Tag Archives: LNG

Governor says people still waiting on LNG promises

The National | December 2, 2019

THE PNG LNG project is yet to deliver the billions of kina promised to the people of Southern Highlands but the operator is already accelerate production of gas from the fields in the province, says Governor William Powi.

Powi said as part of developing the P’nyang project, the proponents were trying to use the PNG LNG gas fields in the province to produce gas between 2024 and 2028 under the Associated Gas Development.

He claimed it would deplete the gas quickly while they are waiting for the P’nyang gas to come into the PNG LNG third train.

He said the plan would have a negative impact.

Powi said the landowners and provincial government had been promised billions in development levies and royalties.

They had allowed for capital expenditure deductions by way of depreciation allowance in calculation of royalty and development levy, allowing capital uplift premium and allowing for operating expenditure recovery in the calculations.

In fact, the 2 percent royalty and development levy becomes less than 1 per cent, an acceleration of the cheating by the developer.

“This should not be allowed at the expense of the people of Southern Highland and its landowners,” Powi said.

He said the development levy and royalty should be calculated at 2 per cent gross value of well head and not 1 percent “as we are currently receiving”.

He told Petroleum and Energy Minister Kerenga Kua in Parliament that the people would continue to be marginalised with the use the PNG LNG gas fields in Kutubu, Moran, Agogo, South East Mananda and Gobe oil under the Associated Gas Development.

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Talks on PNG LNG expansion at a standstill – govt

PNG Liquefied Natural Gas Plant near Port Moresby. Photo: Richard Dellman.

Radio New Zealand | 28 November 2019 

Talks with oil and gas giant Exxon Mobil over an expansion of their huge LNG (Liquefied Natural Gas) project in Papua New Guinea are at a standoff, with the company unwilling to negotiate on the country’s terms, says PNG’s petroleum minister.

Kerenga Kua said the state’s negotiating team had set out draft terms for negotiations on developing the P’nyang gas field that were in line with international standards and would ensure a “fair deal” for PNG.

It was disappointing that Exxon has refused to consider the terms and PNG urged them to reconsider their position.

Reuters reports that the new delay to the P’nyang agreement will make it harder for Exxon and its partners Total SA, Oil Search and Santos Ltd to reach a final investment decision in 2020 on their plans to double LNG exports from the country.

Exxon Mobil’s PNG spokesman said discussions with the PNG government were ongoing and an agreement was needed before decisions could be made on preliminary engineering and design for the expansion of its PNG LNG plant.

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Papua New Guinea, Exxon to start talks on revising P’Nyang gas deal

Reuters | November 15, 2019

Papua New Guinea is set to start talks with Exxon Mobil Corp to negotiate better terms for the state from the P’Nyang Gas Project, Minister for Petroleum Kerenga Kua said on Friday.

“All things going well we can expect to sign a P’Nyang Gas agreement around the end of this month,” Kua said in a statement mailed to Reuters.

The project will help feed an expansion of Exxon’s PNG LNG plant, in which Australia’s Oil Search and Santos Ltd are also stakeholders.

Talks over the project were put on hold earlier this year, when the government sought to revise a separate LNG agreement it has with French energy firm Total in which Exxon is also involved.

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PNG LNG production, loading curtailed by damage at facility: Oil Search

Srijan Kanoi | S&P Global Platts | 28 August 2019

The mooring system at the Oil Search operated Papua New Guinea production facility was reported to be damaged, causing loading and production disruptions, the company said in a statement to the Australian Securities Exchange Wednesday.

“As a precautionary measure, Oil Search temporarily suspended scheduled liquids loading last week. In addition, to extend the liquids storage available in the liquids export system, the company curtailed production from the Oil Search-operated oil fields and the PNG LNG operator partially reduced PNG LNG production,” Oil Search said in the statement.

The company added that due to adverse weather and sea conditions in the Gulf of Papua, the inspection of the mooring system could not be carried out yet.

Oil Search said that they developed a temporary solution for safe berthing and loading of vessels at the facility, which enabled liquids loading to resume at a reduced rate from August 25.

LNG Vessel Kumul is currently anchored at Port Moresby since August 26, waiting to load a cargo from the PNG LNG facility, cFlow, Platts trade flow software showed.

No ships left the port between August 18 to August 25, the data showed. The last LNG vessel to load a cargo and sail from Port Moresby was Maran Gas Leto, which entered the port on August 23 and sailed on August 25, according to Platts cFlow.

Oil search said that they were working closely with the PNG plant operators to ramp up LNG production back to normal. However, they added that it was currently unclear whether it would be necessary to adjust their 2019 production estimate, due to the damaged mooring system and the resultant loading issues.

PNG’s LNG facility has an annual nameplate capacity of 6.6 million mt of LNG, according S&P Global Platts Analytics.

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Petroleum Dept lacks ‘expertise’

PNG Liquefied Natural Gas Plant near Port Moresby. Photo: Richard Dellman.

