Papua New Guinea LNG project given green light

By AAP

 

A $US15 billion ($A16.5 billion) liquefied natural gas project in Papua New Guinea has been approved by its operator and co-venturers.

The PNG liquefied natural gas project is a joint venture led by Esso Highlands Ltd, a subsidiary of energy giant ExxonMobil, with several partners.

Australian listed companies Oil Search and Santos are both part of the deal, as well as Japan's Nippon Oil, the PNG government's Eda Oil and a trustee to represent landowners affected by the project.

Managing director of Esso Highlands Peter Graham said in a statement that the project had been approved pending completion of sales and purchase agreements with LNG buyers and the finalisation of finance arrangements.

These were expected to be concluded by early 2010, he said.

"With this decision to proceed, the Papua New Guinea government and landowner nominees have joined the project as equity participants," Mr Graham said.

"We are pleased to achieve the important milestone of securing the approval of the co-venturers to move ahead with our project," he said.

News the project would be given the go-ahead was made at a ceremony in PNG's capital Port Moresby attended by the nation's Prime Minister, Sir Michael Somare.

"ExxonMobil and our other private sector development partners have shown significant confidence in our nation," Sir Michael said, according to a statement issued by ExxonMobil.

"Cooperation between the public and private sectors will create value for the Papua New Guinea society as a whole and grow our economy in the future," he said.

The project participants will now continue to work with the PNG government and lenders to secure all the necessary environmental and social program approvals, the statement said.

The massive project is tipped to generate 6.6 million tonnes of LNG per annum for about 30 years.

It has hit some hurdles, with some local landowners unhappy at their representation during negotiations.

The PNG LNG project will develop gas fields in PNG's highlands and Western Province and transport the gas via pipeline to an LNG facility near Port Moresby for shipment overseas.

Analysts had been expecting the deal to be given a final approval from the project's partners, with expectations boosted after two big sales deals were recently signed.

In a separate statement Oil Search managing director Peter Botten described the move as "historic" for both his company and for PNG.

"PNG LNG represents a long term legacy project which will add over 19 million barrels of oil equivalent to our annual production and result in approximately a nine-fold increase in our booked oil and gas reserves," he said.

"The development of this project represents an opportunity to fundamentally change the outlook of the PNG economy and its people."

Mr Botten said that when the project commences production, PNG's gross domestic product would more than double and export revenues would triple.

Santos said the approval of the project was the "next major step in its transformational LNG growth strategy".

"PNG LNG will provide Santos with long-term underpinning production and cash flows over the project production period," Santos said in a statement.

Santos chief David Knox said the project would transform Santos' production and earnings profil when it came online in 2014.

The company's share of project production is expected to be about nine million barrels of oil equivalent (mmboe) per annum at plateau including LNG and associated liquids.

"I appreciate the strong commitment of the government of Papua New Guinea, the PNG landowners and our operator Exxon to make this project a reality," Mr Knox said.

At 1515 AEDT shares in Santos were trading down eight cents, at $14.67 while shares in Oil Search were down nine cents, at $5.81.

 

 

Today is International Anti-Corruption Day

Message from United

Nations Secretary General

The theme of this year’s observance of the International Anti-Corruption Day -- “don’t let corruption kill development” – highlights one of the biggest impediments to the world’s efforts to reach the Millennium Development Goals.

When public money is stolen for private gain, it means fewer resources to build schools, hospitals, roads and water treatment facilities. When foreign aid is diverted into private bank accounts, major infrastructure projects come to a halt. Corruption enables fake or substandard medicines to be dumped on the market, and hazardous waste to be dumped in landfill sites and in oceans. The vulnerable suffer first and worst.

But corruption is not some vast impersonal force. It is the result of personal decisions, most often motivated by greed.

Development is not the only casualty. Corruption steals elections. It undermines the rule of law. And it can jeopardize security. As we have seen over the last year, it can also have a serious impact on the international financial system.

