Oil Search and Papua New Guinea's 20-year partnership

PAPUA New Guinea has, for more than 20 years, been enjoying substantial benefits from the Oil Search Ltd, whose fundamental benefits structure is progressive by world standards, The National reports.

Speaking at the 11th mining and petroleum conference in Sydney on Monday, OSL managing director Peter Botten told participants that the resource business in PNG had never been healthier in terms of major project development.

He said, however, the true potential of resource wealth would not be reached without appropriate management of the huge benefit streams that would come from new developments.

Botten said since 1992, the PNG government, provincial and local level governments, landowners (cash or non-cash or indirect payments) had received a total of K11.931 billion, with the government as the main recipient of the oil industry with K8.796 billion to date.

The oil industry has a record investment in petroleum exploration and development, led by the PNG LNG, other projects and continued investment in oil.

There is potential for significant development which will only reach potential if projects operate in a stable environment, have good management and governance of benefit streams which are essential for project stability and have the need to see benefits away from resources areas.

Botten explained that primary benefit streams were mandated by the Oil and Gas Act (1996) and other legislation, while others were more discretionary and were managed through negotiation by the operator with the stakeholders.

There is, however, a need for transparency and understanding of the benefits streams in order for it to work.

This includes MoA funds distributions, which required greater governance, if they are to deliver fair outcomes.

Botten said what had worked in the benefit streams included the Mineral Resource Development Co (MRDC) payments of equity dividend and royalties in the fields.

Mandated apportionment of benefits to various stakeholders had worked, with a percentage given to community infrastructure and future generations.

Botten said it was more important than ever to manage benefits in a rigorous and transparent way.

He said recent steps by the government regarding establishment of independent sovereign wealth funds for receipts from PNG LNG was a new major positive initiative.

These first steps were encouraging and needed a full understanding by all stakeholders, he said.

 

 

Pundari explores plan to build gold refinery

By PATRICK TALU in Sydney

 

MINING Minister John Pundari says he wants to see Papua New Guinea build and own an onshore gold refinery to refine gold produced by its various mines, The National reports.

He told mining investors at the mining and petroleum conference in Sydney that it was time for a big gold refinery because current mining activities warranted it.

Pundari told the conference he was looking at the prospects of preparing necessary legislation for the National Executive Council to pave way for the refinery to be constructed.

“For far too long, the government and people of Papua

New Guinea did not know the real values of gold bars produced and how many ounces are taken out of PNG and refined offshore,” he told The National.

“I want to provide the leadership in supporting the establishment of an internationally accredited gold refinery operation in PNG, through public-private partnership, to process all gold mined in PNG.

“I believe that we are mere custodians of the collective wealth of our nation,” Pundari said.

He reaffirmed Prime Minister Sir Michael Somare’s earlier address that the government

had committed itself to a complete review and overhaul of the mineral policy legislation to ensure the interest of all stakeholders, including the people, within the resources sector were protected and that optimal benefit were  gained from the extraction of PNG’s mineral resources.

Pundari said he also wanted to provide leadership by creating a level playing field for all players within the mining sector and deliver a robust strategic plan to bring onstream advanced and prospective projects as soon as possible.

He reiterated that he would encourage state-owned entities, such as Petromin, to exercise greater state equity option in the new mines coming on stream and to be involved more in new explorations.

The three-day mining conference will end today.

 

 

5,000 on road to recovery in Hagen

By YVONNE HAIP

 

AFTER waiting for more than 20 years to receive much needed government services, the people of Tengtenga village in Mt Hagen have taken the lead by initiating development themselves, The National reports.

Last Saturday, the whole community was busy gathering rocks from the nearby Walter River to be used for gravel filling on a 3km feeder road that the Kentka people had constructed using spades and bush knives.

The road would benefit more than 5,000 people and village leaders, students, women, men, youths, and children all part took in the activity because they believe that better roads would allow for development to be felt at the community level.

They have also built a bridge, elementary classrooms, and an additional building for the Tengtenga sub-health centre to cater for the increasing number of patients.

Through the combined efforts of the local community, traditional assets such as coffee trees were uprooted and land was freed up to make way for development at a total cost of over K40, 000.

This is also in line with the government’s development goals where people should take ownership of developmental changes through practising self reliance.

Community leader Wani Atep expressed concern that even though the village was situated near Mt Hagen, basic services had not reached the area while existing ones had never been maintained during the past 20 years.

