Oil Search stands firm on deal

Business

OIL Search Ltd believes the final gas agreement for the US$13 billion (K43bil) Papua LNG Project signed last month was fair to all parties, says chairman Rick Lee.
Lee said it provided appropriate economic returns to the joint venture partners, including the State through Kumul Petroleum, in an increasingly competitive LNG marketplace.
He said also it also ensured a strong and reliable income stream to the Government, provinces and landowners. “The national content provisions will ensure many opportunities for Papua New Guinea businesses to become involved in the development, as well as provide thousands of jobs for Papua New Guineans,” he said.
Lee said the introduction of a domestic market obligation would ensure a material volume of gas was available at a competitive price for local industry and for the generation of power.
“An example of what can be achieved with it is the new 58 megawatt power station located just outside Port Moresby, which recently started operations,” he said.
“This power project, constructed by NiuPower, a 50/50 joint venture between Oil Search and Kumul Petroleum, uses gas from the PNG LNG Project to provide much cheaper and more environmentally-friendly power than from other sources.
“It will make a real difference to the Port Moresby grid, improving the reliability of electricity supply to our nation’s capital.
“We are hopeful that gas made available through the Papua LNG domestic market obligation will play a major role in the Government’s objective to deliver competitively priced power to more than 70 per cent of the population by 2030.”
Lee said steady progress was made on the world class Papua LNG and PNG LNG/P’nyang development projects last year.
Meanwhile, Oil Search managing director Peter Botten said the gas agreement for the P’nyang gas project in Western should be finalised in the second quarter of this year.
Botten said the gas agreement would pave the way for entry into front-end engineering and design for the integrated Papua LNG and PNG LNG/P’nyang three-train development, which would double the PNG’s LNG capacity and transform the country’s economy.

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