P’nyang remains open issue: Bank

THE importance of the timely start of the Papua LNG Project cannot be overstated, says Kina Bank.
Kina Bank’s executive general manager for business partners and wealth management Deepak Gupta said the P’nyang-based expansion of the PNG LNG facility would remain an open issue that needed to be concluded in order to bring a higher level of certainty to the overall project and facility expansion.
The Papua LNG project has recently been given the all-clear by the Government after re-examining the terms of the agreement.
Total Exploration and Production PNG Ltd (Total E&P) and the Government have provided certain undertakings in good faith to ensure an amicable and speedy conclusion to negotiations.
The Government has signalled its intention to move from the current concession-based arrangements to production sharing arrangements which is a significant change in policy.
Kina Bank said it viewed the shift in policy was best served through broad consultation with industry and stakeholders to ensure future projects remained competitive and met the requirements of all involved; while also avoiding any unintended consequences for a sector that was a large contributor to PNG’s gross domestic product (GDP) and dependent on ongoing foreign investment.
Petroleum Minister Kerenga Kua said the Government had now cleared the Papua LNG project to proceed “full steam ahead”.
The announcement notes the Government’s position is based on a letter received from Total E&P on Aug 21.
The letter outlined concessions in respect of national content, third party access to pipelines, pipeline ownership, and the potential for use of LNG tankers in which a participating interest was owned by the state.
The announcement stated that the Government’s position was that the Papua LNG Project would be allowed to proceed in accordance with the terms of the Gas Agreement, interpreted and applied in accordance with the letter “and the related expectations of the Government and the State”.
Gupta said Kina Bank saw this development as positive for business confidence. The construction cost of Papua LNG was estimated to be around US$13 billion (K44.21b), which was a significant amount of foreign direct investment into the PNG economy.