Tag Archives: Peter Botten

Oil Search on tenterhooks over Total’s Papua New Guinea gas deal

Is PNG exacting payback on Oil Search for the UBS loan debacle?

Sonali Paul | Reuters | August 20, 2019

Oil Search warned on Tuesday that costs for a $13 billion plan to double gas exports from Papua New Guinea could rise if talks on a gas agreement between the government and Total SA drag on beyond next week.

Australia-listed Oil Search is a partner in Total’s Papua LNG project and Exxon Mobil Corp’s  PNG LNG project, which together aim to double LNG exports from the impoverished Pacific nation to around 16 million tonnes a year.

PNG’s new petroleum minister, Kerenga Kua, last week suddenly set out to renegotiate a gas deal with Total, which the company had signed in April with the previous government. Neither side has commented on the talks held last week in Singapore.

Oil Search Managing Director Peter Botten said on Tuesday further talks are planned this week and next week, with the aim of reaching an agreement by the end of August.

“It’s a dynamic environment at the moment,” said Botten, who was in Singapore during the talks, adding that he had been fully briefed on them.

He declined to comment on what issues have yet to be resolved or say how confident he was a deal would be done by the end of next week.

“I’m not going to put odds on it,” Botten told Reuters in an interview.

“We’re doing whatever we can to work with whoever we can to try and get this resolved as quickly as possible. Time is running out though.”

Botten has led Oil Search, PNG’s biggest company, for 26 years and has faced delays on projects before, but said the current uncertainty was rare in a country that has had a “very stable fiscal regime” for many years.

“It’s unusual that this is happening at such a critical time in the project.”

The Papua LNG project had already lined up bids from contractors to do preliminary engineering and design work, but those are due to expire in September, he said.

The companies risk having to pull together new bids if the existing bids fall over, and could face higher costs.

“It would be done in a market that probably would have a higher level of expenditure as the capacity in the market gets soaked up by new projects in other parts of the world,” Botten said.

Oil Search on Tuesday reported its half-year profit more than doubled to $161.9 million for the six months ended June 30 from a year earlier, just ahead of a consensus estimate of $160 million, on strong output from the PNG LNG project and higher oil-linked LNG prices.

The result last year was hurt by a shut down of PNG LNG following a major earthquake.

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New Petroleum Minister says no more coffee shop deals

Kerenga Kua says there will be no more coffee shop deals – like the one between Peter Botten and Peter O’Neill where they agreed the disastrous and unlawful State investment in Oil Search shares (funded through the notorious UBS loan) over coffee at the Grand Papua hotel.

PNG LNG Review Must Focus On People, Says Kua

Elias Nanau | Post Courier | June 18, 2019

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

This was the ultimate assurance from the Petroleum Minister Kerenga Kua during the handover-takeover ceremony between him and outgoing minister Dr Fabian Pok in Port Moresby yesterday.

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 PNG and Treasury had been involved equitably and statutorily.

He drew applause from the conference room.

“We owe it to our people,” he said. “Leadership and government must combine and deliver back to our people.”

Mr Kua gave the assurance in front of a packed conference room of landowners, oil and gas company executives and department staff at Hideaway Hotel.

Mr Kua said although there were market forces, they would not run away and the government and people must approach it judiciously.

He said the petroleum industry was one of the biggest revenue earners but asked: “Is the level of revenue we generate enough?”

Mr Kua reminded the department staff that while there would be work to review projects and legislation.

“There is that urgent need to source money to fund the visions of the government as outlined by Prime Minister James Marape,” he said.

He noted the bold statements of making PNG the richest black nation and to take back PNG.

“The challenge or way forward has been defined, now we need money. It must start somewhere, you cannot wait,” he said.

Mr Kua said his key performance indicators would be defined by the two guiding statements made by the Prime Minister.

“It is incumbent of the leaders of today to make such vision statements,” he said.

He reminded people they may think its “insurmountable and unachievable” but 70 years ago when Kondom Agaundo from Chimbu told expatriates the next generation would learn and communicate fluently in English, it happened and today the country has a load of “intellectual workhorse”.

He appealed to petroleum staff : “We must restore the strength and prominence of the department. “It must be at the forefront of the economic departments.”

Mr Kua told everyone he did not want to have meetings with investors or anyone that is work related outside of the department and staff.

