Wafi-Golpu Negotiations Have Not Recommenced – Newcrest

Matthew Vari| Post Courier | March 16, 2020

NEGOTIATIONS into Morobe’s Wafi-Golpu project is still pending according to project joint venture partner Newcrest Mining Limited.

Newcrest Mining PNG country manager Mr Stanley Komunt said this in response this paper queries in relation to comments made by Mining Minister Johnson Tuke last month on government’s intention to resumes negotiation following the dismissal of the memorandum of understanding in court case relating to the project.

Mr Komunt said the main reason for uncertainty was the relays [sic] in the proposed revised mining act, which is still yet to be passed by government and  how concerns raised may be factored into the amended act.

“We from the JV’s point of view have not made a commitment as yet to progress any discussions.

“There is a couple of reasons why and number one is more to do with the current discussions on the revised mining bill.

“We really don’t know where that is going to end. Whilst the Prime Minister has given us, the industry and SNT (State Negotiating Team) team to go and back and since our meeting in January 17 in Brisbane.

“He has given us two months and we have been meeting last month now and we are slowly getting there but there is still some major, not so much disagreement, but misalignment I would say,” Mr Komunt pointed out.

Komunt pointed out other particulars also in the air such as benefit sharing, royalty and contracts have all been relayed to the minister responsible for mining.

“Whilst we appreciate, the company, not only us but the industry appreciates that country needs to get a better share and we want to make sure that is realized through the negotiations that we will have.

“We are not quite there yet to start the negotiations for Wafi. We have relayed that to the minister.

“Because if the revised mining act changes it will have an impact on the project economics and how we have done our planning and that is a major concern and we can’t do anything.

Prime Minister Marape has indicated his government is set on delivering the project, a point Komunt added the PM is well aware and supportive of an understanding going forward.

Alluvial Sector Revenue at K550m in 2019

Patrick Tom | Post Courier |  March 9, 2020

The country’s alluvial sector production and revenue has climbed to K550 million in 2019, an increase of K140 million from what it earned in 2018.

Mineral Resource Authority regulatory operations manager Roger Gunson revealed during the launching of the Reducing Mercury in PNG ASGM sector last Friday that last year the country’s alluvial sector generates revenue of K550 million, and produced 120,000 OZ (ounces) of gold.

When put that in perspective that’s similar to a medium size mine like Simbari mine in New Ireland.

Mr Gunson said gold represents 70 per cent of mineral revenue, adding that current the gold price as of last Friday was at almost US$1670 an ounce filtering with historic highs.

“The high gold price is beneficial for PNG and the alluvial sector,” he said.

“For every US$100 increase in the gold price, our mineral revenue increases by over K650 million,” said Mr Gunson.

He said that provides some perspective on the significance of gold to our economy.

“From the grassroots miners working the rivers and streams boost their rural household income, through to the national government collecting taxes.”

“The sector is one of the largest small and medium enterprise directly benefits those communities that involve in alluvial gold mining,” said Mr Gunson.

He also pointed out that PNG alluvial sector has a significant component of the overall mining industry of Papua New Guinea.

It has been operating since 1881.

Oil Search works to revive Exxon, Papua New Guinea talks on LNG expansion

Reuters | 25 February 2020

Oil Search Ltd is pressing to revive talks between Exxon Mobil Corp and the Papua New Guinea government over a $13 billion plan to double the country’s natural gas exports, the company’s new boss said on Tuesday.

Oil Search’s new Chief Executive Officer Keiran Wulff said he hoped negotiations could resume “within weeks” between its partner Exxon and the state.

The government ditched talks in January with Exxon on terms for developing the P’nyang gas field to feed an expansion of Exxon’s PNG liquefied natural gas (LNG) plant, amid a push to reap more benefits from resources projects for the impoverished South Pacific nation.

Oil Search’s veteran boss Peter Botten, who just retired as CEO but is still working for the company, is sounding out the government this week on what it would need to resume talks, Wulff said.

“We would hope to see some sort of formal negotiations recommence between Exxon and the state negotiating team within a reasonable period of time,” Wulff told Reuters in an interview after the company released earnings earlier on Tuesday.

“We’re hopeful that it’s weeks. We don’t think it’ll be months,” he said.

Oil Search reported an 8% fall in annual net profit to $312.4 million, hit by weaker oil and LNG prices, missing analysts’ forecasts of around $339 million, according to Refinitiv IBES estimates.

