Impact of agreement assessed

OIL Search has received a letter from PNG Power Ltd (PPL) that could significantly impact the PNG Biomass power purchase agreement (PPA) which was signed between both companies in December 2015.
Oil Search said it had analysed the implications of the letter’s “notice of termination” and was engaging with all key stakeholders including Markham landowners and development partners to assess the potential impact of a cancelled PPA.
According to the company, the PNG Biomass project was aligned with the Government’s ambition to diversify the country’s energy mix and complement the drive to create jobs and long-term opportunities for the people of PNG.
Oil Search country manager Leon Buskens said the project would provide more than 500 direct jobs and stimulate many more across industries in the region.
“It also has the potential to make PNG a leader in renewable energy and enhance the country’s reputation globally,” he said.
“For the power sector and the people of our country, it is important that we find a way forward to bring the project’s low cost reliable energy onto the Ramu (power) grid.
“We intend to work with PPL to find a resolution to move forward together.
“We are ready to build the power plant and solar farm.
“We have met all obligations in the PPA under our control in order to reach financial close and we have strong funding support from international agencies who recognise the social benefits of this project.
“We have a dedicated team ready to work with PPL to support them to meet their obligations.
“We are ready to be part of the power solution and the energy mix and help the country transition to 100 per cent renewable by 2050.
“PNG Biomass has enormous energy benefits for PNG. It will provide the Ramu grid with up to 40 megawatts of renewable, clean, affordable and reliable energy, from biomass power generation and a solar farm.
“The project will help stabilise the Ramu grid and reduce blackouts in Lae.
“In 2018, Oil Search lowered the project’s power price significantly at the request of PPL.
“Ever since, the company has continued to work closely with all stakeholders, including lenders, grant funders and contractors, to ensure an extremely competitive levelised cost of power that will result in material savings to PPL.
“In the process, Oil Search has attracted grants from the international community to the benefit of PPL worth over US$40 million (K140 million).
“This is a compelling project for reliable power generation and creates large financial savings for PPL.
“PNG Biomass project is an example of sustainable development, attracting widespread interest and admiration from the international community.
“PNG Biomass is truly a world-class sustainable tree farming and energy operation.
“This is an opportunity for PNG to showcase what it can do on the global stage.”