Land ownership & disharmony
Students fleeing China refused passage

LNG treads water after talks collapse

James Marape
James Marape calls off LNG negotiations. Big mining exploiters cry, beat breasts and stamp on floor

SONALI PAUL
| Reuters | Extract

MELBOURNE - Plans to double gas exports from Papua New Guinea within the next four years are in doubt after the government walked away from talks with Exxon Mobil Corp on a key gas project needed for the $13 billion expansion.

PNG prime minister James Marape has called off negotiations with Exxon on the P’nyang field, blaming the energy giant for failing to budge on a proposed deal that was “out of the money”.

One of Exxon’s partners in the PNG project, Oil Search Ltd, said on Monday the terms the government had sought would have made the project unprofitable.

“Under the terms proposed by the state, the joint venture partners were unable to obtain a return on their investment that made the project investable and bankable,” Oil Search said in a statement to the Australian stock exchange.

Shares in Oil Search fell as much as 11.5% early on Monday in their first session since the collapse of the talks, on track for their worst one-day fall in more than four years.

The P’nyang agreement was one of two agreements needed for Exxon and its partners to go ahead with a $13 billion plan to double LNG exports from the Pacific nation.

The other agreement, the Papua LNG pact, was sealed with France’s Total SA in September.

The government was seeking terms on P’nyang that would give the state more than the 45%-50% take that PNG is set to reap on the returns from the Papua LNG project, and well above the terms Exxon negotiated in 2008 for its PNG LNG project, a person close to the negotiations said.

Comments

Feed You can follow this conversation by subscribing to the comment feed for this post.

Arthur Williams

Surely when three oil firms collude together that should be called a cartel and subject to very deep scrutiny. Collusion by overseas resource extraction companies of any type is undesirable.

The well documented worldwide environmental disasters and social problems caused by these mighty giants of commerce should be warnings for our elites who too often believe they are able to negotiate with them.

All the extractive firms but especially the Oily-garchs have had far to long to hone their skills of squeezing every last toea out of a project. The bosses of oil firms are on record as saying PNG's oil and LNG is on the low side of the costs of production spectrum. Greed is their God.

I was manager at the Malagan Lodge when the Lihir gold mine agreement was being negotiated in the mid 1990s.

Even shrewd businessman Julius Chan wilted under their efforts and told the landowners to fast track the deal. I guess for the nation's financial prosperity.

What happened from the proceeds of this very huge gold mine. No dividends for at least the first ten years.

Or look at PNG's first LNG project. It proceeds were supposed to be fed into a Sovereign Wealth Fund. SWF emi stap we?

Verify your Comment

Previewing your Comment

This is only a preview. Your comment has not yet been posted.

Working...
Your comment could not be posted. Error type:
Your comment has been saved. Comments are moderated and will not appear until approved by the author. Post another comment

The letters and numbers you entered did not match the image. Please try again.

As a final step before posting your comment, enter the letters and numbers you see in the image below. This prevents automated programs from posting comments.

Having trouble reading this image? View an alternate.

Working...

Post a comment

Comments are moderated, and will not appear until the author has approved them.

Your Information

(Name and email address are required. Email address will not be displayed with the comment.)