Petromin/Kalinoe are GONE = Kumui Petroleum

[bertl05]

True Palm, but my point is that we have seen "purges" before and in the end the culture of abuse and money grappeling remains the same. I dont expect that to change now. I agree ONeil is a brilliant and seemingly honest leader by PNG standards. I do believe the recent developments will help IOC get a fair deal. But leaks and the likes wont end. Like I said DPE is a sieve and there are many involved.

The bureaucrats run the day to day mechanics of the DPE and will continue to do so, and will also staff the "new" govt owner of the PNG % of gulf LNG. It will be mostly the same guys.

The disdain that these mid level bureacrats have for IOC wont change , and firing one or 2 wont change it. It may be muffled or quieted down and such open displays of disdain as newspaper plants, etc etc might calm down, but in the end the steady stream of leaks most likely wont end.

I do believe the playing field has been leveled a bit. Clearly IOC was running uphill and facing stiff headwinds. It was a horrific place to try to navigate for a few years. But in the end IOC needs to execute a quality deal.

[Palm]

Not sure that's the case with DPE.  If you remember this story from the end of 2012 which Tree provided:
http://shareholdersunite.com/mybb/showthread.php?tid=2515

"December 6, 2012

Papua New Guinea’s oil and gas industry is celebrating a government decision to convert the under-performing upstream regulator (DPE) 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 (Frank Kramer?) 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."

Not sure the dismantling is limited to Petromin.  Actions have already been taken to gut DPE and change the people and ways it operates.

[Getitrt2]

"The disdain that these mid level bureacrats have for IOC wont(sic) change".

bert, where are you getting this? My impression from the Company is that they have good relations with and get good cooperation from those bureacrats, even though on "PNG time", and that the primary past problems they have had have been with the energy politicians and their appointees over the bureacrats, especially Petromin/Kalinoe (in bed with Shell) and Duma, with Duma now on board for whatever reason (maybe his survival). IOC has even been getting full cooperation on license adjustments for months, and seem to have no concern for any of that.

Someone here also said Kumul was advertising for new staff, and I doubt it will be "mostly" the "same guys" from DPE who will still need to be doing their current jobs at DPE. I think Petromin has been the primary problem in conjunction with Duma himself; and if it were going to be just a transfer of people from Petromin, which probably couldn't meet future requirements anyway, why advertise for top staffers?

PS: Just saw Palm's posting. I also think it would be safe to say that people considered under-qualified at DPE or Petromin are not likely to be brought into the new organizations.

[bertl05]

Where do you get you information? We all have our sources. I suggest you contact anyone that has had on the ground experience in PNG and has worked with DPE. Its no secret, in fact what i posted about the disdain is well kbow in the SE Asian O&G circles. Wether you believe it or not is of little or no consequence to me.

In the end IOC will get a deal. But to think that because 1 player is removed for cause unrelated, means that the culturtevthat caused IOC all these problems is removed...well its not my thinking anyway.

Do you really think that IOC's political 2 year battle was caused by 1 dissenting person?

[admin]

True Palm, but my point is that we have seen "purges" before and in the end the culture of abuse and money grappeling remains the same. I dont expect that to change now. I agree ONeil is a brilliant and seemingly honest leader by PNG standards. I do believe the recent developments will help IOC get a fair deal. But leaks and the likes wont end. Like I said DPE is a sieve and there are many involved. The bureaucrats run the day to day mechanics of the DPE and will continue to do so, and will also staff the "new" govt owner of the PNG % of gulf LNG. It will be mostly the same guys. The disdain that these mid level bureacrats have for IOC wont change , and firing one or 2 wont change it. It may be muffled or quieted down and such open displays of disdain as newspaper plants, etc etc might calm down, but in the end the steady stream of leaks most likely wont end. I do believe the playing field has been leveled a bit. Clearly IOC was running uphill and facing stiff headwinds. It was a horrific place to try to navigate for a few years. But in the end IOC needs to execute a quality deal.

Cheer up Bert. Do we know it was all of Petromin, or just a few? Even if the first, I would say that disbanding it and firing the head is a fairly strong 'intervention', one that might actually achieve some kind of culture change, if not just to show that there is a downside to playing games with the Nation's resources..