Oil Search’s growth prospects are largely tied to a combined plan to develop P’nyang and Papua LNG, led by France’s Total SA, to feed three new processing units, called trains, at Exxon’s PNG LNG plant.

All the partners want a three-train development, Oil Search said, as sharing infrastructure would be the most efficient way to develop P’nyang and Papua LNG.

“For us we’re strongly behind the operator to pursue a three-train development, which is as much in the joint venture’s interest as it is in the state’s,” Wulff said.

He said they would only consider a two-train development without P’nyang “after all options were exhausted”.

Exxon Mobil had no immediate comment, but Chief Executive Darren Woods said earlier this month the company hoped to revive talks on P’nyang to get to a “win-win proposition”.

The coronavirus has dampened demand for LNG from China, but Oil Search said it expected that only to be a short term issue.

“We are confident in our ability to secure LNG offtake agreements once we resume discussions with potential Asian buyers, due to the attractiveness of LNG from PNG,” Botten said in a statement.

If an agreement is reached on P’nyang and early engineering work on a three-train development begins in 2020, Oil Search expects its capital spending this year will be in the range of $710 million to $845 million.

Booting Exxon gives Marape a boost – for now

Western Highlands province in Papua New Guinea, the region of the proposed P’nyang LNG development (ADB/Flickr)

The rejection of the P’nyang LNG deal signals a new way of doing business, and a shifting landscape for US concerns.

Bal Kama | The Interpreter | 19 February 2020

The recent announcement of the Papua New Guinea (PNG) Government to cease all negotiations with one of the United States’ largest oil and gas companies, Exxon Mobil, over the P’nyang LNG project, a new gas field in PNG, has broader implications for the US and Papua New Guinea.

At first glance, the decision against Exxon for allegedly acting in bad faith is part of a wider crackdown by the government of Prime Minister James Marape to ensure greater fairness in the resource sector. Since ousting then–Prime Minister Peter O’Neill in a vote of no-confidence in 2019, Marape has charted a different approach from that of his predecessor, under the banner of “Take Back PNG” – a larger policy objective to reassess PNG’s developmental direction and regain lost opportunities. Marape laid out his vision in his inaugural visit to Australia in 2019 and is gradually applying it in many sectors.

The decision illustrates the growing frustrations of dealing with investors in resource-rich PNG, and it further demonstrates an emerging crop of PNG leaders confident in reassessing the status quo. For the US, Exxon’s alleged conduct, criticised by the PNG government as being “exploitative”, undermines US efforts in the Pacific region as a force for good.

Exxon Mobil has a US$19 billion liquefied natural gas project in PNG (PNG LNG), which made its first shipment in 2014. The PNG LNG project, which remains the largest economic investment by the US in the Pacific, coincided with former US President Barack Obama’s announcement in 2012 of a “pivot to the Pacific” policy. The geopolitical scenario of the day, the excitement of having the US interested in PNG, and the high expectations surrounding a global and reputable company, among other factors, influenced the PNG government’s initial agreement for Exxon to operate the PNG LNG project. It was thought the deal would have a transformational impact on PNG’s economy – an assurance that continues to be projected by some quarters.

However, the overall economy of PNG did not experience the projected windfall. Instead, there were a series of negative outcomes over the years at both a national and a local level – national debts grew, and unfavourable benefit-sharing arrangements and royalties led to conflict among traditional resource landowners. Many have questioned whether the resource boom marked by the PNG LNG project was in fact a “resource curse”.

“Absolute bad faith”

The ousting of Prime Minister Peter O’Neill in 2019 was partly a result of growing grievances over the failure to deliver on the promises of the Exxon-led project and other resource deals. An important issue was the high level of concessions made in those deals. Historically, PNG governments, desperate to become investor-friendly, have made hasty concessions that often disadvantaged the country from having a fair share of the revenue from the development of their resources.

In a 2016 report, the International Monetary Fund (IMF) observed that “the tax arrangements for PNG’s mining and petroleum sectors are very generous compared to other resource-rich countries and do not reflect the maturity of the PNG resource sector”. The World Bank, in a 2017 report, also found particularly for the Exxon-led LNG project that Exxon Mobil and its PNG LNG partners created “a complex web of exemptions and allowances that effectively mean that little revenue is received by government and landowners”.

The PNG government must share some burden of fault for creating this scenario – including, for instance, the failures by previous PNG governments to negotiate a favourable outcome for the country, the misuse of funds by political leaders, a politicised bureaucracy unable to carry out their due diligence, and judicial interventions that at times hinder payments to disgruntled landowners.

