Category Archives: Petroleum

Proposed policy to declare revenue

Source: Loop PNG

9th October 2017.

 

The Department of Mineral Policy and Geohazards Management (DMPGH) says it is working to introduce a policy for stakeholders in the mining industry to declare any revenue received or made from mining projects.

 

Secretary Harry Kore told Loop PNG that the policy idea came about during consultations for the Revised Mining Act.

 

He said while there are reports of mining revenue generated, a lot of locals impacted by mining activities claim to not see any tangible results.

 

Kore said the policy will ensure stakeholders such as provincial governments, authorities such as the Mineral Resources Authority (MRA), Mineral Resources Development Cooperation (MRDC), as well as landowner association chairmen and landowner company CEOs declare revenue received for the benefit of all.

 

“You fail to do that and you will be held accountable and you will be penalised under the law. So it becomes a practise. Every quarter they just declare their interest. We know that so much money goes to our landowners but whether it trickles down to the peoples is another thing,” said Kore.

 

The policy idea is similar to a draft legislation currently being drawn up by the PNG Extractive Industry Transparency Initiative to make mandatory all revenue from the mineral, petroleum and gas sectors to be fully disclosed as per good governance standards.

 

Kore said they are yet to have formal discussions regarding the policy idea however, there is cooperation and the policy complements that of the work the EITI is undertaking.

 

Secretary Kore added that one of the agendas of the policy is to ensure there is sustainability in how revenue is invested back in the country.

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Govt to inject K310mil into forex market

Source: The National

THE Government plans to inject US$46 million (about K142.6 million) into the foreign exchange market to ease the shortage problem.

 
A statement from the Bank of Papua New Guinea and the International Revenue Commission yesterday said there would be a further US$54 mil (about K167.4 mil) released into the market later this week as part of the two-phase intervention by BPNG.

 
The statement said: “In regard to the US$100 million (K310 mil) intervention in the market, the bank has decided to implement the intervention in two phases.

 
“The first release of US$46 million  to be effected immediately for many small import orders.

 
“The remaining US$54 million will be effected for few large imports in the first week of October 2017.”

 
Deputy Prime Minister and Treasurer Charles Abel thanked BPNG and IRC for undertaking immediate measures as part of the Government’s 100-day economic recovery plan.

 
“The fundamental issue is the over-reliance on imports of processed goods for our needs and the lack of self-sufficiency in agricultural food production which will result in major import replacement,” Abel said.

 
“This is exacerbated by a tax system that is quite complex to administer affecting collection of tax revenue that is due to the State. The 100-day plan intends to begin the process to address these issues.”

 
A memorandum of understanding will be signed this month to allow Puma’s purchase of crude oil from Oil Search to be in kina.

 
BPNG met with Oil Search and Puma Energy to implement the agreement reached between Abel and both parties to sell to Puma Energy domestically-produced crude oil which will be finalised and a memorandum signed.

 
The arrangement will accommodate 50 per cent of Puma’s crude imports.

 
BPNG is also in the process of reviewing offshore foreign currency accounts to assess if those accounts holders have to remit some of the balances to their inshore accounts.

 
The Government is also understood to be in talks with the Asian Development Bank and the World Bank for a further loan facility which is expected to be finalised this month.

PNG Needs Better System For Landowner Benefits

BY MICHAEL ARNOLD

As one of the largest Liquefied Natural Gas (LNG) operators and in the country, Oil Search Limited has raised grave concerns of the need for a better system to manage landowner benefits.

Oil Search managing director, Peter Botten, said at a press conference yesterday that landowner benefits, including royalties and development levies for those within the PNG LNG project area had been accruing since 2014 and to date amounted to over a billion dollars.

Mr Botten said that some of the equity revenues were already flowing in to the Mineral Resources Development Company (MRDC) Limited and Kumul Petroleum Holdings Limited (KPHL).

However, he stressed that there needed to be a better system of benefit management and disbursement to ensure that landowners were getting their fair share.

 

http://postcourier.com.pg/png-needs-better-system-landowner-benefits/

 

PM O’Neill dismisses Sir Mekere’s claims

 

Source: PNG Facts Online

 

Prime Minister Peter O’Neill has dismissed claims by Moresby North West Sir Mekere Morauta that the divesting of shares in Oil Search Limited had cost the Government a major loss.

O’Neill, speaking from New York where he is attending the UN General Assembly, questioned the integrity of of Sir Mekere Morauta, over comments he has made in relation to the decision by Kumul Petroleum Holdings Limited to divest shares in Oil Search Limited, saying it is just typical Opposition politics.

