Huge P’nyang gas deal 'good for PNG'
23 February 2022
NOOSA – Yesterday, as it closed its most beneficial deal yet, it looked like Papua New Guinea had come of age in negotiating agreements with global resource developers.
In what will be a huge boost to PNG’s struggling revenue flow, the P’nyang liquefied natural gas agreement was signed with ExxonMobil and its partners Santos and NOEX of Japan.
Amongst many other benefits, PNG has secured equity of 34.5%, much higher than the previous deals for 19.6% in PNG LNG (19.6%) and Papua LNG (22.5%).
P’nyang, which took three years to negotiate amid disruption caused by the world’s outlook for fossil fuels constantly declining.
It will be PNG’s third biggest LNG project after the PNG LNG and Papua LNG ventures and will cost the three partners K36.7 billion to develop, K1.7 billion of which has been chewed up reaching this point.
“Together, these projects will deliver production and tax revenue for PNG well beyond 2050,” said prime minister James Marape, who added that the royalties, levies and dividends will continue beyond 2050 and 2060.
A statement by Santos said the agreement marked a major milestone for the Western Province-based project, which will deliver LNG through new facilities in the province linked to the existing PNG LNG plant near Port Moresby.
Upon completion, up to 5% of gas that is produced will be made available to support the government’s electrification efforts in Western Province or another agreed location.
Construction of P’nyang development will start in 2028 around the time Papua LNG completes construction and moves into production.
“This provides a firm and stable economic base to the country for years to come,” Marape said.
“Construction activity from 2024 to 2032, (eight years non-stop, and a revenue stream for 30 plus years thereafter. Early works will generate another K150 million.”
“This is in sharp contrast to the stop-start of the past and it will provide continuity to businesses, employees, educational institutions and will serve multiple generations of Papua New Guineans.
“It makes me very proud as a Papua New Guinean.”
Marape said P’nyang would be the first time PNG had negotiated a 3% production levy (compared to 0% for PNG LNG and 2% for Papua LNG).
It had also obtained a better formula for the payment of royalties and development levies to affected landowners and provincial governments.
State equity will be about 34.5%, much higher than the 19.6% in PNG LNG (19.6%) and Papua LNG (22.5%).
An official government statement said that “the state negotiating team, under direct oversight of petroleum minister [Kerenga] Kua and Marape achieved a government take of 63% compared to 49% in PNG LNG and 51% in Papua.
“This is a massive win! This also sets a new benchmark for future negotiations,” the statement said, adding that the government has formed a partnership with ExxonMobil which should foster new exploration activity.
“Successful exploration and commercialisation of discovered resources requires large risk capital,” Marape said.
“The project partners have already spent more than US$480 million (K1.7 billion) on P’nyang and will spend a further US$10 billion (K35 billion) in developing it.
“It needs credibility, track record, a balance sheet and appetite for risk.
“My meetings in Houston with ExxonMobil president Liam Mallon left me in no doubt that they have all capabilities to make it happen.”
"[P'nyang's] royalties, levies and dividends will continue beyond 2050 and 2060."
These companies and the PNG government are delusional. They are behaving as if the world is going to merrily continue consuming fossil fuels for the rest of the century.
Posted by: Matt Andrews | 26 February 2022 at 05:01 PM
Does anyone know anything about Ampolex (PNG) Ltd?
The company was signing the P’nyang agreement along with others after the Mandamus court order to stop the signing.
Is it just one of those spiv companies that fly around the oil flares of the world?
Wonder why this is the first time to read about the company in any stories about P’nyang. Perhaps just typical of the murky world of the oil men.
Who is the CEO of Ampolex?
Apparently it shares 49.1% of the project with Exxon.
Is it registered as a foreign enterprise company because it has registration number 856673 incorporation date 5 July 1978 (over 43 years ago). Jurisdiction is said to be in Delaware (US) at 251 Little Falls Drive, Wilmington, New Castle, Delaware 19808.
I hope for the PNG people that it is not some corrupt backdoor company.
Ampolex Exploration Ltd was taken over by a wholly owned Mobil subsidiary in January 1997 and it seems ExxonMobil (the two big companies merged in 1999) has retained the name in a modified fashion over the years (Ampolex PNG Petroleum Inc was one version). The name Ampolex has been around PNG for many years and in its Ampolex (Papua New Guinea) Limited form seems to have some support function (finance or materials provision are two guesses I would offer). But it's certainly no more fly by night than its ExxonMobil owner - KJ
Posted by: Arthur Williams | 24 February 2022 at 09:22 PM
"Let me ask you one question
Is your money that good?
Will it buy you forgiveness
Do you think that it could?"
'Masters of War' - The Freewheelin' Bob Dylan, circa 1963.
Posted by: Bernard Corden | 23 February 2022 at 10:38 PM
Phil, this is how the people you met then, their descendants and most of their MPs, have been shafted by a visit to the cowboy state:
2021/10/12 - P’nyang LNG should be standalone project - We don't want to wait 8 more years [The National Letters] by Norbert Makmop & Samuel Wain
2013/06/12 - 3rd LNG project to be in Western province from Stanley and Elevala fields- Duma confirms Western Province as new development site for ... By ISAAC NICHOLAS in The National of PNG "Horizon Oil and Osaka Gas will develop Papua New Guinea’s third liquefied natural gas (LNG)
2015/03/10 P’Nyang gas landowners reject licence renewal – must be stand alone project
The Petroleum Retention License (PRL) for the P’Nyang Gas Field reportedly due next month, may not be renewed if the state and ExxonMobil insist on integrating P’nyang gas field into the PNG LNG gas project.
2017/11/30 P’nyang gas owned by Esso subsidiary of Exxon allowed to have separate financial terms - National
THE P’nyang gas will have its own financial terms and will not be part of the Papua LNG project, says Minister for Petroleum Dr Fabian Pok.
Pok said the licence was owned by Esso, a subsidiary of ExxonMobil. “They have not complied with the requirements but they were given an extension of 18 months to complete all the requirements............
“They have six more months to complete the 18 months that have been given. But I can assure the people that P’nyang will not be considered as an extension but it will be considered under its own physical terms.”
2018/04/17 "P’nyang LNG a standalone project, says petroleum minister. National
PETROLEUM Minister Dr Fabian Pok has made it clear that the P’nyang LNG project in Western will be a “standalone” project. He was replying to a question from South Fly MP James Donald in Parliament on Friday over a statement made by ExxonMobil in The National which stated that P’nyang LNG would be an expansion of existing gas fields in Western.
Posted by: Arthur Williams | 23 February 2022 at 09:31 PM
Ahh.... I remember those leisurely canoe patrols out of Kiunga in the 1960s. Up the Fly, Palmer, Black and Elevala Rivers and along a couple of walking tracks.
During Kiunga Patrol No 14 of 1969/70, I recorded 12 villages for an exact total of 800 people. All living in virtually untouched rural spendour.
How times change!
Posted by: Philip Fitzpatrick | 23 February 2022 at 05:10 PM