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Papua New Guinea Prime Minister James Marape says that the country is unfairly being held to ransom by the project developers of the Papua LNG project.
Marape, when giving an update on the status of the Papua LNG project, said the government will not tolerate such behaviour and is committed to ensuring the project is developed without further delay.
He said the Papua LNG project agreement was signed on 09 April, last year, with Total Energy Limited and other joint venture partners ExxonMobil, Oil Search and Nippon Japan.
“The State will own 22.5 per cent of the shares if we decide to exercise our rights, as provided under the Oil and Gas Act,” Marape said.
The project’s total capital outlay was estimated at US$13 billion, he said. It contains similar terms to that of the PNG LNG project, including an improved 1.2 per cent for royalty and development levy and 5 per cent gas for domestic market obligation.
“As a result, the country will receive close to 46 per cent of the project benefit, a mere 6 per cent increase against the 40 per cent share from the PNG LNG project,” Marape said.
“However, our shares could be further deduced or discounted (42 per cent) because we agreed to a fixed price regardless of drop in the oil price.
“More importantly, there is no value as the price is the same as the international price.
“We should have secured a higher share of the benefit but we lost the opportunity due to the misguided approach at the negotiating stage.
“When this government came into office, one of the first actions we took was to attempt a renegotiation of the terms of the agreement. However, this was not possible as the agreement was binding on the State.
“This project has been delayed due to two primary reasons.
“Firstly, because of the impact of the coronavirus pandemic and secondly, other joint venture partners, particularly Exxon Mobil and Oil Search Limited’s insistence for P’Nyang to be part of the project.
“Papua LNG project development is not conditional on P’Nyang gas resources and yet the country has been unfairly held to ransom, so to speak, by these two companies.
“Our government will not tolerate such behaviour.”
“We are seeking legal advice and when this is done, we will be sitting down with Total to get this project started after the sensitivity of the Covid-19 pandemic has ended. I want to assure the people that this government is fully committed to ensuring this project is developed without further delay,” he said
SOURCE: POST COURIER/PACNEWS
Pacific Islands News Association
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International News Safety Institute (INSI)
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