32.5pc stake in gas project

By SHIRLEY MAULUDU
THE country will take up a 32.5 per cent stake in the P’nyang gas project, as per the heads of agreement that was signed by the State team and ExxonMobil executives in Houston, Texas, United States recently.
This was according to Petroleum Minister Kerenga Kua during a media briefing yesterday.
Kua said, under the Oil and Gas Act (1998), the State was expected to take up 22.5 per cent.
He said the State through Kumul Petroleum Holdings Ltd (KPHL) had a 19.4 per cent share in the PNG LNG project operated by ExxonMobil, and 22.5 per cent in Total’s Papua LNG project.
“On Sept 28, two heads of agreement were signed with ExxonMobil and representatives of the State in Huston, Texas, US,” Kua said.
“The first heads of agreement was to demonstrate our firm commitment to taking this negotiation across the line and actually signing a gas agreement.
“The parties have now more or less a firm understanding that the State will end up receiving 63 per cent of the project revenue over its entire lifespan.
“This 63 per cent will include State to potentially purchase an additional 10 per cent equity from ExxonMobil.
“The total State’s take of 63 per cent will be composed of tax, royalty, development levy, KPHL equity, landowner equity, domestic market obligation, and a production levy as base components.
“The production levy negotiated was three per cent.”
Kua stressed that while the P’nyang project was a standalone project with its own gas agreement and landowner benefit sharing agreement, its development would be optimised with synergies from existing infrastructure.
“Construction will begin after the Papua LNG construction is concluded around 2028.
“This will result in construction mode being extended over eight years instead of four years as in the PNG LNG project.
“This is a big plus for the country.”
Kua said, the second heads of agreement that was signed was for the total State take to be no less than 60-65 per cent.
The Minister said, the State negotiating team and ExxonMobil’s negotiating team would recommence discussions in the next two weeks.