 

 

The Prime Minister dismissed the claims that are based on Sir Mekere’s imaginary figures, saying instead that on balance the State had made about 100 million from the sale in Oil Search project.

 

 

“The State’s investment in Oil Search was the right decision at the time, it helped maintain confidence in the oil and gas sector, but was undermined by unforeseen global factors and baseless political opposition,” the Prime Minister said.

 

 

“This has been a business decision based on anticipated return on investment, and has delivered the most prudent outcome for the State considering the consequences of the earlier energy price lows.

 

 

“Terminating the collar arrangement has resulted in a recovery of the remaining prepaid interest on the loan.

 

 

“The balance from this deal will likely be a K100 million gain for Papua New Guinea.

 

 

“This is nothing like the shady deal by Sir Mekere’s friends in the Somare Government, who lost the State hundreds of millions of Kina through the IPIC deal and subsequent losses suffered as result of currency swap on the loan from US dollar to Australian dollar.

 

 

“The reality is that the Oil Search arrangement did not cost the State a toea from Treasury in repayments or interest.

 

 

“Repayments were made through the collar and the sale of shares was scheduled over time to repay the loan.”

 

 

The Prime Minister said in early 2014 that action had to be taken to protect the interests of the State, and investment in the largest resources company was the right move.

 

 

“We were at risk of a situation where shareholding in one of the largest companies in the country would fall into the wrong hands.

 

 

“We had seen similar outcomes ten years earlier when a previous Government had allowed this to happen.

 

 

“The Government’s intervention to buy shares in Oil Search had a positive influence in the direction Oil Search has taken and boosted investor confidence in Papua New Guinea.”

 

 

PM O’Neill condemned the blatant ongoing negative politicisation of investment in the country’s resources by people who should know better.

 

 

“There are arm-chair critics who make no positive input to business and investment.

 

 

“The Oil Search investment is more complex than they can grasp, and misleading claims by the likes of Morauta only ever undermine confidence.

 

 

“Who is he to talk about investment?

 

 

“He ran all state investments into the ground nearly twenty years ago, and today he maintains his illegal control of PNGSDP. This is fraud against the people especially in Western Province and our Government will commence criminal investigations.

 

 

“The question must be put back on Morauta to explain the many hundreds of millions of Kina that have gone missing from PNGSDP in the form of advisory fees and commissions and excessive board fees.”

 

 

The Prime Minister said the divestment does not diminish the excellent relationship between the State and Oil Search.

 

 

“The Government and Oil Search have continued co-operation and mutual interests across a range of activities in Papua New Guinea.

Oil Search Divestment Delivers K100 Million Return

The Prime Minister, Hon. Peter O’Neill CMG MP, has questioned the integrity of the Member for Moresby North West, Sir Mekere Morauta, over comments he has made in relation to the decision by Kumul Petroleum Holdings Limited to divest shares in Oil Search Limited, saying it is just typical Opposition politics.

The Prime Minister dismissed the claims that are based on Sir Mekere’s imaginary figures, saying instead that on balance the State had made around the 100 million Kina from the sale in Oil Search project.

“The State’s investment in Oil Search was the right decision at the time, it helped maintain confidence in the oil and gas sector, but was undermined by unforeseen global factors and baseless political opposition,” the Prime Minister said.

“This has been a business decision based on anticipated return on investment, and has delivered the most prudent outcome for the State considering the consequences of the earlier energy price lows.

“Terminating the collar arrangement has resulted in a recovery of the remaining prepaid interest on the loan.

“The balance from this deal will likely be a 100 million Kina gain for Papua New Guinea.

“This is nothing like the shady deal by Sir Mekere’s friends in the Somare Government, who lost the State hundreds of millions of Kina through the IPIC deal and subsequent losses suffered as result of currency swap on the loan from US dollar to Australian dollar.

“The reality is that the Oil Search arrangement did not cost the State a toea from Treasury in repayments or interest.

“Repayments were made through the collar and the sale of shares was scheduled over time to repay the loan.”

The Prime Minister said in early 2014 that action had to be taken to protect the interests of the State, and investment in the largest resources company was the right move.

“We were at risk of a situation where shareholding in one of the largest companies in the country would fall into the wrong hands.

“We had seen similar outcomes ten years earlier when a previous Government had allowed this to happen.

“The Government’s intervention to buy shares in Oil Search had a positive influence in the direction Oil Search has taken and boosted investor confidence in Papua New Guinea.”

PM O’Neill condemned the blatant ongoing negative politicisation of investment in the country’s resources by people who should know better.

“There are arm-chair critics who make no positive input to business and investment.