This does not, however, excuse Exxon and its partners from the grave unfairness suggested in these reports. This, together with his experience as a minister in previous governments, underpinned Marape’s firm stance on taking a different approach in the current deal on the P’nyang LNG project. In his appeal for Exxon Mobil to act fairly, Marape noted that “the initial terms [in the PNG LNG project] provided by PNG were so generous” and that new “reasonable terms” should be considered for the P’nyang project.

Papua New Guinea’s Prime Minister James Marape (C) at Parliament House in Canberra, during a six-day visit to Australia in July 2019 (Mick Tsikas/AFP via Getty Images)

The terms proposed by the PNG government are not publicly available, but they appear to include giving no fiscal concessions in P’nyang, treating it as separate project from the current LNG projects and increasing domestic market obligations, local content participation, and landowner’s royalties from the current rate of two percent. The Prime Minister described Exxon’s refusal to accept the terms as a move to “extract even more profit for themselves”, while Kerenga Kua, the Minister for Petroleum and Energy denounced Exxon as acting in “absolute bad faith” and coming into PNG “with a determination to exploit our vulnerabilities, exploit us for our weak economic position and take advantage of us”.

A principled populist

The firm position taken by the Marape government is historic – no previous government has ever taken such an approach. PNG has had resource deals in the past that have resulted unfavourably for the country, but past governments have been shown to align more closely with investors than with their citizens.

The leaders and the people of PNG appear to be supportive of Marape’s approach. Further, the government is considering amending and tightening the legislative framework to ensure an equitable resource sector.

Marape is unlikely to concede to Exxon Mobil, as he insists: “You win for your shareholders, and I win for my people”. James Donald, a Member of Parliament representing the area where P’nyang LNG site is located, cautioned Exxon against crossing “a line between commercial parity and commercial greed”. Other MPs representing the resource areas have also demonstrated support for Marape’s stance against Exxon.

The PNG government is likely to reconsider its current position if Exxon responds positively to its terms. Unless that happens, however, there appears to be a general distrust for Exxon among the people of PNG – a situation far from the hope Exxon represented when it first entered the country. The distrust for Exxon has broader implications when one considers Exxon not only represents US economic prestige in the Pacific, but a society whose business ideals are expected to reflect the democratic values of fairness and just outcomes. The longer this tussle between Exxon and the PNG Government continues, the greater the distrust is likely to be, not only for Exxon, but for what it represents – the United States – in the Pacific.

As the vote of no-confidence scheme against a sitting government in PNG resumes later this year, those affected by Marape’s firm policies may hope for a change in government. In the fluid political landscape of PNG, a populist and comparatively principled Marape faces a challenge beyond just his immediate political rivals, and inside company boardrooms. However, if anything, his approach to governance so far has been reassuring for the people of Papua New Guinea.

Rural alluvial miners to be empowered

Loop PNG | February 11, 2020

Morobe Governor Ginson Saonu has reaffirmed the Morobe Provincial Government’s position to empower all rural alluvial miners of Wau-Bulolo.

This was highlighted following a discussion with four tenement holders of Wau, Bulolo and Watut River in Bulolo District.

Governor Saonu said MPG has now engaged the services of Albatross Integrated Limited, who have extensive years of working with alluvial miners and other mining projects of New Ireland Province.

The company will be the coordinating body to ensure the alluvial miners are empowered.

“These are new interventions undertaken by MPG and to drive the agenda of mining in Morobe,” Governor Saonu stated.

“I have appointed a Tutumang committee chairman for mining who will work closely with the alluvial miners, landowners, miners associations and cooperative societies from here and onwards to ensure they are fully taken care of in their activities. All reports will then be presented back to PEC on the progress of the alluvial miners.

“I understand that over the many years, the landowners and historical miners of small scale mining in Wau- Bulolo have been deprived of the full benefits of their gold, and so it is time for MPG to intervene to assist them to reach maximum benefits of alluvial gold.”

Governor Saonu said plans are in place to ensure all alluvial gold collected by the landowners and tenement holders are made into gold bars to ensure financial security in the long run.

“The Regulatory Operations Division (ROD) of the Mineral Resources Authority and Albatross Integrated Limited will work now more closely with the landowners and tenement holders to ensure the all are fully taken care of in their alluvial mining activity.

“The aim of empowering the alluvial miners is part of the Economic Policy of Triple 1, where people of Morobe are empowered at which activity they are engaged in to be financially sound,” Governor Saonu explained.

