Oil Search, Santos deal not good for country

THE Oil Search and Santos merger means we’ve lost our national pride to the Australians.
This is the price we pay for instigating and commissioning an inquiry that will produce nothing, a report that will collect dust.
What is supposed to be an internal national interest and national security issue is causing economic and social devastations.
The merger represents the loss of investor confidence in this country.
The private sector is now beginning to realign and strategise its businesses, not to put all it’s eggs in one basket.
Businesses are now looking at risk-sharing structures and this is normal business practice in the corporate world as preparatory to the storms ahead with eventual shutdowns should situations do not improve.
This Oil Search saga is an example of what the Governments should not do in compromising national interest enshrined in our Constitution, which is full participation by our people in the development of its natural resources.
This saga started over 30 years ago when the Government, under the late Sir Mekere Morauta, for some unknown reason merged Orogen Minerals (State holding company for resources development) with Oil Search, who was then small time exploration company.
This ensured that all our holdings in resources projects were handed over for shares in Oil Search.
This move bankrolled Oil Search who before that had no revenue.
Then came the Government under the late Grand Chief Sir Michael Somare.
In order to participate in PNG liquefied natural gas (LNG) project, the Somare Government mortgaged Oil Search shares to International Petroleum Investment Company (IPIC), a wealth fund controlled by the ruler of Dubai to secure a loan to invest in PNGLNG.
IPIC has significant corruption issues around the world, the recent one being with the Malaysian government.
The Somare government mortgaged all other State-owned companies such as Air Niugini, Telikom, PNG Power Ltd and the lot of investments owned by Kumul Consolidated Holdings Ltd.
For some unknown reasons, there was no competitive bids for this IPIC Arab loan with other global financial institutions.
It was a one-sided agreement where the Arabs controlled all aspects of the deal, including whether they were to return the shares after the due date of the loan.
The O’Neill government was required to pay off the IPIC loan on due date so it set up a committee of civil servants to source the funds through an international competitive bidding process.
Through this, the Union Bank of Switzerland was selected to make funding available to repay the loan.
When the due date arrived, IPIC and the Arabs refused to give back the shares and used the agreement signed by the Somare government to exercise their option to keep the shares.
For the first time in PNG’s history of developing resources, the country had no direct share-holding in a major resource project for over 40 years.
Oil Search then approached the Government suggesting a special offer of shares representing 10 per cent holdings.
It was then that officials were told to negotiate the transaction and making sure that this was a better deal than the IPIC deal.
They were to ensure that the only mortgage for the loan was Oil Search shares only and not other State companies and that the price was cheaper with a lower interest.
That was to ensure that PNG continued to have a say in Oil Search and call it a PNG company.
Sadly, this company is now being merged with Santos, meaning that for the first time, it will become an Australian company with no PNG interest in its rich oil fields.
The so called saints and know-it-all politicians who are quick to claim disclaimer such as spineless cowards can now tell us how they can secure our interest in owning our resources.
We are heading down a slippery slope and gaining momentum because of the stupidity of our leaders who are ensuring that no one in their right mind will do business in Papua New Guinea. We need change next year to save our country.

Yapi Akore,
Kundiawa