Luke Kama | The National aka The Loggers Times | August 9, 2019

THE Department of Petroleum and Energy (DPE) has a shortfall in technical expertise that needed to be addressed by the Government through recruiting competent and qualified personnel from the open market, an expert says.

Johannes Kaman, a national resource economist who has worked around the world on various oil and gas and mining projects, told The National yesterday that PNG was a country rich with oil, gas and minerals but needed the best technical advice to get the most out of those resources, and that advice had to come from the DPE.

“Oil and gas and the mineral sector is a very technical sector that needs the best people with the required skills, knowledge and expertise in those fields to carry out the task on behalf of the State and negotiate with developers,” he said.

Kaman said the failure in addressing the outstanding landowner issues and benefits sharing matrix concerning the PNG LNG and the failure in securing a better Papua LNG deal was a result of poor technical expertise in the department.

“The government needs to enquire about why the senior positions of the DPE which were advertised externally calling for applicants in the open market was withdrawn and the advertisements done again through an internal advertisement,” he said.

“The Government needs to find out why that was the case because people in all the senior positions in the DPE are acting on the positions.

“And some of them are not qualified and do not have the skills, knowledge and the technical expertise to be there.”

Kaman said PNG needed to get a better deal from its resources and there was really an urgent need to review the technical expertise at DPE.

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Please review appointment of new KPHL chairman

Ivan Gordons | YuTok, Post Courier | August 5, 2019

Just recently I wrote a letter that was published in the local daily questioning the appointment of Andrew Baing as the chairman of KPHL on whether he was the same person who was found guilty by the leadership tribunal years back on misappropriation grounds and dismissed from holding public office.

I simply stated that this was not right for someone with such a record to be appointed to such an office that was dealing with public monies especially of such magnitude.

A reply was published also from a person saying that he was grateful for the last Prime Minister for the appointment and that he was going to prove the country proud or something along those lines.

Not much was said after that.

Fast forward to this present day and we all can see for ourselves. It is ridiculous how KPHL has addressed this saga to date.

Yes they can rant on about this law and that, this Act and that but with all that aside they are dealing with public funds.

Just provide the information to the PAC and explain yourselves to the people of this country where their money from the 500 shipment of gas has gone. There are many stories out in the public domain on the abuse and misuse of these funds benefiting the well off while the people are struggling.

I have faith and trust in our new PM honourable James Marape that he will not let his people down.

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Govt Not Receiving Fair Share: Study

Sources of revenue from extractive sector to government. Source: EITI

Post Courier | August 5, 2019

A recent study based on the PNG Extractive Industry Transparency Initiative (PNGEITI) Reports have found that the PNG Government is not receiving its share of resource benefits and recommended government broaden its economic base in order to increase its bargaining power in current and future extractive projects.

The research study titled: Does the PNG government get its fair share from the resource sector? -was presented at a public seminar at the Institute of National Affairs in July to an audience representing Government, Industry and Civil Society stakeholders.

It focused on the Government’s ability to increase its bargaining power in its current and future planned resource projects.

The study was undertaken by Economists, Associate Prof Martin Davies at the university of Washington and Lee and Dr Marcel Schroder economics lecturer at Lebanese American University.

Both researchers are also guest lecturers at the University of Papua New Guinea and the Institute of National Affairs.

The researchers constructed a new database based on the PNG EITI annual reports that documents fiscal resource revenues for a large set of resource rich countries from 2006 to 2017.

“Using this dataset, we analysed the PNG governments’ take from the resource sector and study its determinants through a simple game-theoretic model as well as regression analysis.

This allowed us to make comparisons between Papua New Guinea and other resource rich developing countries,” said Prof Davies.

“Salary and wage tax is largest payment received. Papua New Guinea is the only country in our database of 50 countries where this is the case. Corporate income tax and royalties seem unusually low,” said Dr Marcel Schroder.

The study provided potential Fiscal Regime recommendations.

“PNG is a developing country which means funds for crucial spending such as infrastructure, health and education are needed today rather than tomorrow. Therefore, avoid deals with MNCs that lead to extreme back-load of fiscal take,”

They also recommended avoiding giving too many incentives (loss carry forward arrangements, tax concessions, treating royalties as advance income tax, etc.) and recommended that the State reconsider zero rating GST.

“Many resource rich countries derive significant revenue through GST.

It is also relatively easy to administer. Consider relying more on royalties on sales.

“They have many advantages with Revenue flows today vs tomorrow, they are more stable than income tax and other payments and they are relatively easy to administer,” said Prof Davies.

The study encouraged the audience to understand reasons behind low income tax payments. Is it only due to fall in commodity prices.

“There seems no mechanism for government to benefit from exceptionally high commodity prices (e.g. additional royalty, excess profit tax). Therefore, in future, if deal offered by MNC isn’t attractive, valid to leave resources in the ground for later,” said Dr Marcel Schroder.

The researchers further provided economy-wide policy recommendations.

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