He further emphasised that financial literacy training will be conducted for all Wau-Bulolo alluvial miners as well to ensure they are financially capable.

“The alluvial mining sector will be another economic opportunity for Morobe and a revenue generating activity for Morobe as well.”

Matthew Dalga, the MRA Development Engineer at the Small Scale Mining Branch representing ROD and MRA, said alluvial mining has huge potential and it can bring positive benefits if well-coordinated and supported.

“The MRA will support wherever possible in terms of compliance and ensure the regulatory process is followed so that the initiative taken progresses to a positive direction,” he stated.

Albatross Integrated Limited Principal Bridget Laimo said all good governance and transparency mechanisms will be in place to ensure all alluvial tenement holders and people are given maximum benefit for their efforts.

“Albatross working will be a family orientated partnership with the alluvial miners from onwards,” she stated.

“The levies retained from the alluvial gold sold will go back to your communities to help build roads, schools and all other necessary development infrastructure.”

Albatross Integrated Limited for six years have been working with landowners at New Ireland Province, and also up at Hides and Porgera and will now do the same for Morobe.

PNG PM urges multi-nationals to allow gas project to proceed

Papua New Guinea’s prime minister James Marape. Photo: PNG PM Media Unit

Radio New Zealand | 8 February 2020

Papua New Guinea’s prime minister has urged two energy companies not to hold a major LNG gas project in his country to ransom.

James Marape’s appeal to ExxonMobil and Oil Search follows the failure of negotiations with the former over the fledgling $US13 billion P’nyang gas project

Oil Search said PNG was demanding terms of Exxon that meant the project developers would not gain a sufficient return on their investment.

But Mr Marape accused Exxon of a “lack of interest” to meet PNG halfway by offering concessions for a better state take from the deal.

The failure of the negotiations has raised doubt over the future of the separate Papua LNG gas project signed with French major Total.

Mr Marape said he called upon the two multi-nationals, as beneficiaries of concessions previous governments have given, to work with Total to deliver Papua LNG.

However, he appeared to leave the door open for an agreement with Exxon over the P’nyang gas project proceeding.

He said in the interests of fairness, a Ministerial Gas Committee would request both the state negotiating team and ExxonMobil to present their positions for the State – through a committee of leaders – to decide what is the best outcome for PNG.

The prime minister said he had indicated on all levels of discussions that fundamental policy principles that influenced his government’s mindset would not change.

“These include no fiscal concessions in P’nyang, treating P’nyang as separate from both PNG and Papua LNG projects, increase in Domestic Market Obligations and local content participation,” he said.

“These will be fundamental in progressing P’nyang.

“In the meantime, I call upon ExxonMobil and Oil Search not to hold the Total project in Gulf to ransom.

“If you model the project to be uneconomical, then don’t push it: let’s leave the gas in my land and you develop Papua plus further work in PNG LNG.

“After SNT and ExxonMobil present to the MGC, Cabinet will decide on P’nyang.”

Mr Marape said his government would shift focus to Wafi-Golpu and Porgera mines, and other resource sectors so life in PNG was not only dependent on P’nyang and other LNG gas projects.

MPs stand firm with Prime Minister over Exxon rejection

Western Province MPs stand firm with Prime Minister James Marape over refusal to sign agreement with Exxon Mobil

“We will not surrender our dignity nor our sovereignty”

Hon Taboi Awi Yoto, MP, Governor Western and Hon. James Donald, MP, Member for North Fly | 5 February 2020

1. P’NYANG LNG PROJECT

We fully endorse the decision of our Prime Minister to cease negotiations with ExxonMobil on the P’nyang LNG Project. Our Prime Minister has demonstrated wisdom based leadership through the eye of the storm.

Our historical participation in the P’nyang negotiations, gave us a comprehensive understanding of the State’s and ExxonMobil’s proposed takes in the project. FRPG Term Sheet outlined projects that added further value to the country’s total share. Our PEC sanctioned policy can become the blue print for project host provinces whereby clusters of industrial hubs can be grown on the back of resource extraction and independent from Waigani.

ExxonMobil and Oil Search wanted maximum benefit for their shareholders in the P’nyang Project. But at what cost to PNG? Are we not entitled to a fair deal? Having done so well in the foundation project, we were expecting ExxonMobil and Oil Search to display commercial fairness and reasonableness – evidently they chose to discard these core virtues.