Fortunately, there is a way to fight back. The United Nations Convention against Corruption is the world’s strongest legal instrument to build integrity and fight corruption. A new mechanism decided on at the recent Conference of States Parties in Doha means that, from now on, states will be judged by the actions they take to fight corruption, not just the promises they make.

The private sector should not lag behind governments. Businesses must also prevent corruption within their ranks, and keep bribery out of tendering and procurement processes. I urge the private sector to adopt anti-corruption measures in line with the UN Convention. Companies -- particularly those that subscribe to the 10^th principle of the Global Compact, to work against corruption -- should pledge not to cheat and should open themselves up to peer review to ensure that everyone is playing by the same rules.

We all have a part to play. On International Corruption Day 2009, I urge all people to join the UN anti-corruption campaign at http://www.yournocounts.org/. And I encourage everyone to make a pledge: never to offer or accept a bribe. Live by that motto, and the world will be a more honest place – and we will increase the chances of reaching the Millennium Development Goals.

TEPCO and PNG LNG finalise LNG Sales and Purchase Agreement

• Important Project Milestone with Key Asian LNG buyer

 

Port Moresby, Papua New Guinea, December 7, 2009 – Tokyo Electric Power Company Incorporated (TEPCO) and Esso Highlands Limited, a subsidiary of Exxon Mobil Corporation and operator of the Papua New Guinea Liquefied Natural Gas (PNG LNG) Project, today announced that TEPCO and the project participants have entered into a binding sales and purchase agreement for the long-term sale and purchase of LNG totalling approximately 1.8 million tonnes per annum.

The agreement is effective for a 20-year period.

“This agreement is the foundation of a new relationship bringing together a premier Japanese LNG customer and an important new LNG supplier. It will provide important and complementary benefits to all parties,” said Ron Billings, vice president, LNG, ExxonMobil Gas & Power Marketing Company. “This is yet another key milestone in the project’s schedule.”

TEPCO is the largest power utility company in Japan serving 28 million customers and one of the world largest LNG importers with 20 million tonnes imports in 2008.

The PNG LNG Project is an integrated development which includes gas production and processing facilities, onshore pipelines and offshore pipelines and LNG plant facilities.

Participating interests are ExxonMobil (through various affiliates, including Esso Highlands Limited as Operator) 41.5%, Oil Search 34.0%, Santos 17.7%, Nippon Oil 5.4%, Mineral

Resources Development Company 1.2 % and Petromin PNG Holdings Limited 0.2%.

(Participation will change when the PNG State nominees join as equity participants at a later date).

 

Media Contact: Miles Shaw

Phone: (675) 322-2133

Email: miles.j.shaw@exxonmobil.com

Esso Highlands Ltd

Level 5, Credit Haus

Cuthbertson Street

Port Moresby. PNG

+675 322 2111 Telephone

Global call for tourism ambassadors for Papua New Guinea

By Malum Nalu and Barry Greville-Eyres (self appointed PNG Tourism Ambassadors)

This home-grown marketing initiative unveiling PNG’s unique tourism attributes and experiences as The Last Wild Frontier with a Million Different Journeys will make extensive use of electronic communication and media (linked and interconnected email, websites, social networks and blogs) in order to select PNG’s inaugural cohort of global Tourism Ambassadors. It’s an opportunity to venture into relatively uncharted terrain for PNG - experimenting with modern information and communication technologies (ICT) and how they can combine to provide low cost yet highly effective product development and marketing within an emerging tourism industry. The intention is to use existing ICT infrastructure thus reducing development costs.

The initiative will require sector-wide involvement (including traditional and non-traditional players) since tourism has the very real potential to touch the lives of all communities – rural and urban alike. De-mystifying tourism as socio-cultural and bio-physical resource-based growth and development opportunity, primarily for its Papua New Guinean custodians, is central to the initiative. This will require significant tourism awareness and education, enabling PNG women and men to engage meaningfully in the industry. 