“Let’s meet at the office rather than at the coffee shop,” he said.

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PNG PM Marape urges investors in Mining and Petroleum to consider Resource owners Interests

Papua New Guinea Today | June 13, 2019 

Papua New Guinea Prime Minister  James Marape  has urged investors in the mining and petroleum sectors to consider the interest and benefit of the resource owners and the country.‍

Prime Minister Marape said this when responding to the Managing Director of Oil Search Peter Botten, who said the new Government led by Prime Minister Marape should be investor friendly.

“I know Oil Search Managing Director, Peter Botten came out a while ago in the media asking me to be investor friendly.‍

“Peter Botten knows that I am investor friendly. But I am more concerned for the interests and benefits and speaking for the 8 million shareholders of this country.

“That is what this generation of leaders wants in our country. That is the catch cry of these leaders and our country and what our people want,” said Prime Minister Marape.‍

He said that his Government welcomes new investors and encourages those already in the country to continue investing in the economy.‍

“I am not in the business of harming our investors in the country. Other investors in the country and our partner investors, ExxonMobil, Oil Search, Total, Santos, Nippon Oil, they have been with us for a long time.‍

“We are in the business of now consolidating on these investments here, as well as attracting new investors into the country.‍

“But, as I speak I want to first pick the lowest hanging fruits to improve our economy, improve on areas of domestic market obligations, areas of local content, and in improvements in greater equity participation in the resource sector by our landowners.‍

“We are tired of being rent collectors. Sometimes down the line, whether that is in 2022 or 2025 with the best advice from the Petroleum Department and with the new Ministers we will be making regime shift and change in the resource laws and most importantly it will be friendly to the investors.

“But more so importantly friendlier to the interests of the 8 million people of our country and the benefits they truly deserve.‍

“And that is by making sure that our economy gets the residual benefit from those resources.

“And I make no apologies to anyone. I make no apologies. If you don’t like the way I am speaking, pack up and leave.

“I am more about adding value to the economy and for my people to benefit,” said Prime Minister Marape.

Prime Minister Marape on May 30th during his maiden speech after his election as the 8th Prime Minister of PNG told Parliament he does not want any international conglomerates in the resource sector to dictate to his Government what to do and or change the laws to suit their interests.‍

He said he would tweak and turn the resource laws for the benefit of the resource owners and the country. Prime Minister Marape said his intention is not to chase away investors, but wants maximum benefit and meaningfully participation by landowners and the Government in the resource development.

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New PNG govt’s resources stand in the spotlight

James Marape the member for Tari Pori is the new prime minister of Papua New Guinea. May 2019 Photo: Post Courier Newspaper

Johnny Blades | Dateline Pacific | Radio New Zealand | 12 June 2019

Papua New Guinea’s new prime minister has stressed that his government is pro-foreign investment.

James Marape’s announcement that he wants to review the laws governing the country’s resources has caused some concern among investors in the sector.

But the move is popular at the grassroots level in PNG.

In his first state of the nation address, James Marape said PNG had not been enjoying the full benefits of the commercialisation of its abundant natural resources.

His government will review the laws governing the oil, gas, mining, fisheries and forestry sectors, which he has described as outdated.

Mr Marape showed his hand by appointing Kerenga Kua, a critic of the previous government’s handling of resource projects, as PNG’s Minister of Petroleum.

The prime minister said they will be looking at the resource sector “in a very big way”.

In April, James Marape and other MPs resigned from the Peter O’Neill-led government after it signed with French company Total for the $US13-billion Papua LNG project in Gulf province.

They cited concerns that local interests were not being served and claimed mandatory requirements were not fulfilled before the agreement was signed

Their stand has resonated with Gulf landowners who baulk at the two percent equity on offer for them.

The Purari Development Association general secretary Roy Daniel Evara says the developer has dictated terms to PNG.

“The agreement itself did not comply to very critical pre-conditions of the Oil and Gas Act, which is the guiding pillar for the industry. An agreement should never dictate to the pillars of the country’s laws. It should only conform and comply with it.”

Mr Marape’s moves are being watched closely by companies deeply involved in PNG’s resource sector such as energy firm Oil Search Ltd, a partner in the Papua project.

