Govt urged to rescind decision

A GROUP of landowners has called on the government to rescind its decision to dismantle the National Petroleum Company PNG (Kroton) Ltd as announced by State Enterprises Minister Sir Mekere Morauta last week.
Landowners of Petroleum Development Licences 1, 7, 8, 9 and Pipeline Licence 4 asked the government to fast-track the legislation of NPCP (Kroton) so that it was protected from future political influences.
Sir Mekere announced that the NPCP would be split between the Independent Public Business Corporation (IPBC) and the Department of Petroleum and Energy so that only a shell company remained with IPBC to “protect the state’s equity”.
The landowners led by Larry Andagali, chairman of UBSA and LBBSA negotiating team for Hides Gas Field (PDL1) warned in a statement that unless the decision was rescinded, the government must be ready to face any consequences, including closure of the project and/or to renegotiate the umbrella benefits sharing agreement so that landowner equity was transferred to the landowners immediately to manage.
The landowner statement reads in part: “NPCP (Kroton) was created for a purpose and that purpose is to maximise PNG’s value in the PNG LNG project and in doing so create wealth and sustainable opportunities for all Papua New Guineans and us, the affected project area landowners, the five provincial governments, inclusive of Hela.
“What this decision means is PNG will be mere rent collectors and us landowners and the affected provincial governments mere royalty and equity dividend collectors as provided for in the Oil and Gas Act.
“That’s not what we negotiated for in the umbrella benefits sharing agreement in 2009 as a precursor to the Licenced-based benefits sharing agreement, and prerequisite for early works and project sanction.
“We negotiated and fought for participation in the project and that we got through our 4.22% Kroton equity.
“We want to see our equity grow in asset value and that work we believe has been happening at NPCP (Kroton).
“We want to know who will manage our equity, what experience they have in oil and gas industry that we can entrust so that our equity will grow in value so that for once, we project area landowners can proudly claim that we have a separate stake in the PNG LNG project through the Kroton equity option.”
The landowners said the recent purchase by Marubeni Corporation of 20% of Nippon JX 4.68% in the PNG LNG project for US$286 million indicated that the project was valued at over US$30 billion.
“That means the landowners and the five provincial government’s share in the project now is worth US$1.3 billion (K3 billion).
“This is a significant asset for us and to have it in a shell company or be manipulated with politics is a big slap in the face and we cannot tolerate this kind of behaviour of any government,” the landowners said.  
Gas and oil resources landowners yesterday raised the following questions for Sir Mekere to respond to in light of government’s decision to dismantle the National Petroleum Company PNG:
l    Why has he decided to have a shell company when it needs to function like a Joint Venture Partner in what is the largest investment that PNG has ever made?
l    How will the shell company manage cash calls, monitor the Project progress, do the analysis of various legal, commercial and technical complexities of the project during the construction and into production phases of the project?
l    Are we just going to be watching and accepting what foreign companies tell us on the various aspects of the projects or will we develop our own skills in oil and gas?
l    What happens to the landowners 25.75% equity in the Kroton equity?
l    Why has IBPC or the state enterprise minister not consulted us landowners? It makes us wonder whether there was wider consultation among the other ministers and whether it was endorsed by the prime minister.
l    Was this decision done in consultation with the other state agencies like DPE, the developer of the LNG project etc ?
l    In light of national interests, we wonder who IPBC and Sir Mekere’s advisers are. Certainly this decision as reported by the minister for state enterprises does not look into the big picture in terms of PNG’s national interest.
l    Why is the current draft Organic law on sovereign wealth fund (SWF) silent on a nominated or designated state entity as the vehicle for managing the state’s interests in PNG LNG project? Are the current media statements by Sir Mekere and IPBC deliberately endorsing the demise of NPCP (Kroton)? Notwithstanding the current SWF draft legislation, we landowners are interested to know the link between the nominated state entity, the development funds and our share of Kroton equity.