by BRIAN GOMEZ
Petromin, a grandiose scheme ?

As someone who has written about the resources sector for many years, I must confess to not being able to make head or tail of the new Government proposal to set up Petromin.
It seems that someone is keen to reinvent the wheel all over again even though, as far as Bottom Line is aware, neither Petroleum Minister William Duma or Mining Minister Sam Akoitai have come out with public statements backing this idea.
Most readers of this paper will remember the Government-owned Orogen Minerals that was eventually privatised by the former Morauta government through a merger with Oil Search. That decision has enabled Oil Search to become the biggest corporate player on the PNG oil and gas scene and helped the company to spread its wings to the Middle East, for the benefit of all its shareholders.
Oil Search has rejuvenated the domestic oil industry. Oil production is now well ahead of the projected performance prior to Oil Search becoming the operator of the oilfields and dying fields such as Kutubu and Gobe have gained a new lease of life.
The company has also been proactive in developing alternate markets for the country’s massive gas reserves with plans in hand for a LNG plant as well as two petrochemical ventures.
The 20% stake in the Porgera mine held by Orogen was sold off by Oil Search to the South African DRDGold, which also owned the Tolukuma mine. Eventually these assets were merged with Emperor Gold and these assets are up for sale once again following the virtual collapse of the Emperor operations.
As I understand it, Petromin may have been conceived as a vehicle to hold the PNG Government stake in the gas pipeline to Australia, a long pursued proposal that has now been abandoned. Instead, it has been re-packaged as Orogon Mark II, a vehicle to hold Government equity in all mining and oil projects, with landowner interests continuing to be held by MRDC.
Why a new organisation is necessary is something of a mystery because the Government equity in mining and oil ventures can easily be held under the auspices of IPBC or MRDC with any dividends being paid straight into Government coffers.
There is really not much point in creating Petromin, which will effectively hold the Government equity interests in various projects and add no value to any of them but still come with considerable costs for rentals, salaries and junkets.
A news article in The National recently disclosed that K200 million had been set aside for consultants fees in connection with the establishment of Petromin, but subsequently it was suggested this was the initial start-up funds being allocated to Petromin.
Why Petromin would need such large funds just adds to the mystery because it really doesn’t need to pay one toea to gain ownership of Government assets.
Making the whole scheme even more incredulous was the need for Foreign Affairs and Trade Minister Paul Tiensten and the Chief Secretary Joshua Kalinoe to fly to New York for a secretive meeting with the Italian energy
giant, ENI.
For some time, there have been suggestions in the Australian media that a takeover bid for Oil Search was about to happen, helping to keep its share prices buoyant.
Until now there has been no suggestion of any particular candidate. One has to wonder whether Petromin and ENI were cooking up some diabolical scheme in this regard.
As far as Bottom Line can tell, ENI has never shown any interest in PNG – at least not in the last two decades.
It is also rather strange that the Government would want to set up a holding investment company like this only a matter of months before a national election, when such an organisation could easily become a plaything of the new Government.
But for Bottom Line this provides another message that is even less palatable. This is just another sign the Government is more interested in involving itself in questionable grandiose schemes than in getting down to the nitty gritty of making the nation’s education and health systems perform better.
As this column has pointed out before, there are probably 200,000 or more children who are not in school today and one has to wonder whether people in much more fortunate circumstances really care.
How long does it take for the average outpatient to be seen by a doctor at the Port Moresby General Hospital or in Lae, Mt Hagen, Wewak or in Buka? And when they are seen, how often is the hospital unable to provide suitable medication or to perform the proper medical procedures?
The timing of the setting up of Petromin is also weird, considering the developments that have taken place over the past three or four years.
When this Government came to office the mining and oil sectors were in dire straits – investors had been fleeing the country and much of the nation’s resources were expected to run down by around 2012.
The Government has successfully turned the situation around and investors are flocking back in to undertake a variety of big and small projects.
The mining and oil sectors in fact are the healthiest part of the overall PNG economy and the fact that Petromin is being thrown into this equation is another sign of a loss of direction by the nation’s leaders.