While Mr Kua and others have suggested the Project agreement could be reviewed, Oil search’s chief executive Peter Botten said he didn’t expect to make any significant new concessions on the deal.

Mr Botten told a mining convention in Sydney that delays to the deal could jeopardise PNG’s standing in the international LNG market.

Subsequently, Mr Marape bristled at suggestions that he was trying to chase away investors.

He said he made no apologies for his aim of ensuring PNG citizens get greater benefits from the petroleum sector.

Mr Marape knows the struggles of landowners in resource-rich areas well.

His own elecorate of Tari-Pori is in Hela province, where the country’s first LNG gas Project operated by Exxonmobil and Oil Search is centred.

A magnitude 7.5 earthquake hit the region last year causing around 150 deaths and widespread devastation to infrastructure.

Although it has it share of critics, Oil Search was heavily involved in the immediate relief effort.

The man who headed PNG’s response to the disaster, Bill Hamblin, says Oil Search showed itself to be a good corporate citizen in PNG.

Meanwhile, PNG’s Chamber of Mines and Petroleum says it’s waiting on clarity from the new government on its policies and plans in relation to the resource industry.

But it says that stability on fiscal and regulatory regimes is important to ensure ongoing investment in the sector.

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Oil Search reinforces PR team as pressure mounts on several fronts

A cozy meeting between Peter Botten and Peter O’Neill was at the heart of a disastrous investment for PNG in Oil Search shares according to an Ombudsman Commission report on the illegal UBS loan that financed the deal.

New faces at Oil Search

Matthew Stevens | Australian Financial Review | June 11 2019

Don’t imagine for a second that Oil Search sits wholly calm amid the storm created by the dumping of long-standing Papua New Guinea prime minister Peter O’Neill  and the company’s place in the events that proved a tipping point in the collapse of political support for him.

In the lead-up to O’Neill’s replacement by leadership neophyte James Marape, Oil Search made wholesale changes to the way it manages its external affairs, delivering new blood to its media management and inviting Crosby Textor to take on the driller’s reputation management.

The most immediate effect of the Oil Search deckchair shuffle is that long-standing general manager of investor relations and communications, Ann Diamant, appears to have lost half of her brief to a former PNG television executive.

A familiar media contact point through her 16 years with Oil Search, Diamant has surrendered the day-to-day of communications and media management to a new face in the Australian media landscape. The new vice-president, communications and media, is Matthew Park.

Park lands at Oil Search with an ANU law degree, six years’ experience in policy advisory with the Australian Communications and Media Authority and a whole lot of experience in PNG television. His most recent job of import was running a TV station in PNG and, even more recently, he ran PR for PNG’s APEC advisory council. But, according to his various CVs, that is about as close as he has got to knowing who’s who in the zoo of Australian media, or media anywhere but PNG for that matter.

Oil Search insiders suggest this shift and the decision to appoint Crosby Textor shows just how unnerved the company is by regime change rolling out in PNG.

As The Australian Financial Review reported on Friday, Marape continues to send mixed signals about his future relationship with Oil Search and its much more powerful partners in PNG liquid natural gas, Exxon and Total.

The house view at Oil Search is that Marape might seek changes to a recent deal with Santos that aligns the ownership of the P’nyang gasfield with a proposed LNG development, but that previous investment agreements will be left untouched.

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New PNG cabinet puts Oil Search and UBS Australia on notice

PNG PM James Marape unveiled a surprisingly bold cabinet on Friday.

Angus Grigg and Lisa Murray | Australian Financial Review | June 7, 2019

Papua New Guinea’s new Prime Minister, James Marape, has appointed one of the most outspoken critics of a recently signed gas deal as the responsible minister and taken a swipe at Australia’s Oil Search in announcing a cabinet full of surprises on Friday afternoon.

In swearing in Kerenga Kua as the Minister for Petroleum, Mr Marape noted he was a lawyer who “shared his vision” for reforming the sector and maximising gains for PNG.

Mr Kua has previously said the $US14 billion ($20 billion) Papua LNG project, agreed in April, should be reviewed for its legality, potentially opening the way for the deal to be renegotiated.

The new Prime Minister has said he would not seek to unwind existing contracts. However, looking into the legality of this and other deals could be a way to reopen negotiations.

