Extra profit tax on LNG project

Business, Main Stories

THE additional profit tax has been reintroduced in the PNG liquefied natural gas (LNG) project, according to Prime Minister Sir Michael Somare.
The tax scheme was abandoned in early 2003.
During negotiations between the National Government and project developer ExxonMobil Corp on the PNG Gas agreement, the Government did not provide any tax concessions, Sir Michael said.
He said this in a statement as he expressed congratulatory sentiments to  ExxonMobil Corp and project development partners led by operator Esso Highlands Ltd, a subsidiary of ExxonMobil Corp.
“We have had positive economic growth every year since then and I am especially thankful that the PNG LNG project will push this nation’s economic performance to an even higher level.
“The challenge for my Government is to convert the benefits of this project to meaningful development that would improve the lives and living conditions of every Papua New Guinean.
“The co-venturers in this project will spend US$15 billion (K40 billion) during construction.
“This has to be managed in an effective and efficient manner to avoid cost blow outs that would negatively impact on profitable operations and potential returns to the National Government,” he said.
The Independent Public Business Corp (IPBC) through its subsidiary company Kroton No. 2, is State’s nominee to venture into the project on behalf of the Government
In total, the Government has 19.6% equity stake in the project, where 16.6% is held by IPBC (Kroton No. 2); an additional 2.8% is held on behalf of landowners by the Mineral Resources Development Co (MRDC); and 0.2% by Petromin PNG Holdings Ltd through its subsidiary Eda Oil Ltd.
The overall US$15 billion (K40 billion) cost of developing the PNG LNG project, which excludes shipping costs, will enable PNG to export 6.6 million tonnes of LNG annually to customers in China, Japan and Taiwan.
This would involve the processing of more than nine billion cubic feet of natural gas from gas fields in Southern Highlands and Western province over the  30-year project life.