Narrative Description:

Highly accomplished individuals (up to a maximum of 12) will be invited to express an interest on-line (through an existing website or an appropriate link) for the unique privilege to become one of an elite group of Tourism Ambassadors representing and promoting PNG for a period of up to three years (first cycle followed by a new cohort thereafter).

Eligibility Criteria:

·       Internationally acclaimed expert and personality with an interest and passion in developing and marketing Papua New Guinea as The Last WILD Frontier offering a million different journeys  ....

·       Willingness to travel to PNG annually (for three consecutive years) for up to 14 days at a time within which the expert will explore and indulge, primarily but not exclusively, in his/her area of expertise within the country;

·       Promote his/her in-country experiences widely (using electronic and print media as well as ICT including personal websites/blogs);

·       Aspiring Ambassadors will have to align themselves with a range of tourism market segments which will include:

§         Community-based tourism;

§         Eco-tourism;

§         Cultural tourism;

§         Qua water-based tourism;

§         Terrestrial tourism;

§         Extreme – adventure tourism;

§         Science and history tourism;

§         Culinary tourism (food & drink);

§         Tourism economics;

§         Tourism education; and

§         Others??? 

Costs:

A cost sharing arrangement where various tourism stakeholders, will in return for exposure, marketing and promotions received, provide a range of in-kind services in return ie Air Nuigini, Coral Seas and other resort hotels, packages provided by specialist tour operators etc.....

Purpose of initiative:

·        Create a uniquely branded marketing & communications ‘strategy’ to promote PNG, specifically its relatively pristine and mystical tourism features & attributes in a responsible manner;

·        Offset the PNG resource boom and its associated developmental challenges with responsible and measured tourism development in PNG that will directly contribute to local economic development and prosperity; 

·        Research, teaching and learning – thorough documentation of experiences & successes/failures; 

·        Explore the reach, impact and utility of contemporary information and communication technology in a developing country such as PNG;

·        Demonstrate that strategic partnerships and alliances can and do work;

·        Build capacity, a national brand – identity - pride and confidence  - we can do this together....

·        Attach a value, appreciation and awe of being able to offer an experience so unique, so special unparalleled elsewhere;

·        Get product information out there.....

·        Internationalise PNG ... ... PNG no longer the last Australian outpost ... PNG has a distinct heritage, brand, products, experiences  - also work on the mis(perception) that PNG is unsafe – perhaps you can be more diplomatic about this....;

·        Develop and vibrant and viable tourism industry linking development that is environmental sustainable – friendly

·        Integrated economic development – agro tourism etc......

·        Market some of PNG’s unique attributes – that differentiate PNG from any other destinations in the world – PNG’s people, culture, agriculture – Highland – coastal cultures and environments.... volcanoes, geological instability ...the last WILD Frontier ...etc....

Picture this.....  Jamie Oliver cooking up a storm on a Kavieng Beach ...... doing the same in the mountains of Simbu ....... 

 

Leilani of Kavieng

Students at the National Fisheries College in Kavieng, New Ireland province, have a lot of fun while learning on college vessel, ftv Leilani, which takes them out to sea.

Principal Hugh Walton said Leilani was the only boat currently owned and operated by the NFC.

“It’s a training vessel,” he explained.

“It was built about 12-14 years ago in Australia, essentially, its main purpose being a fishing boat.

“It’s meant to trawl and also to troll, and also to longline and work pot with a line handler, as well as fish deep bottom for snapper.

“It’s a general purpose training vessel and multi-purpose vessel.”

Fisheries and marine resources degree and diploma students, basic observer, post-harvest operations and commercial fishing operations benefit from Leilani.

“For students, we use the vessel for a number of purposes such as navigation and seamanship, vessel safety and practical fishing,” Mr Walton said

“We also use Leilani as a base for training and delivery.

