THE Government’s negotiation team recently met with ExxonMobil executives in Houston, Texas, United States.
Prime Minister James Marape, ExxonMobil president for up-stream Liam Mallon and other executives were part of the meeting.
The gas agreement, as highlighted in the meeting, captures key fiscal, regulatory and licensing terms negotiated over the last two months.
The terms set in the meeting are good for the country.
It is a commendable move Marape and the negotiation team.
The Government, under Marape, has made a bold decision which reflects a win-win solution for the State and the developer.
The first negotiation failed.
The government had to find another way around.
I remember the original development plan, mooted in 2018, called for the development of P’nyang as a one train liquefied natural gas (LNG) addition to the existing two-train PNG LNG project.
In 2019, a set of fiscal terms of Papua LNG project was agreed upon, but P’nyang segment of the plan collapsed last year when ExxonMobil would not agree to the Government’s push for increased benefits and walked away from the negotiation.
Despite a dark moment, Peter Larden, the new managing director for ExxonMobil PNG, said he hoped new negotiations would be fruitful.
The recent discussion of P’nyang gas agreement in Houston ended with a better deal, a deal that is promising for our landowners and the Government.
In addition to all the entitlements, the State’s take is at 63 per cent in the deal, compared to 49 percent in PNG LNG and 51 per cent in Papua.
This is made possible by increasing production levy of 3 per cent and the State equity (including the commercial purchase) being at 32.5 per cent compared to just 19.5 per cent in the PNG LNG and 22.5 per cent in Papua.
I believe the prime minister has achieved a significant milestone in the history of PNG’s extractive industry.
The construction cost of both projects will exceed K25 billion.
I believe this would be a tremendous investment and our economy should pick up once PNG produces and exports gas all the way to 2050.
What a deal.