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Court halts Panguna Mine signing

Staff Reporter | 9:35 PM |
A COURT has issued a restraining order to stop the signing of an agreement between landowners and the Autonomous Bougainville Government regarding the reopening of the Panguna mine.
Justice Ambeng Kandakasi issued the order at the Waigani National Court following an application filed by Philip Miriori, the chairman of the Special Mining Lease Osikaiyang Landowners Incorporated (SMLOLI).
He ordered that the parties to the proposed memorandum of agreement for the redevelopment of the Panguna mine were “forthwith restrained from signing the agreement”.
“If in the event the agreement has already been signed, the parties to that agreement and any person wanting to implement it are forthwith restrained from doing so,” Kandakasi said.
The signing of the agreement would have paved the way for the Bougainville Copper Limited to start work on the mine’s reopening.
The agreement was to have been signed last Friday but was cancelled after women from the area protested.
The court also restrained Lawrence Daveona from acting as the chairman of SMLOLI. The matter will return to court on Friday.
Justice Kandakasi said the order would remain in force unless the parties to the agreement could produce evidence that they had obtained the consent of the more than 500 block holders. The National

ExxonMobil PNG welcomes investigation result

Staff Reporter | 9:26 PM |
EXXONMOBIL PNG Ltd has welcomed the result of an investigation by the Independent Consumer and Competition Commission regarding its acquisition of InterOil.
It welcomed the conclusion reached that the transaction is not likely to substantially lessen competition in the domestic supply of natural gas. A company spokesperson said the company “is driving economic growth and is helping to produce significant, lasting benefits throughout the country”.
“We believe our involvement in the Papua LNG project will allow the operator Total to take advantage of synergies with PNG LNG to realise time and cost reductions that will benefit the government, co-venturers, landowners and communities,” the spokesperson said.
“We look forward to continuing dialogue with the Government in relation to third party access principles, domestic gas obligations and the maximisation of national value in new projects. ExxonMobil PNG is committed to delivering lasting opportunities to the people of Papua New Guinea.”
ICCC Commissioner and chief executive officer Paulus Ain said the multi-billion kina acquisition had negative impacts on competition in three potential markets.
They are the market for:


  • Third party access to natural gas pipelines and other field project facilities;
  • natural gas as alternate fuel for electricity generation; and,
  • Natural gas as input in the petrochemical industries and production of liquefied petroleum gas.

Inaugural petroleum, energy summit in PNG a success: Koim

Staff Reporter | 9:24 PM |
THERE has been a lot of interest from potential clients of PNG’s gas resource following the inaugural petroleum and energy summit early this year, an official says.
Gas projects coordination office director Peter Koim said the summit aimed to market the gas resource the country had, plus the supply from the new LNG projects.
“The reasoning why we brought in the petroleum summit early this year was to ensure that the hydrocarbon sector or the gas sector gets the prominence it needs,” he said.
“From the comments we have been getting, it’s been a great success. We already got the big oil companies here.
“With the PNG LNG project in operation, we got the four major projects on the board right now.”

PNG gas cheaper: Official

Staff Reporter | 9:19 PM |
PAPUA New Guinea gas is superior in terms of heat and cheaper than other gases in the region, an official says.
Gas projects coordination office director Peter Koim told The National that the country’s LNG’s production cost is also less than other LNG producing countries and the country’s position makes it even more attractive in Asian markets.
“The other good thing about our LNG is that the heating power or strength of our LNG is much better than any LNG in the region,” Koim said.
“The quality for our LNG is far more superior because it’s got much stronger heat. We haven’t signed any contracts yet but they know this project (Papua LNG) is coming on stream.”
Koim said a key factor customers look at is the cost of production.
“And cost of transportation, and then cost of storage. All of these costs, when you add them, and when you are selling a unit of electricity or whatever when you burn the LNG, all of those costs are added in,” he said.
“The cost of production in PNG is a lot less than the cost for producing in say, for instance, Australia.
“On top of that, the cost of sending an LNG tanker from Papua New Guinea to Tokyo, or Taipei, distance is shorter from Papua New Guinea. We’ve got superior quality LNG by way of producing the heat, we’ve low cost per unit so strategically we are well positioned for the Asian market.
“So the basic aim of the summit (inaugural petroleum and energy summit held early this year) was to tell the customers that we have a project coming and the contracts will be coming as soon as the project goes into what we call Feed (front end engineering design), project engineering and design.” The National

More gas found in PNG's Pasca field

Staff Reporter | 9:18 PM |
A 3D mapping has confirmed that there is still evidence of gas at the Pasca field off Gulf in Papua New Guinea, an official says.
Secretary for the Department of Petroleum and Energy (DPE) Kepsey Puiye told The National that Twinza Oil Ltd, the operator of the project, had applied for a development licence.
“Twinza is the operator of that project. Pasca project was a blowout in 1993,” Puiye said.
“There was an explosion. Gas went up in flames for nine consecutive months.
“A 3D mapping they have completed has confirmed there is gas still intact.
“They (Twinza) have already applied for a development licence.
“We (DPE) are saying fine. The only thing we want to do is to drill an appraisal well.
“The previous well was drilled a long time ago.
“We want to make sure that there is gas in the reservoir. So they are drilling that critical appraisal well in September.
“Right now they are working on it, in the planning stages.
“By September, we should have a confirmation.”
When announcing the project two years ago, Twinza chief executive officer Huw Evans said the company’s total investment at full production would be US$500 million (K1.57 billion).