“We put a new engine in Leilani last year, so we gave her a new lease on life.”

Mr Walton said the NFC was about to refurbish a pole and line fishing vessel for trawl fishing.

 

China and Papua New Guinea

From PAUL OATES in Queensland, Australia

The Greater Co-Prosperity Sphere of the 20th Century seems to have been reinvented in the 21st Century with not surprisingly, the same results for those who do not share in the benefits but only in providing them.
If the bush knives are indeed being sharpened and the level of frustration is clearly rising, it is only a matter of time before the pot boils over.
What will Australia's position be if there is open rebellion? If PNG cannot control it's own people who are conducting tribal wars in the Highlands, what might happen when the Chinese in PNG are attacked? If the Chinese feel their nationals are threatened, would they be 'invited' to send troops to protects their citizens and investments? If that happened, what would Australia's position be? What if China wished to establish a permanent military presence in PNG?
I wonder what a fly on the wall might have overheard when the Chinese heir apparent met with PNG and Australian Prime Ministers recently? Of course the fly in Canberra would had to have spoken Mandarin.
See attached article from Time Magazine (on line)

___________________________________
The World of China Inc.
By Hannah Beech / Ramu Monday, Dec. 07, 2009

Lunch at the site of the future Ramu nickel and cobalt mine in the remote hills of Papua New Guinea is a hurried affair, food shoveled into eager mouths. But the menu is as divided as the two distinct groups of workers squatting in the heat, swatting away flies and filling their bellies before their nine-hour, seven-day-a-week shifts begin again. In one huddle are local laborers chewing chunks of sweet potato and the canned fish known in pidgin dialect as tinpis. In another clump are imported workers from China who dig into rice topped with pork belly and chili - black bean sauce. The Chinese, who were shipped in by the state-owned China Metallurgical Group
Corp. that has invested $1.4 billion into this faraway outpost, can understand neither English nor pidgin, two of the national languages. The Papua New Guineans speak no Mandarin. Even at mealtime, an event during which both cultures would normally encourage community and hospitality, the air is weighted by mutual incomprehension. "How can we eat together if everything about us is different?" asks Shen Jilei, whose first overseas experience transferred him directly from China's Sichuan province to a South
Pacific nation he hadn't even known existed.
A New Look at Old Shanghai
Notes of culture clash ring everywhere I wander in the vast construction zones that by the end of this year will turn a pristine stretch of virgin forest and grassland into one of the world's largest nickel-extraction sites. On the palm-fringed coast of Basamuk Bay, where the Ramu refinery will be situated, a chatty Beijing-born building engineer tells me that before the Chinese arrived, "the natives were completely uncivilized and running around almost naked." I voice my doubts, telling him that I've just talked to a nearby villager who described a PowerPoint presentation she recently made detailing environmental concerns about the mine. The engineer, like many other Chinese I meet, remains unimpressed. "All they do is chew betel nut and act lazy," he says. "They don't know how to work hard like we Chinese do." (See pictures of Chinese investment in Africa.) The impression the Chinese have left on many P.N.G. nationals isn't much better. A local landowner whose ancestral territory lies in the middle of the mine site alleges, improbably, that the nickel will be used to feed a secret Chinese weapons program. In the capital Port Moresby, my driver announces that if a gang to evict Chinese from P.N.G. is formed, he will be the first to join. "I will sharpen my bush knife and chop 10 or 20 heads," he says. The unease about Chinese influence extends to government circles, even if the Ramu mine promises to add 8 percentage points to the country's GDP. "I know the Chinese are going out everywhere in the world and investing successfully," says Rona Nadile, an assistant secretary of labor and industrial relations. "But what I don't understand is why are they are so stubborn to not respect our local culture. We are a democracy. They have to play by our rules or we will rise up."
Mixed Blessings