He said seeing that the people could not wait for the government to deliver at their doorsteps, they had gone ahead to provide services for themselves.

Not only that, Atep added that they would continue to initiate other developments in their area.

Youths from the area challenged other communities to do the same and become agents of change in order to benefit from much needed government services.

Ethnic groups take up arms

By ANGELINE KARIUS and JEFFREY ELAPA

TWO Highlands groups clashed violently over the weekend in a predominantly Papuan settlement in Moresby South, The National reports.

Police said yesterday that the ethnic clash between Engans and Eastern Highlanders at the Horse Camp settlement at Sabama, in NCD, led to four people being hospitalised with gun shot wounds while at least 10 homes were razed.

Resident and Boroko police communications officer Chief Sgt Hohoves Kora (left), Joyce Bay councillor Joe Vali and Badili police station commander Bill Warake talking to media personnel and residents at Sabama yesterday

Acting police superintendent of operations Jim Namora and the coordinator of the Port Moresby General Hospital (PMGH) accident and emergency unit Dr Sam Yockopua confirmed the casualties.

Many families were affected and office workers had to stay away from work yesterday in fear of being attacked or their homes being burnt down.

Namora said what started as a fight between the two Highlands group spread when settlers from other parts of the country took sides, based on which side of the settlement they resided in.

Horse Camp had been an exclusive settlement of coast people from Gulf and Western since the 1960s until Highlanders started buying blocks from the early settlers in the past 20 years.

Police said yesterday that the weekend clash carried over from an earlier fight between the two groups early last month during which a youth was knifed in the leg after being accused of stealing from an Engan man.

Police turned up in numbers yesterday at the settlement to keep the tense situation under control, adding that both sides were well armed.

They fear one group may pre-empt an all-out fight by a sneak raid during the night.

An Eastern Highlands community leader, who wanted to remain anonymous, said the latest clash erupted on Sunday after compensation negotiations to settle the previous clashes between the two groups failed.

Residents told the media yesterday that they heard several gun shots during Sunday night which police said they were investigating to determine that nobody was shot and wounded.

Of the buildings torched, according to police, was a trade store owned by a former Enga provincial assembly member Michael Magal.

Two Westerners were wounded by stray bullets fired by police to defuse what was a volatile situation.

PMGH’s Yockopua confirmed admitting two people with gun wounds, adding that another two had spear wounds while a fifth person was treated for wounds sustained when he was hit by a vehicle during the confrontation.

He said that the identities of the four people were still unknown but they would be kept under tight security as further treatment venues were sought because of the seriousness of their injuries.

Engan leader and spokesman Luke Yom claimed the Engan were frustrated over the continuous stealing by youths from the area and the fight was the result of that frustration.

Police said last night that the tension was still high and that anything could happen because, they believed, both groups were armed with bush knives, sticks, rocks and bows and arrows.

Papua New Guinea urged to speed up gas development or lose buyers

PAPUA New Guinea must accelerate development of its natural gas projects and lock in customers or risk losing out to other nations pushing coal seam and shale gas ventures, an oil and gas expert said, The National reports,

Independent researcher and the chairman of FACTS Global Energy, Dr Fereidun Fesharaki, gave the warning at the 11th PNG mining and petroleum investment conference in Sydney yesterday.

The US$15billion PNG LNG project under development by ExxonMobil, and partners Santos, Oil Search Ltd and the PNG government is on track to deliver its first shipment of LNG in 2014.

Fesharaki said PNG must act quickly to secure Asian markets or face competition from the cheaper Qatari LNG currently being sold to the US. “You have to be aware that this threat is there, so you have to act to shore up your customers,’’ he said.

“It is not possible to compete with Qatari LNG on economics … the only way to compete is to tie up the market.’’

Fesharaki said LNG production in Qatar cost about a quarter of that in PNG.

The Australian government has provided concessional loans of US$500 million to support development of the PNG LNG project, which is viewed as critical to the social and economic development of PNG.

Prime Minister Sir Michael Somare said in his opening address that Australian companies had already won contracts worth twice as much as the finance provided by the Australian government.

“My government is anticipating that LNG revenues will propel the economy to new heights and significantly improve our social indicators, which for too long have remained stagnant,’’ Sir Michael said.

PNG was expecting growth of 7.1% this year and 8% next year, he said.

