Papua LNG Gas Agreement To Be Reviewed

New Petroleum Minister Kerenga Kua

Post Courier | June 17, 2019

A sigh of relief for the aggrieved landowners and key stakeholders of the recently signed Papua LNG, the gas project agreement will be “reviewed”.

This was the ultimate assurance from the Petroleum Minister Kerenga Kua pronounced during the handover take over ceremony between him and outgoing minister Dr Fabian Pok today in Port Moresby.

He said the review should be done to satisfy the government and people that “it was signed in compliance with all applicable laws” and protocols and key institutions like the Bank of Papua New Guinea and Treasury, to name a few have been involved equitably and statutorily.

Former Petroleum Minister Dr Fabian Pok meanwhile has issued caution that by 2024 the supply of gas world-wide will increase and demand will be less.

“If we think we have enough that the world can wait than we have a serious problem,” he said.

He added that the Papua LNG agreement will see the country reap more than what the PNG LNG in the highlands had to offer.

Dr Pok admitted there had been a lot of criticisms and critiques about the Papua LNG agreement but he was convinced that it was for the better of the country and his team had put in substantial effort to ensure it was beneficial to the state and key stake holders like the Gulf Provincial government and landowners.

“There is nothing sinister about it,” he said.

“When you sit on the chair, you are bound by what happens around the world,” Pok said referring to international gas markets supply and demand which influence business.

1 Comment

Filed under Financial returns, Human rights, Papua New Guinea

One response to “Papua LNG Gas Agreement To Be Reviewed

  1. Hides

    Dear Mine Watch,

    We heard and read one of your earlier reports on Elk/Antelope gas field being commercially marginal and sour gas field and that the reservoir is driven by an active aquifer system and that the gas volume was only 0.5 TCF which was inadequate for an LNG project on a standalone basis.

    Given the above understanding and despite availability of a report at the Department of Petroleum, the State went ahead to sign the Gas Agreement. This was done even after Total had not submitted any meaningful documents for Regulators basic understanding of the project or initial conceptual development plans for the gas field.

    Also, an un-certified gas volume of 10.3 TCF is in the agreement instead of the commonly excepted certified 6.5TCF. The corresponding estimated 150 million barrels of condensate is missing and not sure how that would be account for during production and revenue period.

    In addition, many tax concessions were given away and the agreement provides no provision for review of the agreement sometime down the line which is bad.

    Also the Agreement is dictating or manipulating the Oil & Gas Act 1998 to favour foreign JVPs and therefore the State has no control over the project in certain aspects of the agreement.

    The government in its wisdom shut out the State Negotiating Team and the process was taken over by Prime Minister O’Neil and Total CEO and came up with a gas agreement that was initialled by the two individuals which became the final draft document to be signed by all other JVPs later which was the next day.

    The above are reasons for the government to call for a review of the agreement to be transparent and to maintain good oil field practice and not to chase away investors.

    Experts believe that Total SA played the dominant role in drafting the agreement to dictate terms that are undesirable but done deliberately to invite criticism or discontent. This was designed by Total to invite calls for review of the agreement by the public. This calls would then be used as a pretext for Total to protest and walk off the project to avoid a serious underlying problem with the project.

    The problem is that the field has gas but no volume to underpin an LNG project according to a consultant report at the Department of Petroleum. What this means is that Total failed to carry out its own due diligence on gas reserves prior to taking up equity in the project. After messing that up they have been looking for an opportunity to sell their equity and walk off or find another reason to avoid going ahead with the project.

    It is believed that the gas agreement is providing the perfect opportunity for Total to walk off the project so that adverse effects on the stock market are less severe. They have done it cleverly in manipulating in the agreement.


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