When China began its global investment push in the early part of this century, the flood of new money was welcomed, particularly in those parts of Asia, Africa and Latin America that felt abandoned by the West. China's promise not to politicize aid and investment by attaching pesky conditions like improved human rights pleased many governments. Between 2003 and 2008, Chinese direct investment overseas skyrocketed - rising from $75 million to $5.5 billion in Africa, 1 billion to $3.7 billion in Latin America and
jumping from $1.5 billion to $43.5 billion in Asia. The People's Republic now ranks as the No. 1 foreign investor in countries as diverse as Sudan and Cambodia. In exchange for the natural resources needed to feed China's economic engine, Beijing began an assiduous campaign to win foreign hearts and minds by financing stadiums, hospitals and lavish government offices. The Foreign Ministry in East Timor was built courtesy of the Chinese, while Guinea-Bissau's marble-accented parliament building was a gift from Beijing.
Some countries, however, are no longer as willing to extend a red carpet toward the globetrotting Chinese. Although political strings might not come with Beijing's cash, there are economic catches. The roads, mines and other infrastructure on offer are most often built by armies of imported Chinese labor, cutting down on the net financial benefit to recipient nations. Chinese companies investing abroad also tend to ship in nearly everything used on building sites, from packs of dehydrated noodles to the telltale pink-hued Chinese toilet paper. It's not only the contracted Chinese workers who show up, either. Within a few years, their relatives invariably seem to materialize to set up shops selling cheap Chinese goods that threaten the livelihood of indigenous entrepreneurs. Locals who do get work on Chinese-funded projects complain that their bosses don't heed national labor laws ensuring minimum wage or trade-union protection. Over the past three years, anti-Chinese riots have erupted everywhere from the Solomon Islands and Zambia to Tonga and Lesotho. Tensions are also simmering in India, where the Chinese are involved in several major infrastructure projects. Even
high-level officials are speaking up. In Vietnam, plans for a $140 million Chinese-operated open-pit bauxite mine were publicly excoriated by none other than revolutionary hero General Vo Nguyen Giap because, he said, of "the serious risk to the natural and social environment."
An Island Apart
Nestled in one of the most backward parts of one of the world's least developed nations, the Ramu mine has emerged as an acute example of resentment against China Inc. In 2004 P.N.G. Prime Minister Michael Somare returned home from Beijing, triumphant at having snared the country's largest foreign-investment project to date. The euphoria was short-lived. Landowners brandished slingshots and announced they wouldn't sign off on their tribal territory being used for mineral extraction, no matter what document was signed in China's Great Hall of the People. Environmentalists cried foul over plans to deposit mine waste in the sparkling Basamuk Bay,
while local workers protested conditions that even P.N.G.'s Minister for Labor and Industrial Relations David Tibu described as slavelike and "not fit for pigs or dogs." Skirmishes repeatedly broke out between villagers and the 1,500-plus imported Chinese laborers, some of whom were working illegally in P.N.G. At the same time, anger has boiled over because of an
influx of thousands of Chinese who over the past couple of years have monopolized businesses that by law should be reserved for P.N.G. nationals. In May, anti-Chinese riots convulsed cities nationwide, and several people were killed amid the looting of Chinese-owned shops. "Our timber, our minerals, everything, goes to China," says Damien Ase, founder of the nonprofit Centre for Environmental Law and Community Rights in Port Moresby. "But we get so little in return."
Read more:
http://www.time.com/time/magazine/article/0,9171,1943087,00.html#ixzz0YUVQXK6m

Record-breaker expected to hold oil

INTEROIL’S Antelope-2 well in Papua New Guinea has flowed 705 million cubic feet of gas per day and yielded 11,200 barrels of condensate per day, breaking another world record.

 The better than anticipated results, which are equivalent to about 129,000bbl of oil per day, follows the Guinness Book of World Record certification of Antelope-1 back in March, which flowed 382MMcfd and yielded 5000bbl condensate.

