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DPE morphed from 'upstream regulator' to a 'statutory authority' - Printable Version

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DPE morphed from 'upstream regulator' to a 'statutory authority' - Tree - 01-09-2013

Well, well.  Perhaps this has also muddled the process on the Gov't side.  Less concntration of power in a single appointed politician means less corruption risk.  This is grand improvement for all exploration and foreign investors.

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December 6, 2012

Papua New Guinea’s oil and gas industry is celebrating a government decision to convert the under-performing upstream regulator into a statutory authority.

It is understood the main differences between the current regime and the statutory authority are that industry players will pay a levy to fund the authority, and an independent board and managing director will oversee and provide expertise, without compromising regulatory authority.

Under the new system, the authority will also be able to pay higher salaries than current regulator, the Department of Petroleum & Energy (DPE). (Attract more professional talent)

The DPE has under-performed for years, and industry body — the Chamber of Mines & Petroleum — has lobbied at length for it to be replaced by a statutory authority, similar to the Mineral Resources Authority, serving PNG’s mining industry.

PNG Minister for Petroleum & Energy William Duma said the government had “observed the performance” of the Mineral Resources Authority, and would adopt a similar model — although it will be “tailored to meet the requirements of both government and industry”.

Duma said a Cabinet submission was awaiting final clearance to establish the Petroleum & Energy Authority “early next year”.

“I believe the authority, when established, will deal with genuine concerns and issues affecting the industry, while conserving the government’s inherent role as a guardian of conserving the future energy needs of PNG,” he added.

The Chamber of Mines & Petroleum praised the initiative, adding that it had been a long time coming. “The Chamber has, for a long time, been expressing concern over the DPE which, despite its growing importance, has continued to deteriorate.

“The Chamber acknowledges the... dedicated staff who have tried to keep the department going.”

PNG’s oil and gas business is booming. The $19 billion ExxonMobil-led PNG LNG project is about 70% through construction. There are several other projects in the engineering phase, and a record number of exploration licences.

The DPE has failed to keep up with the pace of investment, due partly to its inability to retain experienced staff. Duma himself has complained about the industry “poaching” DPE staff.

The PNG LNG project received tremendous government support, said Duma, despite “poaching” of the DPE’s “best employees… forcing us to recruit and train more with insufficient budgetary support, putting us under great pressure” to deliver results. Under statutory authority, it will be easier to retain and train staff, plus attract new talent, given the superior funding compared to the DPE, said sources.

The coalition government, led by Prime Minister Peter O’Neill, was elected in August, and says it aims to give PNG a stable environment, politically and fiscally.



RE: DPE morphed from 'upstream regulator' to a 'statutory authority' - ArtM72 - 01-09-2013

Further grist for the mills of those of us who believe the PNG government and not IOC management is the source of all of the Gulf Project's delays.

While I am sympathetic to the concept of professional talent raids I don't buy it in the case of Duma's personal fiefdom. If ONeil is an honest politician, and I strongly suspect he is, I don't believe it was possible for him to launch Duma because Duma's cabal was the meat and the bones of DPE. ONeil likely recognized it would take both structural change and time to create a professional department to replace the DPE. Because important work needs to be done soon due to PNG's budgetary mess and Duma's was the only game in town, ONeil figured he had to play.

Consequently IOC is caught in the transition. The only way to move the Gulf LNG project forward quickly is using the former model of unilateral decision making. The new commitment to professional decision making is far slower and the mechanism is just now being built. Where Gulf LNG fits on the timeline of this transition is anybody's guess. I wouldn't bet a nickel we will know for sure before the next gathering at the Spinnaker.

Meanwhile, the only hope I have for an announcement in the next month or two is provided by the deafening silence of the players (but I still reach for news from PNG the first thing every morning!)

RE: DPE morphed from 'upstream regulator' to a 'statutory authority' - Tree - 01-09-2013

Well, that's certainly 1 way to look at it. Chin up and chest out Art. Have you noticed the influx of exploration and license activity? These existing and new PNG players, SM's and minnows alike are independently assessing, and choosing, PNG. In no small part based also on how IOC's success in the field and how they've ultimately been treated justly by Gov't.

RE: DPE morphed from 'upstream regulator' to a 'statutory authority' - Tree - 04-13-2013

Operation Statutory Authority almost complete. Just hope the SM's and others aren't fearful of partnering with an eager PNG which has cleaning house. Even though Petromin has no say in IOC's commercial matter of partner selection and even though Duma is firmly in O'Neill's camp.

Wait a second, this article claims that O&G industry wanted the changes being implemented in PNG regulatory bodies!!  Maybe the baby's daddy is illegitimate!