LNG monopoly mars competition

Staff Reporter | 6:54 PM | |
THE recent acquisition of InterOil by ExxonMobil has negative impacts on competition in certain markets in the country, according to the Independent Consumer and Competition Commission.

Commissioner and chief executive officer Paulus Ain said their investigation was conducted pursuant to the ICCC Act.
“The investigation was to determine if the acquisition of InterOil by ExxonMobil would seriously lessen or reduce competition in certain markets in PNG,” Ain said.
He said when ExxonMobil announced its intention to take over InterOil, the commission feared it could raise some serious competition concerns in some markets in PNG.
This is because ExxonMobil, the operator of the PNG LNG project, owns the only pipeline and processing facilities for natural gas in the country.
“ExxonMobil also generates and supplies electricity using natural gas from the Papa-Lealea plant to the Port Moresby electricity grid under the arrangement with the Government,” he said.
The three potential markets which could be affected are:

The market for the third party access to natural gas pipelines and other field project facilities;
The market for natural gas as alternate fuel for electricity generation; and
The market for natural gas as input in the petrochemical industries and production of liquefied petroleum gas.
“The ICCC is of the view that competition in the market for pipelines and other field project facilities access services may be the only market that would give rise to the potential competition concerns, because ExxonMobil is currently the only operator of the existing facilities,” he said.
“The ICCC is convinced that competition in the other two markets may not be significantly affected because the current supply of natural gas is to overseas markets.”
ExxonMobil PNG Ltd managing director Andrew Barry recently told The National regarding the competition concerns raised: “I think that our coming here and helping with the synergies associated with the project has the benefits of reducing the cost of the project which will help the project to actually mature and develop.
“We think that with us coming in, the project will be done quicker, cheaper and more effectively and efficiently.
“This will  ultimately benefit the Government, local communities and the country.”  The National

ExxonMobil's LNG project going well

Staff Reporter | 5:39 AM |
THE managing director of ExxonMobil PNG Ltd ANDREW BARRY says the US$19billion PNG LNG project has achieved outstanding performances in its different areas of operation. He told The National Business Editor SHIRLEY MAULUDU that the project had not only made great progress but also invested millions of kina in the different areas of its operations. Below are excerpts from the interview.

MAULUDU: Briefly tell us about ExxonMobil PNG Ltd and its operations in Papua New Guinea.
BARRY: There are three different parts of the operations at the moment. We are the operator of the PNG LNG project. And with the recent acquisition we’ve made of InterOil, we are now a partner in the PRL 15 or the Papua LNG project operated by Total. And then we have also recently entered into some offshore licence areas which are more than 150 kilometres off the coast of the Gulf of Papua and in more than 1500 metres of water.

MAULUDU: It has been three years since the first LNG shipment was made from the PNG LNG project. How would you describe the progress so far?
BARRY: I would say absolutely outstanding. And I’ll characterise it in a number of different areas.
The first one and most important is our safety performance. If you think of 2016, we had the best year ever from a safety perspective. And we are really actually the best in class.
Whether you look at it internally from ExxonMobil and externally from the industry as well. We’ve worked almost 70 million hours without a single lost time to injury.
And we’ve worked since 2013 without anyone getting hurt from that perspective. So it was an outstanding performance.
And from environmental performance, again we had our best year ever in 2016. We see that from the biodiversity perspective things went really well. The regeneration of all our sites is going better than expected. We continue to invest heavily in the communities in the areas of education, empowering women, and health.
We have recently been helping in the Highlands Highway – K150 million investment in Highlands Highway. And from a production perspective, we have just delivered our 300th cargo. Production has been going about 20 per cent above what our designed at the PNG LNG. So all the key matrix, we are doing outstanding. Most important thing is that the performance of the teams have done that. In my position, I couldn’t be more proud and more privileged to lead such a fantastic team.
We’ve got about 2500 people working on the PNG LNG project and more than 80 per cent of them are Papua New Guineans.

MAULUDU: Being the first operator of the major LNG project in the country, do you think Government legislations and policies for the petroleum sector are framed in a way to encourage further investment in the industry itself?
BARRY: I think the policies and legislations are sound. We have demonstrated through the PNG LNG project that within that framework, we can make projects happen.
And so we understand that and are comfortable with it. With any legislation or policies, there is room and opportunities for improvement. But we don’t see that there needs to be a whole rewrite of any of the policies or legislations. We think they are sound. And importantly, the development of multiple projects happens, improving and increasing the capacity and resources within the Government.
For example, the DPE (Department of Petroleum and Energy) is really what is needed to be able to progress some other projects going forward.

