Tag Archives: Peter O’Neill

Wafi-Golpu MOU to be eliminated

So Newcrest and Harmony signed a deal with the O’Neill government that stitched up the landowners and the country – but nobody gets held accountable once again. Not the bureaucrats, not the politicians and certainly not the mining company executives and their lawyers! 

Cedric Patjole | Loop PNG | January 31, 2020

The Memorandum of Understanding between the former O’Neill-led coalition government and the Wafi -Golpu Joint Venture will be eliminated.

Prime Minister James Marape revealed this at the Back to Business Breakfast event in Port Moresby.

The MOU signed in December 2018 established the framework for the parties to progress the permitting of the Wafi-Golpu Project ‘as quickly as practicable’ with a view to achieving a Special Mining Lease by 30 June 2019.

However, the Morobe Provincial Government rejected the move, taking the matter to court and stalling the Wafi-Golpu Mine from maturing.

Prime Minister Marape revealed to the business community that the MoU would be eliminated.

“Some of you might be interested on what is happening with Wafi-Gopu, one of our lowest hanging fruits, and let me thank Harmony and Newcrest for their patience,” said Marape.

“But they also know that the MOU that they signed with the previous government was a show stopper. That MOU was signed outside of the normal protocols of Government.

“And so we are in the businesses of now eliminating that MOU, and they have agreed to eliminate that MOU, and so, we’re now having discussions with our provincial government and our landowners and very soon, Wafi-Golpu will be a project that is moving towards maturity.”

Since the move by the Morobe Provincial Government and the ongoing permitting delays, WGJV has reduced its planned work program and manpower.

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Marape holds Singapore talks over PNG trust fund

Radio New Zealand | 19 June 2019 

Papua New Guinea’s prime minister has led a delegation to Singapore to find a way in to a trust fund the government has been locked out of.

In his first overseas trip since taking office last month, James Marape met with officials from the PNG Sustainable Development Program on Sunday.

The company manages about $US1.4 billion of assets through a long term fund which was set up to hold profits from the Ok Tedi copper mine in Western Province.

Since the government of Peter O’Neill expropriated the mine from the SDP in 2013, it had been in a protracted court fight to gain control of the long-term fund parked in Singapore.

Singapore’s High Court ruled against the government’s claim in April. Following this, and a change in government leadership, PNG’s new prime minister Mr Marape is seeking a different approach.

He said on Facebook the aim of his trip was to find common ground with the company managing the fund.

The prime minister was accompanied by MPs from Western Province whose constituents are intended to be direct beneficiaries of the SDP’s projects and long-term fund.

Mr O’Neill, who indicated that the government would appeal the Singapore court ruling, portrayed the government’s aim in the case as being to ensure the company’s funds were given to the people of Western Province.

It remains to be seen whether that appeal will proceed, with Mr Marape advocating a discourse-based approach to dealing with Sustainable Development Program.

The SDP was established in 2001 when BHP Billiton divested its majority share in the lucrative Ok Tedi copper mine in Western Province to SDP.

The divestment followed legal action by Western Province landowners over extensive and long lasting environmental damage caused by the mine operations, particularly its riverine tailings disposal system.

April’s court decision was welcomed by the four Western MPs, who said it would ensure SDP was protected from political interference and that its assets went to the people.

However, the money in the fund is intended to be disbursed by SDP within Western Province when the Ok Tedi mine closes. The mine is still operational.

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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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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 leader aims to ‘maximise gain’ from resources sector

Despite the rhetoric of a leadership challenge is the new PM really going to change PNG’s addiction to elite politics and large-scale resource extraction?

Tom Westbrook | Reuters | 30 May 2019

  • Parliament elects ex-finance minister James Marape
  • Critic of major gas deal, plans to review resource management
  • Peter O’Neill resigned on Wednesday after weeks of turmoil
  • Concerns over benefits from resources not reaching the poor 

Former finance minister James Marape was elected prime minister of Papua New Guinea on Thursday, and the critic of a major global gas development deal vowed to review management of the nation’s resource riches.

Marape received 101 votes to eight in parliament in the capital, Port Moresby, a day after Peter O’Neill resigned having lost the support of the house after almost eight years in power.

Marape, who hails from the poor but gas-rich highlands of the South Pacific nation, said he would focus on “taking back our economy” and proposed an overhaul of mining, forestry and fishing laws.