[Getitrt2]

Where do you get you information? We all have our sources. I suggest you contact anyone that has had on the ground experience in PNG and has worked with DPE. Its no secret, in fact what i posted about the disdain is well kbow in the SE Asian O&G circles. Wether you believe it or not is of little or no consequence to me. In the end IOC will get a deal. But to think that because 1 player is removed for cause unrelated, means that the culturtevthat caused IOC all these problems is removed...well its not my thinking anyway. Do you really think that IOC's political 2 year battle was caused by 1 dissenting person?

Did I say "1 dissenting person"?  I think not.  I named Petromin (all of) including Kalinoe and political appointees specifically, Duma and his political appointees, and Shell, for starters.  I would also say the kind of drastic action that has been taken, though not likely to end any and all problems, should have a very significant effect.

[petrengr1]

From Tree's Dec 6th article: "Papua New Guinea’s oil and gas industry is celebrating a government decision to convert the under-performing upstream regulator (DPE) 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 (Frank Kramer?) will oversee and provide expertise, without compromising regulatory authority."

Looks like they have thought of a new source of funds to pay the Gov't employee's salaries.

[Palm]

Exactly Pet. Same way that the Mineral authority has been funded and its worked very well. That's been the goal since last fall; turn DPE into the same type of organization. It's a must to make this a house cleaning. Any carryover staff will likely be technical in nature; lie those who went to Japan to be trained by JAPEX; better keep them as long as they are "clean". Other than that the BOD of Petromin probably is flushed. Again, that has to be done. Can you imagine the Japanese, Koreans and legitimate bidders being told that its been discovered that DPE and Petromin were toxic and false information was being fed to them as potential partners as well as hedge funds who bet against them all, then saying, "But we've taen care of the problem. We created a couple of new entities and transferred most of these same people into them and they've all promised to be good now and not accept bribes." The reaction would be something like this:

http://static.businessinsider.com/image/.../image.jpg

[petrengr1]

Palm- Can you explain how all of this new system will work? Last week we heard about National Petroleum Corporation of PNG (NPCP) which I thought was to be run by Frank Kramer. Now we have this " statutory authority" which is to have an independent board and Managing Director (Frank Kramer?) and today we hear about another National Oil Company, Kumul Petroleum which is to replace Petromin. I had previously thought that NPCP was to replace Petromin. Now I don't know how all of this is supposed to fit together. And then Frank Kramer has his own company which I had thought might be going to become NPCP.

If you or anyone else knows how this will work and what the function of each entity will be I would appreciate it if you could explain it to us.

Thanks.

[Palm]

Pet, can only guess at this point. I don't think Frank Kramer will be the managing director of the revamped DPE. That was my mistake. I do believe though that as CEO of NPCP he and the rest of the BOD of NPCP will oversee subsidiaries like Kumul Petroleum. If you watched the EMTV videos of Micah and Kramer I think we get a picture of what this umbrella will look like. When NEC quickly rejuvenated NPCP in late February they made it clear that it would replace Petromin. Petromin was very slowly transitioning to just petroleum projects but their biggest weaknesses are/were high corruption and no real assets. They've failed all along the way to do what they were firmed to do. So if you look at the charter of Petromin and how it was to own and manage the State's interests in petroleum projects, you'll see what NPCP will be.

But NPCP will be part of a much larger umbrella of State owned entities; IPBC. This is IPBC's website and you can see what all they own:
http://www.ipbc.com.pg/

This speech by Micah last September gives a lot of good info on the plans for the "umbrella". In it he mentions, "We are also sponsoring a plan to rehabilitate and upgrade the Port Moresby power supply through a similar Public-Private Partnership model, although negotiations with the private sector have been put on hold for the time being." I believe that is the project JAPEX signed on to be part of back in 2010, but Petromin screwed things up so badly because the plan was for JAPEX to invest in EA and use some of the gas for the PM power supply. But we know what happened there. Now NPCP has been fired up and a new agreement was signed in Japan with JAPEX. I bet things will move forward.
http://www.ipbc.com.pg/PDF_files/2012073...revise.pdf

DPE will be revamped into the new entity which will mirror the Mineral Resources Authority which functions so well. If Duma survives he will be part of the new entity but the board will be set up like the mining board;
Board Composition
The Board consist of nine members
Four representing the public sector and
Four representing the private sector with
The Managing Director being the ninth person

That DPE transition appears to be in process. This is the MRA website and we'd expect the PRA to be very similar:
http://www.mra.gov.pg/Home.aspx

As we noted some time ago, the DPE website has been trashed for quite a while:
http://www.petroleum.gov.pg/