Papua LNG Gas Project to go ahead: additional gains for PNG

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According to the Office of the Minister for Petroleum, on September 2, 2019 the PNG Government cleared Total to proceed with the implementation of the Papua LNG Gas Project. Upon declaring this, the Minister for Petroleum Hon Kerenga Kua  however has stated that “this Government is committed to doing things differently from the past. Doing the same things again and again by all successive past Governments has not substantially shifted us away from poverty. If we require different outcomes we must be prepared to take different approaches.”

Minister Kua further added that as part of the new approach, the current Government has taken a fresh new look at the Papua LNG Gas Agreement signed by the previous Government, “To see if it could be done differently. Our approach was to look at firstly all the legal compliance issues, and secondly, the adequacies of the fiscal take for Papua New Guinea.”

“Some have argued that the sanctity of a signed contract must be respected, but all good and experienced businessman know that even signed contracts can be opened up for reconsideration. Some contacts even provide for periodic reviews too. Reviews are a normal incidence of contracts” Kua said.

Here’s a quick PNGBUZZ overview of Minister Kua’s statement:

  • The NEC sanctioned review now completed. 
  • State articulated concerns – regulatory, fiscal and otherwise, leading to an easing of positions, which resulted in Total and its partners becoming more forthcoming
  • Total Exploration & Production PNG Limited (Total E&P Ltd) made concessions as a result
  • National content plan to proceed – Total fully commited to this
  • Total agreed to allow for third party access for Petroleum Pipeline
  • Total & Kumul formed joint venture into transportation of  Kumul’s share of jointly marketed cargo
  • New arrangement allows for new potential benefits for PNG
  • Both parties fully commited to honoring the new agreement
  • As a result of the agreement review exercise, Mining & Petroleum Ministry is now instructed to re-write laws to move into a revised system based on production arrangements (PSA).

Patrick Pouyanné, Chairman and CEO of Total said in a statement “The finalization of the Gas Agreement is a major milestone for Papua LNG project that confirms the commitment of all partners and the Government of Papua New Guinea to make the project a success for all stakeholders”

“We are very pleased with the progress of this competitive LNG project that benefits from the brownfield synergies with existing liquefaction facilities and the proximity to Asian markets. It will further strengthen our position in the Pacific basin and ensure our future LNG portfolio growth.”

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