'TxPm' pid='10937' datel Wrote:Palm, do you think that if PNG negotiates a higher % they pay whatever the SM pays per mcf?
Tx,
Here is the language from the O&G Act pertaining to State Equity Entitlements and Project Benefits. Basically for IOC the "petroleum project" language applies. The Orogen Option referes to a company formed by the PNG gov (I beleive) and it was later acquired/merged with OSH. This states that PNG can acquire "an interest not exceeding 22.5%", but that once acquired it can do with it as it wants. There have been suggestions that it may want to sell some or all of this off to raise cash.:
"PART IV.—STATE EQUITY ENTITLEMENT AND PROJECT BENEFITS.
164. No effect on compensation entitlement.
Nothing contained in this Part affects the entitlement of a person to be compensated pursuant to Section 118.
165. State equity entitlement.
(1) The State has the right (but not the obligation) to acquire, directly or through a nominee, all or any part of a participating interest not exceeding 22.5% in each petroleum project.
(2) Subject to Section 179, the right referred to in Subsection (1) may be exercised by the State—
(a) in the case of a petroleum project which is an Orogen option project—
(i) at the time of the grant of the licence or licences pursuant to which the petroleum project is conducted; or
(ii) if the Company has exercised its option under the option agreement in respect of that Orogen option project, at any time prior to the date upon which MRDC is required under the terms of the option agreement to complete the transfer to the Company of a participating interest in the Orogen option project; and
(b) in the case of any other petroleum project, at the time of the grant of the licence or licences pursuant to which the petroleum project is conducted.
(3) Subject to Subsection (4), the consideration payable by the State for an acquisition under Subsection (1) shall be a percentage of the unrecouped sunk costs of the vendor attributable to the vendor's interest in the petroleum project, equal to the percentage participating interest in the petroleum project being acquired by the State.
(4) Any interest acquired under Subsection (1) shall be acquired on and any consideration payable under Subsection (3) shall be calculated in accordance with specific terms and conditions contained in an agreement entered into in accordance with Section 182 or 183.
(5) The State shall exercise its right under Subsection (1) in respect of a petroleum project—
(a) if the Company has an option under the option agreement in respect of that petroleum project and has exercised that option, to the extent necessary to ensure that MRDC can complete the transfer of a participating interest in the petroleum project to the Company under the option agreement; and
(b) to the extent necessary to ensure that any equity benefit required to be granted under Section 167 can be granted in accordance with that section.
(6) Subject to—
(a) Section 167; and
(b) the terms of the option agreement; and
© the terms of any written agreement between the State and the vendor of the participating interest in a petroleum project acquired by the State pursuant to the State equity entitlement,
the State or the nominee of the State which acquires a participating interest in a petroleum project in accordance with this section shall be free to deal with that participating interest as it sees fit.
166. Acquisition of participating interest by the Company.
(1) Notwithstanding any other provision of this Act or the terms of any agreement made by the State, subject to Section 179—
(a) the Company shall have the right to acquire, and the State or MRDC, as the case may be, shall have the right to transfer to the Company, out of the State equity entitlement, a participating interest in an Orogen option project in accordance with the option agreement; and
(b) without limitation—
(i) any petroleum prospecting licence or petroleum retention licence; and
(ii) the terms of any agreement made by the State in relation to a petroleum prospecting licence or petroleum retention licence; and
(iii) any petroleum development licence or pipeline licence or petroleum processing facility licence granted in relation to an Orogen option project or any part thereof,
granted or made after the coming into operation of Parts II and III of the
Mineral Resources Development Company Pty Limited (Privatisation) Act 1996 shall be subject to the exercise of those rights.
(2) Subject to Subsection (1), the State shall, subject to and in accordance with the option agreement, nominate MRDC or the Company to acquire a participating interest referred to in Subsection (1).
167. Equity benefit.
(1) Out of the State equity entitlement referred to in Section 165, there is reserved an equity benefit to be dealt with in accordance with this section.
(2) The cost of—
(a) acquiring the participating interest in the petroleum project for the purposes of the equity benefit; and
(b) development attributable to that participating interest up until the commencement of commercial production of petroleum from that petroleum project,
shall be borne by the State.
(3) Subject to this section and Section 169, the State grants to the project area landowners and the affected Local-level Governments of a petroleum project, if any, an equity benefit in that petroleum project.
(4) The equity benefit granted under this section shall be shared between the project area landowners and affected Local-level Governments of the project in proportions agreed by them in a development agreement, but in default of such agreement in the proportions determined by the Minister, by instrument.
(5) The equity benefit granted under this section shall be held on trust for the grantees in accordance with Section 176.
(6) The participating interest in a petroleum project which comprises the equity benefit granted under this section shall be subject to the obligations applying thereto by law or by agreements to which the licensee is party, save that the State and not the grantee of the benefit shall be responsible for liabilities attributable to that participating interest until the commencement of commercial production of petroleum from that petroleum project.
(7) If in respect of a petroleum project there are no project area landowners or affected Local-level Governments, the State shall not be required to exercise its State equity entitlement to provide an equity benefit, but if it does so it shall be at liberty to grant that equity benefit to such organisations for such public purposes as it sees fit.
(8) This section shall only apply in respect of petroleum projects which commence development subsequent to the commencement date, and shall not affect arrangements in existence on the commencement date in relation to petroleum projects which on the commencement date are in production or have commenced development. "