MAULUDU: It has been revealed recently that there is still a huge potential of oil reserves yet to be tapped into. What is ExxonMobil’s view on that?
BARRY: We are very upbeat of that and excited about the opportunities right across the country. And as part of the InterOil acquisition, we picked up some exploration acreage around PRL 15, around Papua LNG. So we feel that there is more potential out there that we would like to go out and explore. In the offshore, we now have got three offshore blocks (more than 150 kilometeres offshore, 1500 metres of water) and that really played to ExxonMobil’s strengths and capabilities to be able to develop those types of resources.
It still requires a lot of work at the early days because we need to go out and do more seismic activities and drill wells to be able to then understand what these resource base is.
But we are very excited and would like to think that there is a lot of opportunities.

MAULUDU: How competitive then do you think the country’s petroleum industry is?
BARRY: Within PNG, it can be quite expensive to develop resources, driven by the terrain and logistics and such. For example, an exploration well can cost more than K300million to drill one. When I look at the competitiveness, there are different factors that ultimately play into that competiveness.
It’s the cost of developing those resources, it’s the fiscal regime that’s in the country.
And what’s really important is that when we work in partnership with Government, is to be able to find that balance to be able to continue to make the country competitive for resources.
Certainly there are lots of opportunities out there and we are excited about, I think that we’d be able to develop the resources but we’ve got to work on the cost, to get the cost down and more importantly, a stable, physical environment such that we have confidence in developments.

MAULUDU: We understand the PNG LNG project has just shipped its 300th LNG cargo. What does that mean to ExxonMobil as the operator?
BARRY: We are fiercely proud of what we’ve done with PNG LNG. I think from the reputation that it has in the international community, it is of a very safe, reliable supplier, and that is really important to us because that reflects on the reputation.
And importantly, that reflects on the reputation of the country.
If you think about other players, for example, Total, coming into the country, to look to develop additional resources, the success of the PNG LNG project has enabled or given the opportunity for others to come in and say if ExxonMobil is able to do it, we could come in and do it as well.
And so, we welcome that because we look at the development of the oil and gas resources in the country, which is really important enabler to improve the living standard of the country. And as we see others come in and ourselves looking to develop more, we encourage that.
We are very proud of what we’ve done as an operator and believe that our leadership has been key to that. But we also can’t forget that it’s a partnership and a team.
And so with our co-venture partners Oil Search, Santos, Kumul Petroleum Holdings Limited, Mineral Resources Development Company, JX Nippon Oil and Energy, very important partnership that we have within our co-venture. And extremely important is the Government and the communities where we operate.
And we’ve also got the buyers in China, Japan and Taiwan, all of our suppliers.
It’s a really about partnerships and team work. And what is important is that we are all working together for the success of the project because if you have one element of it that is pulling against that, then it sort of falls apart.

MAULUDU: How involved are the locals in the spin-offs of the PNG LNG project?
BARRY: They are very much involved. And there are multiple different ways that the community benefits from a project like ours. We are using a lot of Papua New Guinean businesses and in particular landowner companies.
At the moment I think there are  about nine landowner companies we are using at all the production activities.
If you look at how much money was spent on landowner companies, it will be more than K3.5 billion.
And more than K13 billion with Papua New Guinean companies. Then the employment, and community investments and that. And you also have the royalty development levies that go directly to the landowners and provincial governments.
There have been some of the challenges where they have been held up in some courts. But there is multiple facets of opportunities.
And importantly if we look at business opportunities, if you look at SMEs, we would like to look at the full range of opportunities from large landowner companies right through to micro SMEs. The National

Oil Search to buy 30pc stake

Staff Reporter | 3:55 AM |
OIL Search (PNG) Limited has entered into an arrangement with ExxonMobil for the acquisition of certain licence areas in the Papuan Gulf basin in Gulf.
The arrangement was for 30 per cent acquisition of each of the licenses which included Petroleum Prospecting Licences PPL474, PPL475, PPL476, PPL477 and PRL39.
According to Oil Search, ExxonMobil acquired interests in these licences when it purchased InterOil Corporation this year.
The licences are in the Eastern Foldbelt in the onshore Papuan Gulf Basin, adjacent to the Elk-Antelope fields in PRL 15.
They contain the Triceratops, Bobcat and Raptor discoveries.
As part of the proposed farm-in arrangements, Oil Search will undertake a seismic acquisition programme over the licences during the remainder of this year into early next year, on behalf of the operator ExxonMobil.
Oil Search managing director Peter Botten said: “Prior to our proposed bid for InterOil in 2016, Oil Search identified the onshore Papuan Gulf Basin as an area with not only discovered gas resources, but also significant further gas potential.
“The proposed farm-in to these licences materially enhances Oil Search’s exploration portfolio in this highly prospective area.
“Combined with our existing acreage position, Oil Search has a world-class exploration portfolio in PNG, with multiple high potential play types close to infrastructure.”
He said the onshore Gulf licences were close to the world class Elk-Antelope fields in PRL 15, which were expected to underpin the Papua LNG development, providing a potential route for future commercialisation.
“In addition to the existing gas discoveries, we have identified a number of additional leads and prospects on the acreage,” he said.
Botten said Oil Search’s acquisition of the licence interests was subject to due diligence, execution of binding agreements, conditions precedent and regulatory approvals in which the terms of the agreement were confidential. The National