Beware of a big monopoly of gas

Editorial, Normal

The National, Thursday June 20th, 2013

 THE viability of ExxonMobil teaming up with InterOil to develop natural gas fields in Gulf province is being questioned by Petroleum and Energy Minister William Duma.

Duma has cast doubts on the exclusive discussions between the global energy giant and the little Canadian company despite Prime Minister Peter O’Neill endorsing the proposed joint venture in Parliament.

In a brief statement this week, Duma said: “… there is some concern that it may not be a wise thing to allow one major energy company to dominate the industry in the country. 

“There have already been some concerns expressed by some influential sections of the community so we are also mindful of that.”

The minister’s concern should not be merely dismissed as sour grapes for being kept in the dark about a proposal that has real possibilities of developing into another world-class liquefied natural gas project.

Duma has been in the ministry long enough to realise that the Elk and Antelope gas fields in the Gulf hinterlands have the viable potential to produce a massive amount of natural gas. 

He would have been briefed at some point by InterOil about the true prospects of Elk and Antelope.

Some quarters of the industry believe that the combined volume of the Gulf gas fields could equal or even outstrip the Hides fields in Hela being developed by ExxonMobil under its K41 billion PNG LNG project.

It is obvious from the minister’s statement that he takes a dim view of any Ex­xonMobil involvement in the Gulf venture. 

But is Duma suggesting that the Gulf gas fields are big enough to be a separate project?

If he is, then we agree that Gulf LNG should be a project on its own and not be overtaken by ExxonMobil in a quest for domination of our energy sector.

The proposal for the Elk and Antelope gas fields to become part of the PNG LNG project makes financial and economic sense given ExxonMobil’s status and reputation as the world’s premier energy developer.

But the downside is that the Gulf people and their impoverished province will be denied the full benefits of a world-class project if their gas is only extracted to enhance PNG LNG supplies without the provision of onshore processing facilities and infrastructure.

Resource developers must always be mindful that Pa­pua New Guinea is a landowners’ paradise where the people demand to be fully compensated for development that takes place on their land and for the exploitation of resources on their land and below the earth.

The Kokopo UBSA (umbrella benefits sharing agreement) that paved the way for the PNG LNG project to proceed in 2009 set the precedent for landowner participation in large-scale resource projects.

No doubt the Gulf landowners will demand a similar benefits package if their  gas fields become commercially viable under an ExxonMobil/InterOil joint venture deal.

O’Neill told Parliament that as a stakeholder, the Government welcomed the serious discussions by Ex­xonMobil and InterOil as “the next significant step towards the development of our vast natural gas resource”. 

“If the talks are successful and ExxonMobil gains access to gas from Elk and Antelope, we will certainly add one, possibly two more trains and our GDP (gross domestic product) would triple in size,” O’Neill said.

ExxonMobil has not uttered a word since O’Neill expressed his confidence in the proposed joint venture.

InterOil issued a brief res­ponse to Duma’s statement this week, saying the PNG Government had been informed about the proposed tie-up, both at the political and bureaucratic levels.

ExxonMobil may need to quickly clear doubts about its intentions. 

There are some critical questions that need imme­diate answers from ExxonMobil. 

If the talks are successful, will the Gulf gas resource become part of the PNG LNG project? 

Will the Gulf landowners be provided a similar UBSA as their counterparts in Hela and Central? 

Will Gulf and its people benefit from similar LNG processing facilities and infrastructure such as roads, bridges and wharves?

Duma’s statement about the risk of ExxonMobil becoming the dominant player in the PNG energy industry should not be a major concern if the global giant can ensure that the development of the gas fields will fully benefit the Gulf landowners, people and province.

After all, it would be a grave injustice for the Gulf people to be mere spectators while a world class LNG project is being developed in their backyard via remote control by ExxonMobil Corporation in Texas, USA.