Oil refinery

Letters

ALLOW me to place on record that it’s not an easy business to set up an oil refinery in PNG some 20 years ago when a little known InterOil Ltd was given pioneer status by the government to venture into the risky business of downstream processing of crude oil into gasoline, lubricants, diesel, kerosene and Aviation Jet A1 fuel product range.
At that time, InterOil Ltd had no crude stock feed of its own and had to import under Import Parity Pricing based on Singapore spot pricing.
Due to challenges in its humble beginnings, InterOil Ltd had to re-strategise and undertake massive exploration into upstream investment to secure its own supply of crude feed not limiting to gas to liquid options resulting in the discovery of proven 13 TCF natural gas at Elk Antelope fields.
InterOil’s exit has paved way for bigger players such as Puma Energy coming in at the right time to reinvest and consolidate a sustainable domestic oil refinery business by using local crude from Kutubu/Gobe oil fields to provide fuel security for the first time in 2019 for PNG ahead of many countries in the region.
On the upstream part, it is a vote of confidence that energy giants Total and Exxon Mobil have taken over with Oil Search Ltd and the State to develop Elk Antelope and also related fields.
My only word of encouragement for the Marape government is to internally review the deal signed off to see if PNG has squeezed out all maximum benefits possible for itself (state and landowners) under the prevailing oil and gas laws and any other relevant laws.
If not, by all means it should invite the parties to the agreement to specifically grant the missing gaps and beyond if any.
As a golden rule may not always be in the best interest of the State to change the rules or demand anything the existing laws does not make any provision.
One area of interest for the country is the conversion of gas to liquid provision for domestic refinery if that was accommodated in the second LNG agreement or not.
That was the vision of InterOil Ltd when it went into upstream investment to support the stock feed for its refinery business now under Puma Energy.
The current governor for Gulf who brought InterOil Ltd into the scene against other competing investors when he was then Finance and Planning Minister should be commended. His shared vision for PNG to be self-sufficient in its fossil fuel energy has come to fruition and the gas to liquid provision has to be clearly captured in the domestic utilisation of gas provision in the Total agreement with state.
Next is to achieve food security in rice cultivation; processing, distribution and consumption by circulating K600 million annually within the economy.
Marape’s signal to stop importation of rice is commendable and genuine investors have to make strategic moves with local landowners to go into that business.

Observer -NCD