By DALE LUMA
THE Pasca A offshore oil and gas project in Gulf faces further delay to its start-up which is now expected in 2025, says developer Twinza Oil Ltd.
Country manager Roppe Uyassi told The National that the project would continue to be delayed until a gas agreement was signed, although it was likely to be further exacerbated by the standing down of the project team.
“This is really unfortunate for PNG, following the lengthy delays we have already seen from resource projects in PNG such as Papua LNG and Wafi-Golpu,” Uyassi said.
The Government, just before the signing of the agreement last month, made known its demand for a 6 per cent production levy before it could sign the agreement.
It was, according to the developer, 4 per cent higher than what was initially agreed to.
Petroleum Minister Kerenga Kua said it was imperative to secure the best deal for the country, while the window for negotiations was still open.
Uyassi told The National that oil and gas exploration and development “is very risky but potentially lucrative business”.
“There needs to be a balance that recognises the risk taken by private investors and the development goals and aspirations of PNG, and the best deal would be one that maximises revenues to PNG,” he said.
“This could be in the form of payments to local businesses and employees, or taxes and royalties to the Government to fund the country’s development priorities in health, education, security, infrastructure etc.
“Importantly, it must also provide an incentive for private investors from all over the world to provide their money to develop the Pasca A Project on the promise of profits that will reward them for taking the risk to invest in Papua New Guinea.
“We firmly believe that the deal agreed to between the State and Twinza strikes the right balance and provides a win-win outcome for both parties, delivering the highest State take of any resource development in PNG, be it on a discounted or nominal project value going to the State.
“We understand that the outcomes of over 65 per cent discounted and 52 per cent nominal State take were even verified and benchmarked independently by Deloitte after being consulted by the State.
“The agreed terms also included domestic market obligation (DMO) for the supply of gas being provided from the first year of production for the first time in PNG’s history, plus an increased percentage of domestic market gas supply to 10 per cent of production.”
Uyassi said the Pasca Project would require an additional investment of at least K5 billion over the coming years.
“Even the State nominee carrying the State’s 22.5 per cent equity on the project going forward would require project financing to move this project forward into production, meaning that whatever terms we agree with the State must also be viable for the State nominee to raise financing.
“The worst case scenario would see Twinza sign an unviable gas agreement deal, only for the project to fail as it can’t attract investment from financiers who are more conservative than oil and gas project proponents such as Twinza.”
Uyassi said given the continued delays in the signing of the agreement, Twinza had already begun standing-down the Pasca Project team as the timing of execution of the gas agreement remained uncertain.
“This will continue, however I will point out that as a foreign investor, Twinza has invested more than K350 million in the Pasca field over the past 11 years and will remain committed to PNG long-term,” he said.
“The Pasca Project is ready to move into the Feed phase of project development soon after a successful gas agreement signing.”
Uyassi added that the project had been on hold since 2020 awaiting commencement of the Feed phase.
“We remain hopeful that the development of PNG’s first offshore oil and gas field will commence soon,” he said.
“We are committed to Papua New Guinea and remain hopeful this is something PNG will have to address for the long-term good of the industry and the many local businesses that depend on the industry.”
By DALE LUMA