Papua New Guinea will soon see the fruition of a five per cent Liquefied Petroleum Gas for its domestic market obligations.
This will come as a result of the successful negotiations between the State Negotiating Team and developer Twinza Oil Limited (PNG) of the country’s first ever offshore Pasca A gas project in the Gulf Province.
The K3 billion (US$2.4bn) Pasca A gas project is set for signing at the end of this month.
This project will have a lifespan of 12 years.
Following the negotiations on the agreement for the project, the State negotiating team, together with the developer has, come to an agreement for a 55 per cent to 45 per cent in favour of the State in terms its nominal stake take.
The negotiations have also managed to set a precedence for all other oil and gas projects in the country seeing 5 per cent has been marked for LPG to fulfill the government’s vision of domestic market obligations.
Petroleum Minister Kerenga Kua announced yesterday that it’s a good deal for PNG after 10 months of negotiations.
He said the 55 per cent is based on the oil price of $US50 a barrel, however, the good news is the oil price has increased to $US76 dollars, a bonus for the country.
“The composition is made up of a 2 per cent royalty and 2 per cent development gross revenue to the Gulf provincial government.
The 2 per cent is 2 per cent of gross production and not net after deductions like in the past.
The developer has also agreed on a 5 per cent production levy out of total production and it’s important to note that there is no entitlement under the Oil and Gas Act for production levy and this is something that is created out from the Pasca A gas project,” he said.
“This means that the State will be able to receive revenue on a monthly basis by giving away the dividend withholding tax.
On top of that we will get 15 per cent of additional profit tax and domestic market obligation provisioning is important for this project so we have secured 5 per cent, whose details will be discussed later and the corporate tax of 30 per cent.”
The hydrocarbon resource project in the Gulf of Papua about 95kms offshore at water depths of 93 metres will evolve in a two-phased development plan where in phase one, rich liquid will be stripped and produced, namely liquid petroleum gas (LPG) and condensate while gas is re-injected; and in phase two gas will be produced.
Phase one will have a two-year timeframe where around 35 and 38 stock tank million barrels of LPG and condensates will be produced respectively.
Phase two kicks in the third year of the production life of the project where an estimated 326.7 to 400 billion cubic feet of gas (BCF) will be produced, for the remaining 10 years of project life.
Mr Kua said though Pasca A is small gas condensate project in terms of reserves size, its potential to aggregate small pockets of stranded gas fields in the Gulf of Papua is huge.
“The tentative schedule for the first shipment of LPG is 2025. However, the schedule for first shipment may be reduced if Twinza moves quickly into Front End Engineering and Design (FEED).
As minister responsible, my next step is to ensure that the processes leading to the gas agreement signing takes place swiftly to meet the timeline of tentative date for signing at 29th July 2021,” he said.
He noted that the negotiations of the Pasca A project is a PNG affair as both sides have nationals on their teams without the involvement of expatriates and politicians.
Post Courier / Pacific Mining Watch
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