Friday, May 23, 2008

Papua New Guinea Gas Project Deal

[Report from the PNG National Newspaper 23rd May, 2008]

K38 billion gas project sealed

With a consortium that includes one of the world’s largest companies, Exxon Mobil, placing PNG on the global commercial scene.
The project will underpin the PNG economy for the next 40 to 50 years, as it has the potential to earn more than K130 billion in income for the Government and landowners over a 30-year period once LNG export begins.
The gas agreement was signed by the Governor-General, Sir Paulias Matane, and Petroleum and Energy Minister William Duma and the project’s joint venture participants which include ExxonMobil, Oil Search, Santos, Nippon Oil, MRDC and Eda Oil.
The agreement outlines the fiscal and legal framework by which the LNG project will be regulated through its lifetime.
The agreement was formally presented to the Prime Minister, Sir Michael Somare, at a ceremony in Parliament yesterday where executives of the joint ventures, members of the diplomatic corp, Members of Parliament and invited guests attended.
The Prime Minister said the agreement is a major achievement and provides a clear indication of the Government’s commitment to the project.
Sir Michael said its potential impact is significant as it could double the GDP of PNG and provide a big boost to the average income of the PNG workforce.
“Papua New Guineans should be proud.
“We have now become the 16th nation in the world to have a substantial LNG project in place,” Sir Michael said.
He said the PNG LNG project is of world class and will show the global community that PNG is an ideal place to invest and do business.
ExxonMobil project executive Peter Graham said the gas agreement has set out the fiscal regime and legal framework by which the PNG LNG project will be regulated.
Mr Graham said ExxonMobil, which has a 41.5% interest in the project, is pleased to have the gas agreement executed.
“We look forward to working with the PNG Government and our joint venture participants to maximum the value of the resource and long-term sustainable benefits to the community,” Mr Graham said.
The project is set to enter front end engineering and design (FEED) stage.
The FEED team will comprise personnel from ExxonMobil, the joint ventures and the FEED contractors based in PNG, Australia, the United States and Japan.
The FEED stage will pursue LNG sales agreements, secure necessary permits and licences, and undertake the financial planning necessary for investment decision.
Oil Search managing director Peter Botten said they were happy that the agreement has been executed. Oil Search has a 34% stake in the project.
The PNG LNG Project includes all development components including the processing facilities, pipelines and LNG plant facilities.
Other stakeholders are Santos 17.7%, AGL 3.6%, Nippon 1.8%, landowners 1.2%, and Eda Oil 0.2%. Interests will change when the PNG State’s nominee join as an equity participant at a later date.

Prime Minister Sir Michael Somare opens a gift box watched closely by ExxonMobil project executive Peter Graham and executives of joint venture partners and government officers at the presentation ceremony at Parliament House yesterday. – Nationalpic by WILLIAM WILLIANDO

Comments from J.B. Nirenga [May 23, 2008]

The signing of this gas deal between the government of Papua New Guinea and joint venture partners of Exxon Mobil is clearly historic but Papua New Guinea as a country, and more so the landowners from which this natural gas is located may not benefit a great deal in terms of infrastructural and socio-economical development. I may not be absolutely correct here, but I perceive that many of these so called resource development deals and agreements are done by the government of Papua New Guinea without any of its own tangible long-term plan for the country for creating an economy within the country that will create jobs and improve the standard of living of its people. After over thirty years since independence from Australia, Papua New Guinea has a growing population with high illiteracy amongst its population, and the standard of living has consistently dropped over the years. Crime and criminal activities are on the rise simply because there are no jobs for school leavers and many young people are just frustrated of a system that is working against them and their aspirations. I am hoping that when politicians and bureaucrats start thinking less of themselves and begin to serve their people, and their country maybe, just maybe..... the future will be bright again for Papua New Guinea.