No monopoly assured

PRIME Minister Peter O’Neill says the Government will ensure that there is no monopoly in the country’s liquefied natural gas industry.
He said this yesterday in response to concerns raised by Gulf Governor Havila Kavo about ExxonMobil wanting to buy out InterOil shareholding in the Papua LNG Project.
Kavo said such discussions between ExxonMobil and InterOil raised a lot of concern about the future of the industry in PNG.
“ExxonMobil and Oil Search hold the biggest shares in the PNG LNG project,” he said.
“InterOil holds the biggest shares in the Papua LNG Project.
“With the buyoff, ExxonMobil alone will hold almost 60 to 70 per cent of hydrocarbon developments in the country. When ExxonMobil buys off InterOil, it also buys all the PPL licences that are held by InterOil.
“If this transaction takes place, the issue of monopoly by one major developer in the country will become a big concern to us Papua New Guineans.”
Kavo said other interested developers would also be affected and asked O’Neill what was the Government’s stand on this issue.
He asked that the State reject this proposal and make an offer to InterOil. O’Neill said the offer by ExxonMobil to InterOil was made after a competitive process had taken place.
He said the offer was US$3 billion, after offers made by Oil Search and Total for US$2.5 billion, with Inter-Oil owning about one-third of the assets of Elk-Antelope at the Papua LNG Project.
O’Neill said Total had already been nominated as the operator, so even if ExxonMobil bought off InterOil shares, there would be competitiveness in the marketplace.
He said InterOil had been operating the project for about 10 years and had not been able to raise the money to develop the Elk-Antelope field, which was estimated to cost about US$20 billion.
“We (PNG) can’t afford that,” O’Neill said.
“That is why we are not participating in the bidding process. Even US$3 billion is too high already.
“The reality is we cannot afford it, but we have put ExxonMobil and Total on notice that our Government will exercise all its rights under the Oil and Gas Act, meaning we are entitled to 22.5 per cent of the shares.”
O’Neill said Kumul Petroleum was created to ensure PNG shareholding in such projects and to maximise returns to Government and the people.
He said the Government had no right to intervene in what was going on between ExxonMobil and InterOil as they were publicly-listed companies going through a bidding process.
“But it won’t be one single operator in the country, it will; be two operators as we have always wanted to happen, to ensure that there is competition in the market,” O’Neill said.