ExxonMobil/Oil Search asserted that gaps in the Asian LNG market created by maturing off-take agreements, opened a small but fast closing window of opportunity for our gas. Further substantial cost savings would be realized by combining the EPC contracts for Papua trains with P’nyang’s. Both companies pushed National Government and FRPG to accelerate P’nyang development, including statutory compliances. During the negotiations, ExxonMobil claimed Papua’s development was conditional on P’nyang being licensed first. And so it begs the questions, why didn’t ExxonMobil bring into production the proven and certified gas fields in foundation project like Juha? Why are several of foundation project’s gas fields being warehoused with no certainty of delivery to Caution Bay? Why is P’nyang being pushed for development when warehoused fields have yet to be monetized? Why must our Government bear solely the social cost for warehoused gas fields? State sought terms considered commercially reasonable and consistent with regional industry practices, so why couldn’t ExxonMobil and Oil Search make at least some concessions, especially when the PNG LNG Project delivered a windfall for both companies at the expense of our People? Where do you draw the line between commercial parity and commercial greed?

Peter Botten has gone to the media stating that our terms compelled ExxonMobil and Oil Search to abandon P’nyang because they would not be able to achieve a return on their investment. What Mr. Botten has intentionally and maliciously elected not to disclose is that in February 2019, ExxonMobil and Oil Search informed the State that project would cost $7 billion. On the eve of P’nyang Gas Agreement Negotiations, both companies increased capex to US$12 billion. The inflated capex reduced substantially the ideal investment hurdle rate. SNT went to great lengths to argue that capex was highly exaggerated but ExxonMobil and Oil Search refused to accede. Was the capex deliberately and maliciously increased to secure favorable terms for ExxonMobil and Oil Search? Yes.

The last person to be criticizing PNG Government is Mr. Botten. He should be thankful that he is still employed because of the sacrifice our People made when we lost US$400 million in a scheme he supervised and diligently implemented through the now infamous UBS Loan. We are still bleeding from the first stab. Mr. Botten is heartless by inflicting another wound. Mr. Botten will be retiring in his golden parachute, but what about the Kubutu People who still lack after 32 years of oil production, electricity and running water?

ExxonMobil and Oil Search promised our leaders the great economic miracle PNG LNG would deliver. Many outcomes were guaranteed. Trusting the ExxonMobil brand, we signed away our sovereign rights. Sadly, many of those promises are yet to materialize.

We are steadfast in our resolution that the Oil & Gas Act needs to be amended urgently. The legislation leverages financial and legal benefits to foreigners than to our Country. The amendments are in line with what other hydrocarbon producing nations have successfully enacted in the last 10 years.

2. STANLEY GAS AGREEMENT & PDL

We have instructed lawyers to review the Stanley Gas Agreement. Legal proceedings will be filed shortly to ascertain whether Horizon Oil and its joint venture partners are entitled to continue to enjoy the unbounded generosity of PNG or in the alternative whether the landowners, LLGs and FRPG are due for financial compensation for the questionable delayed development.

We believe the Stanley Gas Agreement is unconstitutional because it strips the State of its most basic sovereign rights. There are no penalty clauses for failure to achieve FEED, FID and construction. Shockingly, State has no recourse to terminating the license consequential to fundamental breaches. The deliberate exclusion of these mandatory sunset clauses, has given the developers unfettered latitude to deciding, at their own volition, the development schedule for Stanley.

The Stanley PDL has been used to conduct substantially valued farm-outs. Ironically none of these transacted monies have been reinvested in Stanley’s construction. For several years now, the developers have not engaged neither communicated with FRPG and landowners. Accordingly we have reached the conclusion that Stanley Gas Fields may never reach commercial production under Horizon Oil as the nominated developer.

The Stanley Gas Agreement and PDL is unprecedented and entirely at odds with established industry practices. How and why did Horizon Oil and its partners vouch for Stanley’s FID being achieved by or before 31st December 2014 and construction to begin in 2015? If State had known that Horizon Oil and its partners would fail to achieve the milestones of FID and construction as scheduled, would it still have signed the Gas Agreement and issued PDL? No. Did Horizon Oil and its partners deliberately and maliciously misled the State to sign Gas Agreement and issue PDL? Yes.

Surely we acknowledge developers/investors are needed to prove up resources. Legislated incentives are on offer to bring onshore investment dollars. However, any conduct or action that is clearly deceptive, or a Gas Agreement that licenses the ransacking of our resources with negative netback gains for our People, or lack of development thereof to the detriment of our People, will be rejected completely.

We will not surrender our dignity nor our sovereignty.