“We will look into maximising gain from what God has given this country from our natural resources,” he said in his maiden address to parliament.

“I have every right to tweak and turn resource laws for my country, then it will empower my citizens as well,” he told the chamber to cheers and applause.

Political instability is not unusual in the poor but resource-rich country, but Marape’s resignation from cabinet in April tapped into growing concern over governance and resource benefits not reaching the poor.

Those concerns ultimately led to O’Neill’s downfall.

Marape told a news conference after he was sworn in at Government House that any changes to laws would not be retrospective.

But he has previously questioned an agreement with French oil company Total in April, which allows Total, Oil Search Ltd and ExxonMobil Corp to begin work on a $13 billion plan to double gas exports.

“We are not here to break legally binding project agreements,” he told reporters when asked if he would consider reviewing another gas deal with Exxon critics say has failed to benefit landowners and the government.

However, he added: “If we find any project agreement … that has not fully complied with proscribed provisions of law, then we are open to reviewing and scrutinising them,” he said.

“We are not about breaking laws. We are about honouring existing laws.”

Exxon has said it does not comment on politics. Oil Search and Total did not immediately respond to requests for comment.

Business leaders in Papua New Guinea offered cautious support for the new leader.

“He was finance minister so understands need for clarity and stability in policies,” Isikeli Taureka, chairman of Kinabank and a former oil and gas executive at Chevron and InterOil, said in a text message.

“I believe he is rational and seems to lean towards respecting and grandfathering current agreements,” he said.

The political uncertainty has knocked almost 6% from shares in Oil Search, an Australian partner in large liquefied natural gas developments in PNG, since the challenge to O’Neill gained traction last week.

Oil Search shares climbed in early trade, but turned negative after Marape’s election to trade 0.7 percent below Wednesday’s close in a falling broader market.

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Papua New Guinea turmoil puts LNG projects at risk

The government of prime minister Peter O’Neill appears to be in jeopardy with opposition MPs set to hold a no-confidence vote against him in parliament next week

Political crisis threatens to delay $12bn-$14bn expansion led by ExxonMobil and Total

Jamie Smyth | Financial Times | 28 May, 2019

ExxonMobil Corp and Total SA have become embroiled in a political crisis in Papua New Guinea that risks delaying a $12bn-$14bn expansion of the nation’s liquefied natural gas industry. 

The government of prime minister Peter O’Neill appeared to be in jeopardy with opposition MPs set to hold a no-confidence vote against him in parliament next week. Mr O’Neill on Tuesday applied to the Supreme Court seeking an injunction to block the move, which could bring an end to his eight years in charge.

The revolt by the opposition, which says it has the numbers to bring down the government, was sparked in part by allegations Mr O’Neill mishandled the financing of the LNG projects.

Analysts warn that if he is ousted, there could be a delay in finalising the requisite contracts for the multibillion-dollar expansion that is critical to the Pacific nation’s finances. The Supreme Court is due to hear Mr O’Neill’s appeal on Friday. 

David Low, an analyst at Wood Mackenzie, forecast that the prime minister’s resignation would delay first gas from the LNG projects by as much as two years, to beyond 2025. 

Any delay would be a blow to the oil majors, with Wood Mackenzie projecting 2019-20 will be record years for LNG investment decisions, unleashing 100m metric tonnes a year of new capacity. The risk is that the PNG projects miss out on this wave of investment and a new administration seeks to extract more taxes or royalties from the projects.

“While we still expect the project to go ahead, the political turmoil opens the door to competing projects and increases the risk of knock-on delays,” Mr Low said.

ExxonMobil and Total are spearheading the PNG LNG and Papua LNG projects, in partnership with Australian listed resources companies Santos and Oil Search, spending an estimated $12bn-$14bn on expansion.

The opposition MPs support development of the projects for the investment they would bring to the resources-rich but poverty stricken country. But they have demanded Mr O’Neill stand down after a report, drafted by the PNG Ombudsman and leaked to the press, that concluded Mr O’Neill acted improperly by securing a A$1.2bn ($831m) loan from UBS to buy shares in Oil Search in 2014 without seeking formal parliamentary approval.  

According to the Ombudsman — an independent body established under the constitution that protects citizens’ rights against administrative injustice — the PNG government used the loan to buy a 10 per cent stake in Oil Search, enabling the company to buy into a gasfield being developed by Total.

