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In light of the PNG government now owning a significant share of Oilisearch stock, there is an obvious potential for bias by the government for Oilsearch and against Total and IOC. There are certainly reasons they should not be biased. However, this investment directly in Oilsearch now creates a situation where there could be abuse and bias against companies other than Oilsearch.
While I am not saying that the current government is crooked, we all know from expeience that PNG is without doubt one of the most corrupt countires in the world. In some ways it is a miracle that Phil was able to do anything at all in PNG.
I hope TOTAL and IOC both let the PNG government know in a friendly but stern way that they will not tolerate any bias or fuuny business and will not ignore conflict of interest laws.
They need to be procative not reactive on this topic.
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Since OSH owns 23 percent of PRL 15 it's in their best interest to develop it in the most quickest most economical way.
Frankly I don't see a conflict of interest but a matter of mutual interest. And OSH is clearly a minority partner. Let's vote .
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'steve3752' pid='40276' datel Wrote:
In light of the PNG government now owning a significant share of Oilisearch stock, there is an obvious potential for bias by the government for Oilsearch and against Total and IOC. There are certainly reasons they should not be biased. However, this investment directly in Oilsearch now creates a situation where there could be abuse and bias against companies other than Oilsearch.
While I am not saying that the current government is crooked, we all know from expeience that PNG is without doubt one of the most corrupt countires in the world. In some ways it is a miracle that Phil was able to do anything at all in PNG.
I hope TOTAL and IOC both let the PNG government know in a friendly but stern way that they will not tolerate any bias or fuuny business and will not ignore conflict of interest laws.
They need to be procative not reactive on this topic.
*********
I'm sure IOC and TOT are doing just that. But PNG is an equity holder in E/A and may independently agree with OSH that the existing plant offers better economics. If I were PNG, and driven soley by money, I would prefer the less expensive additional trains and quicker revenue that would come with the gas goiing to the existing plant. I would prefer this regardless of whether I owned 10% of OSH or not. That being said, there are other considerations beyond just the economics, as PNG has landowners to appease and they may like the idea of being able to deal with two, rather than just one, big boy.
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I don't think IOC should assume there is or will be any bias on the government's part, or express any concern or take any action on that assumption, without hard evidence of biased action; and I do not think IOC management needs any advice from us on that subject. The apparent lack of any comment by the government about the current situation may actually indicate an intent to be very unbiased and even-handed. The government also has strong interests in being and being perceived to be fair and law-abiding to all investors in PNG, and both these companies have long histories of successful achievement, investment in, and dedication to PNG and its people.
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03-28-2014, 07:55 AM
(This post was last modified: 03-28-2014, 07:57 AM by jdeo1969.)
An equally strong argument could be made that what would be in PNG's best interest is TWO LNG projects for diversity and for employment in building the plant. There is a fine line that the market may dictate regarding demand and pricing for LNG. I go back to Oneill being in a position where he needs to show results and "show them the money" because in just under 9 months he is likely to be challenged. He needs some wins in the meantime, so to speak. But to use the much overused word, it is "naive" to think that Oneill won't do what is Politically expedient in the face of what may seem practical, with regard to his "suggestions" as to where the gas will go. So again, we are all speculating, yet again, about the same thing, over and over, again and again, repeating the same conversation, redundantly going back and forth, up and down, again, albeit on a new thread. 
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["An equally strong argument could be made that what would be in PNG's best interest is TWO LNG projects for diversity and for employment in building the plant."]
Yes, as well as developing the Gulf.
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PNG owns 10% of 23% of E/A and 10% of 29% of PNG LNG. Not a lot of difference for PNG if the gas goes either way although there would be a small apparent advantage ((29-23)/23)(0.1)= 2.6% for PNG to send the gas to PM.
On the other hand most of the cost difference between going to Gulf and going to PM would be in new infrastructure. That is money coming in to the country to help build its economy and secure its future. So even though the separate plant might cost more and return a little less in dividends to PNG those amounts would be significantly offset, if not overwhelmed, by the financial benefits accruing to the country by building a new stand alone facility.
My bottom line: while an ownership percentage in PM and attractive gas price for E/A might provide a slightly better deal for IOC and TOT the government will do far better with a separate facility in Gulf Province.
Slam Dunk? Seems assured.
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'jdeo1969' pid='40287' datel Wrote:An equally strong argument could be made that what would be in PNG's best interest is TWO LNG projects for diversity and for employment in building the plant. There is a fine line that the market may dictate regarding demand and pricing for LNG. I go back to Oneill being in a position where he needs to show results and "show them the money" because in just under 9 months he is likely to be challenged. He needs some wins in the meantime, so to speak. But to use the much overused word, it is "naive" to think that Oneill won't do what is Politically expedient in the face of what may seem practical, with regard to his "suggestions" as to where the gas will go. So again, we are all speculating, yet again, about the same thing, over and over, again and again, repeating the same conversation, redundantly going back and forth, up and down, again, albeit on a new thread.
I do not believe O'Neill will make, as you say and mean, "politically expedient" "suggestions" as to where the gas will go, and PNG LNG revenues will help him in that regard.
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'steve3752' pid='40276' datel Wrote:
In light of the PNG government now owning a significant share of Oilisearch stock, there is an obvious potential for bias by the government for Oilsearch and against Total and IOC. There are certainly reasons they should not be biased. However, this investment directly in Oilsearch now creates a situation where there could be abuse and bias against companies other than Oilsearch.
While I am not saying that the current government is crooked, we all know from expeience that PNG is without doubt one of the most corrupt countires in the world. In some ways it is a miracle that Phil was able to do anything at all in PNG.
I hope TOTAL and IOC both let the PNG government know in a friendly but stern way that they will not tolerate any bias or fuuny business and will not ignore conflict of interest laws.
They need to be procative not reactive on this topic.
Great point. Hard to believe it has not already been made on this site. My guess is that Shorts that pick up on this have another tool to bash IOC with until it is finally closed out. I agree with you. I don't like this arrangement. Government bias is humanly unavoidable. How this will manifest remains to be seen. It raises a long list of unpleasant questions. E.g, Is PNG driving this legal challenge? The only analogy I can think of is when a SM is in on a deal with a national oil company. But in those cases all the rules and players are known and negotiated upfront before capital is committed. The NOC has a business reputation, but everyone knows the deck is prestacked in the NOC's favor. This OSH case is very different. The government has entered after the fact by the back door. I imagine they will give OSH every advantage and benefit to their favor, just like NOC's get. It seems OSH is a de facto PNG national oil company now. Someone tell me why PNG would want to own part of a publicly traded company? The Chinese do this. We know why. It's not good for industry.
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