Kroton Ltd in control

THE government has created a new company to take full control of the PNG LNG project, and any future petroleum projects in the country, The National reports.

The company is known as Kroton No. 2 Ltd, previously a subsidiary of the Independent Public Business Corporation, controlling the state’s interest in the project.

Prime Minister Sir Michael Somare announced that Kroton No. 2 would now have its own management and board. It is understood Dairi Vele from the Gas Office would be chief executive officer of Kroton, but this could not be confirmed.

Kroton would manage the state’s 19.6% equity in the LNG project.

The prime minister said Kroton No.2 Ltd would be a fully-functional petroleum company with the appropriate resources to adequately represent the State’s interest in the LNG project.

Sir Michael said since Kroton No.2 Ltd was wholly-owned by the state through the General Business Trust, it is imperative that Kroton played a leadership role in the commercial development of the hydrocarbon industry in the country.

“To facilitate this, cabinet has endorsed the functional separation of Kroton No. 2 Ltd from IPBC to allow the former to develop into a national hydrocarbon development corporation while IPBC focuses on value-adding and management of the General Business Trust.

“IPBC will remain as a shareholder in Kroton No. 2 Ltd until the maturity of the existing funding arrangements with the International Petroleum Investment Company (IPIC) of Abu Dhabi. Thereafter, the shareholding will be reviewed.”

The government borrowed money from IPIC to invest in the project, swapping with the Middle East company cash for the state’s equity in Oil Search Ltd.

Sir Michael said Kroton No.2 would represent the interest of the state in all future meetings relating to the LNG project.

The Department of Public Enterprises and its minister and IPBC have been directed to fast track the necessary logistical requirements to enable the office to be fully functional and report back to NEC.

“In addition, the Public Enterprises secretary has been directed to lead the formulation of a national hydrocarbon policy primarily aimed at maximising the state’s participation and optimising value to the state, in close consultation with key departments and agencies,” Sir Michael said.

“The government has acknowledged the achievements of the state in terms of the PNG LNG project reaching its final investment decision on Dec 8, 2009, and the financial close on March 12, 2010.”