Sydney (Platts)--22Aug2012/437 am EDT/837 GMT
The incoming government of Papua New Guinea plans to "give priority support to ensure the delivery" of InterOil Corporation's Gulf LNG project during its current term, Governor General Michael Ogio said Tuesday.
"In this regards the government will immediately establish a state negotiating team comprising of key agencies to negotiate a gas agreement with InterOil and its partners," Ogio told the opening of the newly elected parliament under Prime Minister Peter O'Neill, according to a transcript of his speech.
"The team will work with Petromin, the state nominee to ensure that the best gas agreement is negotiated," he said. "Specific consideration will be given to increased benefits for landowners, local level governments and provincial governments."
The new government would also ensure that the ExxonMobil-led Papua New Guinea LNG project is "delivered on time so that revenue flows will begin 2014," Ogio said.
"These two projects will underpin our economy for the next 40 years," he added.
ExxonMobil is currently two years into construction of its $15.7 billion PNG LNG project. The facility will produce 6.6 million mt/year of LNG from two trains.
PNG's Minister for Petroleum and Energy William Duma late last week agreed to suspend a notice of intent to terminate InterOil's December 2009 agreement for the development of its LNG project. The notice was issued by Duma in May, on the grounds that the project did not meet the requirements under the agreement that it be based on recognized technology and operated by a major company.
The notice triggered a 180-day period during which the company and its project vehicle Liquid Niugini Gas Limited would be required to take steps to meet the terms of the project agreement. Since then, however, InterOil has held a number of constructive meetings with government departments, which are now scheduled to brief the prime minister and members of the National Executive Council, or cabinet, on the progress made on the project, Duma said.
The 2009 agreement calls for the delivery of a 7.6 million-10.2 million mt/year LNG project using internationally recognized technology and operated by a company with experience at similar-sized facilities. Instead, InterOil had proposed a phased development with itself as the upstream operator.
InterOil meanwhile is currently negotiating to bring a heavyweight partner into the project.
"With the sound backing of the new administration in PNG, we are continuing to work with our advisors to finalize selection of an LNG equity partner," Mulacek said recently. "The end result of the partnering process is expected to fully satisfy all the terms of the 2009 LNG project agreement."
PNG media has reported in the past that US major Chevron was interested in partnering InterOil in the Gulf LNG project, and Duma has repeatedly pointed to Shell as a potential stakeholder. Shell signed a strategic alliance with PNG state-owned Petromin last August and is actively pursuing LNG opportunities through a Port Moresby office opened in February.
--Christine Forster, email@example.com --Edited by Jonathan Fox, firstname.lastname@example.org
Then the solution would be to charge premium prices for deals and or product to compensate for the $$$ lost to the negociations. Can't really speculate until we hear details. If nothing else the deal should reflect what is normal for the industry within +/- certain guidelines. Don't forget that IOC's target audience for ng is Asia where the price is approx. $18/mcf. Why should we sell below $3? Asia has no better alternatives that I know of. At just $5/mcf, our E&A plus Tri would equate to $80 billion worth of product!!
I hope someone is listening.
I like it, Ed...maybe you should be on IOC's negotiating team, but fat chance of PNG contributing anything. The reason they are bringing in high priced attorneys from Australia is to push the envelope of what they can get away with legally. You don't hire high priced lawyers to stuff give away to the other guys. They are strengthening their "negotiation team". And they already had the trump card of project approval. The only question is how much this will cost IOC (i.e., shareholders) and/or its partners IMO.
Yes I do,let them share more with their share, not ours. If not, then some sort of scaled 'bonus" for landowners as certain financial goals are achieved in IOC's overall fiscal growth. That way everyone shares the burden.
PS.. Jobs from Interoil should also be considered in lieu of a straight cash bribe. The existing deal that was "broken" by IOC with regards to the original 2009 agreement works BOTH ways.
“In this regard, the government will immediately create a state negotiating team of key agencies to negotiate a gas agreement with InterOil and its partners,” Sir Michael told the opening of the parliament under Prime Minister Peter O’Neill.
“The team will work with Petromin, the state nominee to ensure that the best gas agreement is negotiated.
“Specific consideration will be given to increased benefits for landowners, local level governments and provincial governments.”
I repeat: "increased benefits for landowners, local level governments and provincial governments.”
Where do you think the funding for all these "increased benefits programs is coming from? Certainly not from Petromin or PNG's existing share of the pie. The government wants more of the potential partners' financial contribution to go to the Government of PNG to fund some very costly programs.