PNG stands by Total gas agreement

THE Papua New Guinea government has finalised negotiations of its gas agreement with Total, clearing the French company’s two-train Papua LNG expansion to advance, in turn paving the way for an associated one-train expansion of the ExxonMobil-operated PNG LNG project.
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Helen Clark

Editor

 

"The government has now cleared Total to proceed full steam ahead with the implementation of the Papua Gas Project," petroleum minister Kerenga Kua said in a statement late yesterday.

The core agreement is unchanged, but Total has signed a non-binding letter that will see an increase in local content during the construction phase of the project, third-party pipeline access, which the government will have an equity stake in after repayment of loans, as well as a joint venture with PNG's national oil company Kumul to look at LNG shipping.

The gas agreement was signed in April under the previous Prime Minister Peter O'Neill, and was one of the reasons given for the PM being forced out to be replaced by James Marape.

Since Marape came to power he has pursued a more nationalist agenda and argued PNG must extract more value from its resources. This view was echoed by Kua, who said that "doing the same things again and again by all successive past governments has not substantially   shifted us away from poverty".

In August Kua led a surprise trip to Singapore to renegotiate the deal after previously saying he'd stand by it.

 "Articulation of the state's concerns led to an easing of positions, which resulted in Total and its partners becoming more forthcoming," Kua said yesterday.

The changes appear to be largely small, and some analysts have suggested they will not significantly impact the project but it still appears to be a nationalist win for the new government, which called them "substantial gains".

Papua LNG will share PNG LNG's facilities and when the expansion is completed will double the nation's LNG exports.

The two projects are worth a combined US$13 billion.

Australia's Oil Search is a partner in both projects.

Managing director Peter Botten said yesterday the projects will "help deliver billions of kina in value to the PNG economy, support local businesses and provide greater employment opportunities for thousands of Papua New Guineans".

The company's share price rose on the news yesterday and is up 2.4% today at $6.84 but still far below the level of $8.40 about six months ago.