Prime Minister Hon. James Marape has reassured Papua New Guinea of a better deal from the P’nyang Gas Project in Western than previous projects.
He gave this reassurance in Parliament today (Tuesday Oct 12) when answering a series of questions from North Fly MP Hon.James Donald in relation to P’nyang, as well as execution of the Heads of Agreement (HOA) on P’nyang Gas Agreement along with an Equity Purchase HOA with ExxonMobil in the USA last month.
PM Marape said he, and Petroleum Minister Hon. Kerenga Kua, would give a detailed answer to all 13 questions posed by Donald later.
“The Heads of Agreement we signed in Houston was to set out a framework to guide us into a proper Gas Agreement with ExxonMobil as developer,” he explained.
PM Marape said when he became Prime Minister in May 2019, his first statement was that P’nyang would not be part of Papua LNG, as the previous O’Neill government had wanted.
He assured Donald that his people of North Fly, Western and PNG would get a better deal from P’nyang as the world moved towards cleaner energy.
“The State will get 63 per cent of total project economic benefits from P’nyang,” PM Marape said.
“PNG LNG sits at 49 per cent, Papua LNG sits at 51 per cent.
“I want to give a big thank to (Gulf) Governor Haiveta for leading the team as my special envoy.
“This (negotiation with ExxonMobil) was a National Government function, and as we move towards the Gas Agreement, there will be a time to call in the province and landowners.
“This will be a public exercise as we did with PNG LNG.”
PM Marape said his Government’s wanting to take back more for PNG included P’nyang, Porgera, forestry and other resources.
He thanked ExxonMobil for understanding the dynamics at play, including allowing for the Stae to acquire an additional 10 per cent equity.
PM Marape also noted the planned Oil Search-Santos merger, and said that in the event they offloaded part of their stake in P’nyang or PNG LNG, national interest – through Kumul Petroleum - would take precedence
The Gas Agreement HOA captures key fiscal, regulatory and licencing terms. The Equity HOA provides for the State to acquire at cost 10 per cent additional equity from ExxonMobil in the P’nyang Project.
The overall deal reflects a win-win for both sides. In addition to all the legal entitlements, the State’s take is at 63 per cent in this deal compared to 49 per cent in PNG LNG and and 51 per cent in Papua. This is made possible by increased production levy of 3 per cent and the State equity (including the commercial purchase) being 32.5 per cent compared to just 19.6 per cent in the PNG LNG and 22.5 per cent in Papua.
The deal makes P’nyang an investment grade bankable project, meeting the project partners’ investment thresholds and gives it the best chance of going into construction.