Exxon Partner Fires Back at Papua New Guinea in Gas Fall-Out

•  State terms for P’nyang project not bankable, Oil Search says
• Oil Search shares plunge 11.5% Monday to lowest since August

James Thornhill | Bloomberg | February 3, 2020

Exxon Mobil Corp.’s partner on a Papua New Guinea gas project that’s threatened by failed talks with the government hit back at the state’s position on Monday, saying its terms were uneconomical.

Oil Search Ltd., in its first comment since the talks broke down Friday, said that the government’s demands meant the project would not gain a sufficient return on investment. The impasse casts doubt on a broader $13 billion plan to double the country’s exports after Prime Minister James Marape, who came to power on a promise to increase the nation’s share of resources wealth, said Friday that Exxon’s proposed terms were ‘out-of-the-money’ for PNG.

The country’s take from the project would have been “significantly less” than deals done elsewhere in the region, including Malaysia, where Exxon has a big operation, Marape said Friday. The size of the resource, cost of development and the unique challenges of operating in PNG made comparisons with other arrangements in the region “misleading,” according to Oil Search.

“For Oil Search, the project returns under the State’s proposed terms were approximately the same as our cost of capital, on an unrisked basis,” Managing Director Peter Botten said in a statement to the Australian Stock Exchange.

The company’s shares ended Monday down 7.2% at the lowest closing level since Sept. 3, and having lost as much as 11% intra-day, as investors reacted to the latest setback to the group’s expansion plans in PNG.

The failure of the P’nyang talks has cast doubt on the future of Total SA’s Papua liquefied natural gas project. While the government has already reached agreement with the French company on that project, the business case of Papua was based in part on sharing infrastructure costs to expand the existing PNG LNG processing facility.

“With the talks failing, and P’nyang now stalled, we now see the most probable outcome being the PNG expansion (including Papua) stalls,” said Morgans analyst Adrian Prendergast in a Feb. 2 note.

Oil Search said it would “seek to advance the Papua LNG project in a timely way,” but added that several engineering and commercial changes would need to be made following the P’nyang delay. Meetings with the Papua joint venture partners, which also includes Exxon, were planned in the short term, the company said. A spokesman for Total in Papua New Guinea did not immediately respond to a request for comment.

“Papua is looking at a material delay which could push a final investment decision well into 2022,” said Saul Kavonic, energy analyst at Credit Suisse.

Total is currently targeting an FID in 2021. Further delay could see the expansion plan slip further down the queue in terms of projects competing globally for contractors and long-term offtake contracts.

“Trailing in the wake of the biggest wave of new LNG supply the industry has ever seen is not ideal,” said Angus Rodger, research director at energy consultancy Wood Mackenzie, adding that any reassessment of how the project is structured would inevitably require lots more time.

Marape doubled down on his criticism of Exxon in a Facebook post Sunday, saying the company was “not sincere” in dealing with the government on P’nyang. Referring back to the original Exxon-led PNG LNG project, which started in 2014, Marape said that “to date my families, my tribes and my provinces and country are yet to fully see those promised windfalls yet the state continues to foot the social cost of this project.”

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.

Papua New Guinea scraps talks with Exxon on P’nyang gas project

Nikhil Subba and Sonali Paul | Reuters | 31 January 2020

Papua New Guinea on Friday called off negotiations with Exxon Mobil regarding the P’nyang gas project, casting a shadow on a $13 billion plan to double the country’s gas exports by 2024.

The government said Exxon had refused to budge on the financial terms for developing the gas field and failed to come up with an offer that it could accept.

The P’nyang field was key to helping feed the expansion of Exxon’s PNG LNG plant, which it operates with partners Oil Search and Santos, among others.

The P’nyang agreement is one of two agreements needed for Exxon and its partners to go ahead with their $13 billion plan to expand LNG exports. The other agreement, the Papua LNG pact, was sealed with Total in September.

“Exxon Mobil’s offer had barely changed from its opening offer presented last November,” Prime Minister James Marape said in a statement, adding that it was not “substantially different” from a recent LNG agreement with Total.

The country is hoping Total will still go ahead with its Papua LNG project, a person close to the negotiations said.

Exxon Mobil’s Papua New Guinea spokesman was not immediately available to comment.

The country’s petroleum minister had said last year that the government would press Exxon for “far better” terms on the P’nyang gas project than it had with the Total agreement.

The government was seeking terms that would give the state more than the 45-50% take that the country is set to reap on the value of Total’s Papua LNG project, the person said, adding that the share was much less than the 80% take that governments like Malaysia and Indonesia have on gas projects in their countries.