PNG wants a good LNG deal, not a fast deal

LNG Industry,| 2 December 2019

The Papua New Guinea (PNG) State Negotiating Team has released a statement, reaffirming its position in relation to the P’nyang Field.

Isaac Lupari, Chairman of the State Negotiating Team, said: “It is important we get a good deal, not a fast deal.

“This is vital to generate revenue and wealth creation from development of nation building projects in PNG.

“The key issue for PNG is to learn the lessons from the PNG LNG project and recently signed Papua LNG project agreement. What is essential to PNG is to develop the P’nyang Field in a timely fashion, on terms similar to other countries.”

According to the statement, there are two aspects to this. One of the current arguments is about the commercial terms.

Lupari said: “In essence PNG has already determined that we can achieve State benefits that are far greater than Papua LNG, while delivering an attractive return to the developer. We’ve already suggested to Exxon how we can resolve this sharing of benefits of the project based on international best practice.”

The other critical aspect to this is the certainty of the field being developed, and that this occurs according to a reasonable timeline with clear milestones. And yet Exxon won’t commit to this before the Minister issues the Petroleum Development License (PDL).

Lupari added: “What Exxon has demanded is we deliver a PDL before they complete industry standard prerequisites required for a final investment decision, which could give them an excuse to defer the development.

“A timeline for development must be one of the fundamental conditions in any agreement.

“Not agreeing to this makes us wonder if the developers really have any current plans to develop the project, or instead intend to warehouse the field. That kind of flexibility means the country may get no benefit – only costs – in the foreseeable future.

“We welcome the developer’s participation to resolve these issues and achieve a mutually beneficial outcome.”

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Filed under Financial returns, Papua New Guinea

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