papua-new-guinea-sticks-to-gas-deal-with-total-for-13-billion-project-idUKKCN1VO115

Team aims to renegotiate gas deal

Posted on The National

A state negotiating team (SNT) led by Petroleum Minister Kerenga Kua, pictured, left for Singapore on Thursday aiming to renegotiate the terms of the Papua LNG gas agreement.
The agreement on the US$13 billion (K44bil) project was signed by the previous government on April 19.
The Papua LNG project will develop the Elk Antelope gas fields which is expected to produce close to 2.7 million metric tonnes per annum.
Former Petroleum Minister Dr Fabian Pok told The National earlier that the State had signed on “what percentage shares to take, what per cent of benefits goes to the State, the developer and the provincial governments”.
Pok had said after the signing, French developer Total could then go to the financial institutions to raise funds for its investment in the project.
Kua said since the current government took office on May 30, it took the firm view that the Papua gas agreement was disadvantageous to the State and the people in certain respects and resolved to seek a renegotiation.
He cautioned that considering what was at stake, the peoples’ expectations needed to be guarded during this period.
“The negotiations could work out well or even disastrously, but either way, the people must be ready to accept whatever the outcome. As a nation, we have reserved all our rights in law as we move down this path,” Kua said in a statement.
“Success in the discussions could lead to an early progress of the project.
“By the same token, failure could have very serious ramifications. But failure must not be ruled out and must remain within our contemplation.
“The final outcomes will be briefed to the Prime Minister James Marape and the National Executive Council, and the final decision will be taken by the NEC.
“Considering our nation’s economic circumstances short and long term, no stone must be left unturned at such important junctures.”

Go to this link for more: https://www.thenational.com.pg/team-aims-to-renegotiate-gas-deal/

Japan largest purchaser of PNG natural gas

Posted on The National

SINCE 2017, Japan remains the largest purchaser of natural gas from Papua New Guinea, importing 4.2 million tonnes, followed by China (2.1 million tonnes), according to a World Bank report.
Taiwan, China, is the most dependent on gas from PNG, with 10.4 per cent (1.9 million tonnes) of its LNG imports coming from the country; in China the number is 6.1 per cent, and 5.1 per cent for Japan.
World Bank PNG released its report it Port Moresby last week, Papua New Guinea Economic Update: Recovery Amid Uncertainty.
With liquefied natural gas (LNG) production accounting for about 13 per cent of GDP and nearly 40 per cent of merchandise exports, LNG is now a firmly-established feature of PNG’s economy.
“Papua New Guinea is still a minor producer by global standards. Its 8.2 million tonnes of LNG exports is dwarfed by the 81 million tonnes exported annually by Qatar, the world’s largest LNG exporter,” the report stated.
“In the Asia-Pacific region, PNG ranks fourth behind Australia, Malaysia, and Indonesia. However, if the new Papua LNG project and the PNG LNG expansion (P’nyang) deliver the promised eight million tons of extra capacity, PNG will potentially move closer to Indonesia.”
The report said rising demand for PNG’s main commodity export, LNG, gave cause for optimism.
Moves to improve air quality in Chinese cities, coupled with China’s continued economic expansion, were driving steady increases in Chinese demand for natural gas.
With domestic Chinese supply unable to keep pace with demand, LNG imports are rising rapidly and exceeded 50 million tonnes per year in 2018 (more than five times Papua New Guinea’s total annual LNG production).
Japan, the world’s largest importer of LNG, took steps in 2011 to reduce the use of nuclear power and saw an increase in LNG imports which had proved sustainable in recent years but was likely to decline as its nuclear plants come back on-line.
Demand for LNG in Taiwan – PNG’s third largest LNG trade partner – rose by an average of five per cent per year from 2012-18, supporting the outlook of growing regional demand over the medium term.

Go to this link for more: https://www.thenational.com.pg/japan-largest-purchaser-of-png-natural-gas/