Oil prices subsequently crashed, and the government lost hundreds of millions of dollars when it sold the shares in 2017 during a fiscal crisis that forced widespread cutbacks.

“The A$1.2bn UBS deal represents all that is wrong with Peter O’Neill’s prime ministership,” Mekere Morauta, an opposition MP, told the Financial Times. “PNG did not benefit. It lost K1bn ($297m).” 

UBS declined to comment on the loan, on which the bank earned A$100m in interest and fees. Finma, the Swiss financial markets regulator, said: “It is familiar with the financing business mentioned, and we are in contact with the bank”. 

Mr O’Neill did not reply to a request for comment. He has previously denied that the loan was unlawful, saying the matter had been clarified in parliament and the ombudsman investigation was “flawed”. 

Oil Search said on Tuesday it had breached no laws, and no allegations had been made against the company or its officers. It said that contrary to the requirements of PNG law, Oil Search and others were not contacted by the Ombudsman Commission during its investigations or given any opportunity to provide evidence or comment. 

Kevin Gallagher, chief executive of Santos, said forecasts of a two-year delay were “pure speculation” and there was no indication the PNG government wanted to delay anything.

ExxonMobil and Total did not immediately respond to requests for comment.

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Political disarray in Papua New Guinea rocks Oil Search shares

Tom Westbrook and Sonali Paul | Reuters | May 27 2019

Political turmoil in Papua New Guinea threatened to delay a $13 billion plan to double the country’s gas exports, sending shares in one of the project’s partners, Oil Search Ltd, down nearly 4% on Monday.

PNG Prime Minister Peter O’Neill said on Sunday he would resign after weeks of high-level defections from the ruling party. Sir Julius Chan, twice a former premier, would take over as the government’s leader, O’Neill said.

Political instability is not unusual in Papua New Guinea and has not held back mining and energy investments in the resource-rich country, however protests over benefits failing to reach rural areas have dogged the government and project owners.

It was not clear whether Chan could command a majority in parliament when it resumes on Tuesday.

“We will not choose him. It’s a really bad choice,” opposition lawmaker Allan Bird told Reuters in a text message.

“We want a complete break from O’Neill (and) Chan is just a proxy for O’Neill,” he said.

Chan said on Monday he had been approached by both the government and the opposition to take the role.

“This is not a position I am seeking,” he said in a statement. “However, I love Papua New Guinea, and there is a desperate need right now to unite the country … and to make the wealth of this country work to the benefit of the people of this country.”

O’Neill had resisted calls to resign for weeks but his opponents said on Friday they had rallied enough support in parliament to oust him over a range of grievances, including a gas deal agreed in April with France’s Total SA.

The deal with Total set the terms for developing the Elk and Antelope gas fields, which will feed two new liquefied natural gas (LNG) production units at the PNG LNG plant, run by ExxonMobil Corp.

At the same time, ExxonMobil and its partners are planning to build a third new unit at the PNG plant, to be partly fed by another new gas field, P’nyang.

Credit Suisse analyst Saul Kavonic said the political upheaval could put pressure on the government to negotiate tough terms for the P’nyang gas agreement, which is yet to be finalised, and affect talks on development costs.

“Both these factors heighten the risk of delay,” he said in a note to clients.

Any delays in the P’nyang agreement could hold up a final investment decision on the PNG LNG expansion, which is set to double the plant’s capacity to 16 million tonnes a year.

The uncertainty sent shares in Oil Search, a partner in PNG LNG and Papua LNG, down as much as 3.9% in early trading on Monday. Energy stocks rose 0.6%.

ExxonMobil and its partners had hoped to begin basic engineering planning for the expansion by mid-2019 and make a final investment decision in 2020.

They are racing against projects in Mozambique, Qatar, North America and Australia to produce LNG from the expansion by 2024 to fill an expected gap in the global LNG market. ExxonMobil and Total both have LNG projects elsewhere that could take priority if PNG politics delays them, Kavonic said.

RBC analyst Ben Wilson said he did not think a final investment decision in 2020 was at risk yet and played down the threat that the PNG opposition would seek to renegotiate the LNG agreement.

“Sanctity of contract is critical to ongoing investment in PNG and to the success of future potential sovereign bond issuances,” Wilson said.

Total and Oil Search representatives were not immediately available to comment.

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