Oil deal deserted: Kua

By PETER ESILA
THE Napa Napa project agreement which gave InterOil the monopoly for crude oil production and refinery was abandoned years ago, according to Petroleum and Energy Minister Kerenga Kua.
Kua said the Petroleum Department was seeking advice on what the State should do to fix the Napa Napa project agreement which gave InterOil (now Puma Energy) a financial incentive to establish the country’s first commercial oil refinery.
Having a refinery also resulted in Puma having a monopoly on the Jet A-1 (jet fuel) market.
He said the agreement between the State and InterOil, now inherited by Puma Energy PNG Ltd, was signed in 1997 for 30 years. It is due to expire in 2027.
“But in the meantime, the State and InterOil (Puma) have apparently walked away from their obligations under the project agreement,” he said.
“And for many years, that agreement has not been applied.
“For example, new petroleum products and importers such as Mobil, Total, Islands Petroleum and Niugini Energy are bringing in their own refined petroleum products, and neither the State nor Puma have objected to that.”
Kua said Puma had been importing its own crude and refined petroleum products from overseas,
“So the monopoly in the project agreement that guarantees Puma access to crude oil from Kutubu (Kutubu crude) and to refine it at Napa Napa has been abandoned by InterOil (now Puma),” he said.
“No one has objected and so forth. So for all practical purposes, this agreement has been regarded as abandoned.
“What it means is that both the State and Puma have rejected the agreement and they are no longer acting as if it is binding upon them. So they do not really need to follow its terms and conditions.
“In other words, the parties, the State and Puma and by their conduct rescinded the agreement and abandoned it, so, it seems like this project agreement doesn’t apply anymore.”
Kua said the Petroleum Department would submit some recommendations to the National Executive Council soon.