Puma explains foreign exchange challenges

Puma Energy PNG Group of Companies chairman and managing director HULALA TOKOME explains to acting business editor PETER ESILA the challenges of doing business in the country, especially on the foreign exchange issue. Questions were sent to the Bank of Papua New Guinea to also explain the foreign exchange issues with Puma Energy. Bank’s acting governor Elizabeth Genia said: “BPNG is working closely with all parties to find a solution to this issue. The bank can make no further comment on this story.”

Q: Now that the Government has issued a directive reinstating Puma Energy’s access to FX and its financial services, has Puma reinstated fuel supply?
TOKOME: While we have not yet received sufficient FX, we have temporarily restarted supply as a gesture of good faith on the back of the directives issued. We trust that BPNG, BSP and all relevant authorities will meet the commitments outlined in the directives including non-disruptive access to financial services which is of critical importance. We are very grateful for the support of the prime minister, deputy prime minister, treasurer and Government for intervening with this temporary directive. It has been a very difficult few weeks for the community and our customers, and we regret the inconveniences caused.

Q: How confident are you that the outstanding matters that led to fuel rationing will be resolved?
TOKOME: There is no reason why we can’t resolve them by working together. And we have been very clear, including our commitment to resolving as well as putting in place sustainable solutions. In addition, the Government has made its position very clear with the directives that have been issued, and any non-compliance with such directives would be illegal. We do not believe that there are fundamental differences that remain between Puma and the relevant authorities. And where differences do remain, we believe we are compliant and have received supporting information, even from third party subject matter experts which we have communicated through. These are matters that we understand relate to interpretations of administrative requirements and customs documentation– and these are tied to international oil trading norms and global best practices.

Q: Do we risk facing a similar fuel rationing situation in the near future?
TOKOME: I honestly hope not, and trust that collaboration and dialogue will prevail. It’s important that we have temporarily restarted supply as a gesture of good faith and that means we continue to draw down on our already low stock levels. The risk of disrupting security of supply remains very real, and should our access to foreign exchange and financial services remain unaddressed, then I fear we will need to reinstate rationing to make sure we can maintain supply for emergency services, hospitals, power generation and critical infrastructure for as long as possible. We never want to be in a position where we need to ration fuel. For us, fuel rationing is the option of last resort because of the difficulties it creates for the community, our customers and our business. We will continue working with BPNG and all relevant government authorities, under the support and leadership of the prime minister and deputy prime minister, to find long-term permanent solutions.

Q: The prime minister has formed a task dorce to investigate the issues between Puma Energy and BPNG, and to find a permanent resolution.
TOKOME: We welcome the opportunity to work with the task force and with those agencies involved to reach a resolution. Puma has made every effort to resolve the remaining matters through information sharing, not just about Puma’s business, but also international oil trading norms and global best practices. We hope that we can work quickly with the task force and to reach a resolution and return to dedicating our full attention to our customers and the PNG community.

Q: Your comment on the allegations floating around related to money laundering?
TOKOME: We, at Puma, take matters of compliance extremely seriously and reject any allegations of money laundering in the strongest possible terms. Any references to it are entirely unsubstantiated and have no basis in fact or law. No such issues exist.

Q: Why are some fuel stations still rationing fuel? Does it take time to fully restart supply?
TOKOME: Since we received the directives on Saturday afternoon, our operations teams have been working to load as many trucks as possible and have fuel made fully available at all points of sale. It is unfortunately not a situation where fuel supply returns instantly to 100 per cent. Given that our customers and dealers have now experienced multiple days of reduced supply, the majority are either experiencing very low or zero stock levels and therefore require immediate resupply in order to lift restrictions. While we are working hard to do this, we have operational limits on how many trucks can be used through our cartage contractors to load at our refinery in Port Moresby and our bulk terminals throughout the country, especially given the long weekend. In order to ensure that fuel gets to all points of sale as quickly and as safely as possible, it may mean that we cannot completely refill our customers’ storage in one delivery. That means that some sites will take longer to return to business as usual. We thank the public and our customers for their patience as we complete this process and return to normal operations as soon as possible.

Q: What is the volume of petrol, diesel, Jet A1 fuel, and others being used daily, monthly, yearly in the country?
TOKOME: It is probably more appropriate for the ministry of petroleum to give you a precise answer for this. What I can share is that based on our internal estimates, our Napa Napa refinery is adequately sized to supply 80 per cent of the country’s fuel needs. And for reference, last year, we supplied more than 650 million litres of oil products to our customers in PNG.

Q: What do you produce at Puma? When we are talking about fuel shortages, are we also talking about the Kutubu crude? And the products you have at Puma, what are they?
TOKOME: Puma produces jet fuel, diesel, LPG (Liquefied Petroleum Gas) – that’s Puma Gas and Naphtha, and low sulphur waxy residue. The latter two, which are produced at the Napa Napa refinery, are exported from PNG because there is no demand for them domestically. The production of these products requires a skilled and specialised workforce of 125 people, of which over 90 per cent are local.

Q: Does Puma bring in crude oil or does it buy it from PNG, or through Santos’ Kutubu crude?
TOKOME: Puma imports crude oil and condensate products from the international market. We also purchase and refine Kutubu crude. But Santos is only willing to sell Kutubu crude to us in Kina occasionally (approximately one cargo per quarter). Should more volumes of Kutubu crude denominated in Kina become available, that would definitely help.

Q: How much are you producing from the Napa Napa plant? Is there fuel left there? How low is it?
TOKOME: We are not producing at the moment and are supplying the country from existing inventory. This is why urgent attention must be directed to this matter, for all parties to do their part in reaching a solution exactly as the Government has done with the directive over the weekend.