The gas flow test for Antelope-2, lying 2.3 miles south of Antelope-1 and just within PPL 237 in Gulf Province, went for 30 minutes using a 6-inch capacity choke opened to 4.375in while surface flowing tubing pressure was 1258psi.

The results indicate Antelope-2 could hold enough gas to support almost two liquefied natural gas trains, but as the owner of PNG’s only oil refinery, InterOil is more excited about the potential for oil further down.

Drilling before the test reached a depth of 2260m of the planned total depth of 2525m.

InterOil president Bill Jasper told PetroleumNews.net the remaining drilling and completion work at Antelope-2 could take at least another 60 days and he expected more condensate to come, along with oil.

At 11,200bpd of condensate, Jasper said InterOil could start production in about 24 months to generate “cash flow we never dreamed of”.

But if oil is further down, Jasper said it could be barged to InterOil’s refinery in nine months.

InterOil chief executive Phil Mulacek told PNN the presence of oil was confirmed in Antelope-1 and the company would set casing to isolate the massive gas section in Antelope-2 with the view of opening it when needed for LNG.

Once the casing is complete, InterOil will drill further down to test the expected heavy condensate and then the potential oil zone underneath.

“We are going to be testing condensate over the next three weeks,” he said. “We look to test for oil by the end of the year or the first two weeks of January.”

InterOil is bringing in a specialty crew from Houston to help undertake horizontal drilling.

“We will do a horizontal well and the objective is first to test the heavy condensate then drill horizontally into the oil leg,” Mulacek said.

Horizontal drilling was going to be used in case the 6in drill bit got into an isolated tight area, while 20m away there could be great permeability in the oil zone.

Looking at the combined resources of the Antelope reef and the Elk structure, Mulacek said the latest gas flow results meant the reservoir was bigger than 6.1 trillion cubic feet and InterOil was aiming to get 8tcf for two big trains of its LNG project.

Antelope-2 also had a larger dolomite interval than Antelope-1 and better porosity.

Further modelling of the reservoir will be done while front-end engineering and design work for a stripping facility to cash in on the condensate has begun with the help of EDG Consulting Engineers.

The proposed site is on the Purari River instead of the Elk-Antelope field and is targeting recovery of 9000bpd.

Mulacek said once the company understood the saturation levels, which was expected this month, final design could start and a final investment decision was planned for the first half of 2010.

Representatives from Mitsui attended the flow test of Antelope-2 yesterday and Mulacek said they were interested in the condensate project.

As for InterOil’s LNG plans as part of the Liquid Niugini Gas consortium, the upcoming December 8 FID for the rival ExxonMobil-led PNG LNG project takes precedence for the PNG government.

Mulacek expects the government to pursue an agreement for Liquid Niugini, targeting cargoes in 2015, soon after the FID for PNG LNG.

Liquid Niugini is 52.5% owned by InterOil and 47.5% held by Pacific LNG, with the project aiming to build a 6-9 million tonne per annum LNG plant adjacent to InterOil’s oil refinery at Napa Napa.

Meanwhile, InterOil is conducting 2D seismic over a 100km area, including the Deer prospect west of Antelope-2.

The seismic is due for completion at the end of January and for processing in February.

With a cash position of $81.8 million at the end of the last quarter, InterOil has the Antelope-3 and Antelope-4 appraisal wells to drill after work is done at Antelope-2.

Antelope-3 will be 0.6 miles south of Antelope-1.

Just before the gas flow test yesterday, old hands from Weatherford, Halliburton and SGS confirmed to PNN that what they had seen in InterOil’s Elk-Antelope field, which also hosted major flows from Elk-4 last year, was beyond what they had encountered elsewhere in their decades of experience.

Jasper and Mulacek presented the Guinness Book of World Records certificate for Antelope-1 to Gulf Province Governor Havilla Kavo yesterday.

The certification was sought to counter scepticism of the well’s results.