“We will come to a position that everyone is comfortable with without disrupting business,” Mr Kua said when asked about the Papua LNG project after being sworn in.

“But [we will] ensure there is an equitable distribution of benefits which come out of these resource projects.”

Mr Marape used the occasion to take aim at Oil Search chief executive Peter Botten, following a speech Mr Botten made in Sydney on Thursday.

“Peter Botten knows me. I’m investor friendly but I also have to win for the 8 million shareholders of this country,” he said.

Prior to this the Prime Minister said he would not apologise for his comments on getting a better deal for the country out of resource projects.

“If you don’t like the way I’m speaking … pack up and leave,” he said.

This skirmish follows Mr Botten saying that any delay in the Papua LNG project would have it leapfrogged by other projects around the world.

“We can’t wait too long before our place in the queue slips,” Mr Botten said. “The government is aware of this, as is the new Prime Minister.”

ExxonMobil and Total are spearheading the PNG LNG and Papua LNG projects, in partnership with Australian resources players Santos and Oil Search.

Shining a light on corruption

The other surprise move on Friday was the appointment of Bryan Kramer, a popular but outspoken opposition figure, as Police Minister.

Mr Kramer, who has over 117,000 followers on his Facebook page, has said former prime minister Peter O’Neill should face criminal prosecution and has written scathing articles about the UBS loan affair.

He said the deal, which had PNG borrow $1.2 billion from UBS to buy into Oil Search, would “go down as one of the dumbest investments in PNG’s history”.

His appointment should ensure ministerial-level support to further investigate the loan affair, which cost PNG $400 million.

On Friday, Mr Kramer said his main priority was keeping the people of PNG safe but he would also be looking at high-level corruption.

Shane McLeod from the Lowy Institute said Mr Marape had delivered a pointed and substantial shake-up of the ministry.

“Bringing across prominent opposition voices Kerenga Kua and Bryan Kramer – and placing them in key portfolios of Petroleum and Police – shows that Marape is serious about distancing himself from his predecessor, and shining a light on resource deals and allegations of corruption,” he said.

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Papua New Guinea appoints reformer to crucial petroleum portfolio

Kerenga Kua is a former attorney general turned prominent opponent of Marape’s predecessor, Peter O’Neill.

Tom Westbrook | Reuters | June 7, 2019

Commodity and energy companies with projects in the resource-rich archipelago have been awaiting the makeup of Marape’s cabinet as a sign of his plans, after parliament voted him in last week on a platform of economic change.Papua New Guinea Prime Minister James Marape installed a reformer as petroleum minister on Friday, handing him a mandate to overhaul the sector and warning investors to “pack up and leave” if they did not like it.

Announcing his ministries in the capital of Port Moresby, Marape said Petroleum Minister Kerenga Kua – brought in from the opposition – shared his vision for raising more revenue from the resources sector.

“We are tired of being rent collectors,” Marape told reporters at Government House where the cabinet was sworn.

He promised changes “friendly to the investor but also friendlier to our country”.

Marape had sparked months of political chaos when he quit as finance minister over the government’s handling of a big gas agreement struck in April with French oil major Total SA.

He then rode a wave of discontent over that deal, and an earlier one with ExxonMobil Corp, into the top office, triggering a new round of scrambling – this time from commodity firms clamoring to meet and lobby him.

Kua is a former attorney general turned prominent opponent of Marape’s predecessor, Peter O’Neill.

He has been quoted in the media as saying resource laws should be changed to give the state a bigger stake in extractive projects.

“(He is) widely respected and a noted critic of dodgy deals,” said Jonathan Pryke, director of the Pacific Islands program at Sydney think-tank the Lowy Institute.

Nevertheless, Marape has insisted reforms would be slow, unlikely to take effect until well beyond elections due in 2022, and not designed to harm investment.

Peter Botten, the head of PNG-focused energy firm Oil Search Ltd said in Sydney on Thursday he did not expect to make any significant new concessions on a gas deal it and ExxonMobil Corp hope to strike with the government.

Marape, referring to concern among foreign investors, offered both reassurance and a warning.

“I make no apologies to anyone,” Marape said. “You don’t like the way I’m speaking? Pack up and leave.”

“Peter Botten knows me. I am investor friendly. But I have also to win for eight million shareholders of this country and that’s what this generation of leadership is all about.”

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