Deal hits snag

PRIME Minister Sir Michael Somare left Hides yesterday disappointed that he was not able to sign the licence-based benefits sharing agreement (LBBSA) with the Petroleum Development Licence 1 (PDL1) area landowners.
The PDL1 area landowners refused to sign the LBBSA yesterday, after several last-minute changes were made to the benefits sharing formula by Petroleum and Energy Minister William Duma.
The refusal by the landowners was an eleventh hour decision as it is understood that the landowners had reached an agreement in the early hours of yesterday and were prepared to sign the LBBSA after a marathon meeting on the sharing arrangements.
In a major boost to the PNG LNG project, the United States government’s Export-Import Bank at the weekend granted a US$3 billion (K8.5 billion) loan to ExxonMobil for the project.
And the China Petroleum and Chemical Corporation, Sinopec, inked a deal last week with ExxonMobil to purchase a 20-year supply of LNG.
Yesterday, the Prime Minister was looking forward to putting down his signature to basically seal the deal for the mega project.
But he left Hides for Port Moresby without signing.
It has been nearly a month now since the LBBSA forums began for landowners to discuss how the benefits agreed to during the umbrella benefits sharing agreement in Kokopo earlier this year would be shared among themselves.
The landowners’ refusal kept Sir Michael, who was to sign the agreement on behalf of the State, waiting for nearly an hour.
Sir Michael flew into Hides PDL1 yesterday morning, a day after arriving from Sydney where he witnessed the signing of the significant sales and purchase agreement between ExxonMobil and Sinopec. Sir Michael flew into Hides after visiting Oil Search’s Iagifu Ridge camp.
Despite their refusal to sign yesterday, the landowners said they were in agreement that once what they had agreed to was set in the LBBSA, then they would sign.
Juha (PRL2) and Angore (PRL11) landowners are expected to sign today.
These landowners have only today to sign the LBBSA or Petroleum and Energy Minister Mr Duma will use his ministerial powers set by the Oil and Gas Act to make a determination on how landowners will share their benefits.
But State Enterprises Minister Arthur Somare was adamant not to take this path and allow the landowners to sign the LBBSA.
The reason for this is that PDL1 will supply 60% of the gas required for the PNG LNG project.
“This is a very significant portion that underpins the PNG LNG project,” Mr Somare said.
Meanwhile, last Friday, Gobe (PDL4) landowners signed the LBBSA.
Gobe and Kutubu (PDL2) will be the source of the initial supply of gas.
Kutubu landowners were the first the sign the LBBSA, followed by PRL12 (Hides 4).
The only area whose benefits are likely to be set by a ministerial decision is Moran (PDL5/6).
All the outstanding agreements must be signed today before the final investment decision is made by ExxonMobil and its project partners, due tomorrow.