Chamber: Consultation vital in amendments

THE Chamber of Mines and Petroleum says it acknowledges the passing of Oil and Gas (Amendment) Bill 2020, and understands the desire of the Government to maximise its position in resource projects.
However, the chamber, in a statement yesterday, said it believed that significant changes to existing legislation was best made in collaborative consultation with the industry.
“In failing to consult, consequences of some of these amendments would not be to the benefit of PNG but would inadvertently set back the nation’s economy for many years to come,” it said.
According to the statement, amendments to the Oil and Gas Act, such as those made to section 185, would severely impact bankability of future projects for developers, state equity participants and landowners. The section, now, allowed a review in effect of the project before PDL (petroleum development licence) grant against a national interest test, even if these things were satisfied previously as the project entered front end engineering and design (Feed) when a state agreement was concluded.
It also allowed the minister discretions to grant licences and give approvals against a national interest test during the life of the project. Historically, all these issues have been agreed upfront in the state agreement.
Financiers may choose not to proceed in view of the uncertainty or to add a significant risk premium on developer, state equity participant and landowner financing with higher borrowing costs to cover the perceived heightened political risk.