But exporting gas from the remote Southern Highlands and Western was not without its challenges, according to ExxonMobil upstream project manager for the PNG LNG project Decie Autin.

Autin said a 700km pipeline, including 450km of sub-sea pipeline, would be required to transport the gas to an LNG facility near Port Moresby for shipment.

She explained that the pipeline must also traverse low lying topography, deep gorges and steep terrain that were subject to landslides and significant environmental areas, making it a complex undertaking.

An export terminal would operate 24 hours a day at the LNG processing site near Port Moresby, loading an LNG tanker for export every two to three days, she said.

Sir Michael said the government would continue to focus on providing a stable political environment and transparent mining regime to encourage further development.

 

 

New petroleum firm to be set up, says Prime Minister

PRIME Minister Sir Michael Somare announced yesterday that a new national petroleum company will be established to manage the state’s interest in the oil and gas industry, The National reports.

He made the announcement at the 11th PNG Mining and Petroleum Investment conference at the Hilton Hotel in Sydney, Australia.

Sir Michael did not give details of the new petroleum company but said his government would review, rationalise and reform the state’s mining and petroleum interest participation that would form the basis for the new petroleum company.

Treasurer Peter O’Neill later reaffirmed Sir Michael’s announcement at a press conference.

He said the government had undertaken the initiative to park the state’s interest in a single entity.

The announcement was among new initiatives that the government had undertaken to make PNG’s investment environment conducive for investors and tap into the revenues generated by the vast petroleum industry in the country. 

Delivering his keynote address, Sir Michael told investors that his government had made the investment environment conducive by providing the necessary policy legislation for investors.

He said in early 2003, his government passed legislation to make investment in the country’s resources sector more attractive. In that year alone, spending of mineral exploration doubled in value to around K60 million well before the China factor caused an upsurge in commodity prices.

“My government will ensure Papua New Guinea’s competitive edge will be strengthened and maintained,” the prime minister said.

“To do this, the government, with consultative input from the industry, will immediately pursue a key number of initiatives.

“The government will continue to provide a stable environment in the form of political and policy stability and remain committed to a petroleum and mining regime where rules are widely known, fair and transparent and understandable.

“The government will ensure licence holders do not sit on licences but fast track development on our resources and review, rationalise and reform the department of petroleum and energy.”

Sir Michael said part of the review would involve setting up a petroleum resources authority with similar roles and functions as the Mineral Resources Authority.

The prime minister said the policy reviews were in line with the government’s Vision 2050 and its development strategic plan.

He admitted that the economy looked gloomy before his government took office but things had changed over the past eight years, resulting in an unprecedented consistent economic growth.

He said under his government’s tenure, the most notable achievement was the delivery of the K45 billion PNG liquefied natural gas project.

He was optimistic that revenue from the LNG project would transform the nation’s economy and improve the living standards of its people.

“Revenues from LNG, as I have explained, will underwrite many of our social and economic programmes over the next three decades.”

The prime minister urged potential investors to make Papua New Guinea their next investment destination.

 

 

More colleges and varsities needed, says administrator

By ZACHERY PER

 

THERE is a great demand for tertiary education as more and more students pass out from the school system, a high school graduation ceremony outside Goroka, Eastern Highlands, was told last week, The National reports.

Acting Eastern Highlands provincial administrator John Gimisive said lack of spaces at tertiary institutions was pressing the government to build more higher educational institutions to cater for the increasing number of graduates.

Gimisive was speaking at the graduation of Rintebe High School in upper Bena, Unggai-Bena district, last week.

He also raised concern that while the number of students leaving high schools and secondary schools were increasing, there were not enough tertiary institutions to complement this increase.

He told students, teachers, parents and guardians and guests at the graduation ceremony last Tuesday that students had to work hard to secure placing in PNG’s tertiary institutions.

“We have more primary and secondary schools under the reformed system with more child enrolments, but the tertiary level is not expanding.

“My concern is that there are not enough spaces at the universities and colleges for large numbers of students passing out from secondary and national high schools every year,” Gimisive said.

He said spaces were limited and students in secondary and high schools were competing for these spaces.

Gimisive said students studying overseas and others attending private and church-run agency schools, and those from other Pacific Island nations, also fight for the limited places at tertiary institutions.

However, he encouraged the graduating students not to feel let down if they did not get a university or college placing.

He said there were other avenues for leavers to further their education.