“The Oil Search investment is more complex than they can grasp, and misleading claims by the likes of Morauta only ever undermine confidence.

“Who is he to talk about investment?

“He ran all state investments into the ground nearly twenty years ago, and today he maintains his illegal control of PNGSDP. This is fraud against the people especially in Western Province and our Government will commence criminal investigations.

“The question must be put back on Morauta to explain the many hundreds of millions of Kina that have gone missing from PNGSDP in the form of advisory fees and commissions and excessive board fees.”

The Prime Minister said the divestment does not diminish the excellent relationship between the State and Oil Search.

“The Government and Oil Search have continued co-operation and mutual interests across a range of activities in Papua New Guinea.

“Oil Search has an outstanding reputation delivering for its shareholders, and has been an extremely responsible corporate citizen, investing millions of Kina in social development programs that help people around Papua New Guinea.”

Kumul Holdings to account for sale of stake

By HELEN TARAWA of The National 

 
DEPUTY Prime Minister and Treasurer Charles Abel says Kumul Petroleum Holdings Limited  will report on the net outcome of the government’s 10 per cent stake in Oil Search Limited that it has divested.

 
Abel told The National that KPHL was holding the debt and the shares.
The debt has been cleared and shares sold.

 
“The collar loan protected KPHL from some of the share price drops,” Abel said.
“They will calculate and report on the net outcome of the transaction.”

 
KPHL managing director Wapu Sonk said they were preparing for the PNG LNG project expansion, the Papua LNG, the power project and their own investments.

 
Responding to claims of the sale of shares as a rescue package for the government, Sonk said the government did not pay anything.

 
“This is not a rescue package because this was never on the government’s balance sheet,” Sonk said. “The government wasn’t paying anything. It was Kumul.

 
“We’re preparing for the PNG LNG project expansion, Papua LNG, the power project, our own investments going forward. So it’s got nothing to do with the PNG Government.”
KPHL on Friday announced that it had sold its shares in Oil Search Limited and had ceased to have any interest in the firm.

 
Sonk, who announced the decision in the presence of KPHL chairman Sir Moi Avei, said it would continue to be responsible for managing the State’s 16.77 per cent equity in the PNG LNG project.

 
“As a close partner of Oil Search in PNG, we look forward to continued cooperation on our numerous projects.”

 
Sonk explained that the UBS collar loan was not a normal loan.

 
The value of the parcel of shares on any day supports the loan itself which, in this case, was approximately 149 million shares.

 
A collar is a protective-options strategy that is implemented after a long position in a stock has experienced substantial gains.

 
Sir Moi said KPHL had made about K100 million (A$35 million) as a result of the transaction.

 
He said the current oil and LNG price environment and projected  long-term views indicated that oil prices would remain about the same for the next few years.

O’Neill And Exxon CEO Meet In US

Source: Post Courier

 

 

Papua New Guinea and ExxonMobil are working together to expand Investment and create more jobs, Prime Minister Peter O’Neill said from the United States last night.

 

Mr O’Neill has expressed confidence in the ongoing strength of the commitment by ExxonMobil in Papua New Guinea’s economy, saying there is scope for greater investment and job creation from the company that is one of the largest foreign investors in Papua New Guinea.

 

He made the comments after meeting ExxonMobil chairman and chief executive officer, Darren Woods, and Senior Vice President, Jack Williams, at the company’s global headquarters in Dallas, Texas, on Thursday.

 

“The contribution that the PNG LNG Project has made to our economy has been substantial, and this will continue to grow,” Mr O’Neill said.

 

“ExxonMobil has demonstrated their continued commitment to Papua New Guinea through the delivery and management of the PNG LNG project, together with ongoing exploration activities.

 

“We look forward to continuing to partner with ExxonMobil to advance projects and create more jobs for Papua New Guineans.”

 

ExxonMobil PNG Limited is the operator of the US$19 billion PNG LNG Project, the largest private sector investment to date. Additionally, ExxonMobil is working with partners to expand LNG processing at the existing PNG LNG plant site near Port Moresby.

 

“Papua New Guinea is an important country in ExxonMobil’s global portfolio, and we are committed to making our business successful for all parties,” Darren Woods said.

 

“We are committed to working with the government to support economic growth and provide long-term, sustainable benefits to the people of Papua New Guinea through workforce, supplier and community development programs.

 

“ExxonMobil also congratulates Papua New Guinea on hosting APEC in 2018.

 

“We are working closely with PNG’s APEC organisers to make the event a success for the country.

 

“I look forward to returning to PNG to participate in the APEC CEO Summit.”

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