05-16-2014, 11:35 AM
PM O'Neill gave the official word to let the LNG flow into the first tanker and Botten is interviewed.
"PNG PM starts the loading of first cargo from ExxonMobil's LNG project
Updated 15 May 2014, 9:28 AEST
The long-awaited loading of first cargo from the ExxonMobil liquid natural gas project in Papua New Guinea has begun.
PNG PM starts the loading of first cargo from ExxonMobil's LNG project (Credit: ABC)
At a ceremony at the PNG LNG plant yesterday, Prime Minister Peter O'Neill gave the formal order for the gas to flow into the hold of the tanker 'Spirit of Hela' which is named after the province in the PNG highlands which is home to most the gas.
Mr O'Neill thanked the thousands of landowners and government and company executives who have worked for the last 6 years to get the project to this point.
One of PNG's oldest companies, Oil Search, is the junior partner in the project.
Oil Search Managing Director Peter Botton says this next phase of the PNG LNG project will be transformational for his company.
Presenter: Jemima Garrett
Speaker: Peter Botton, Managing Director, Oil Search Ltd
BOTTON: I think it was a feeling of euphoria. It has been a long road for Papua New guinea> It has been a long road for a number of the participants and it was a real benchmark for both the project developers and the country. It certainly represents, I think a significant vote of confidence by the developers in the country and the financiers of the project: a complex, difficult project like this delivered slightly ahead of time and below a revised budget is, I think, a massive achievement for the country and says business can be done in Papua New Guinea.
GARRETT: You, yourself, have spent more than 2 decades trying to get gas exports from Papua New Guinea off the ground. Before the ExxonMobil project you were part of one that planned to pipe gas to Australia. What does this first cargo mean to you personally?
BOTTON: look, it is certainly a pleasing moment here for us all at Oil Search. A number of us have been around and have been working towards the development of a project that we believe will more than double the GDP of the country and significantly change our own corporate fortunes in underpinning our resource and revenue base for the next 20 or so years. Obviously, being involved in such a big project, a complicated project, it is a satisfying thing to see it come to fruition but it is not just about the building. It is about the basis apon which the building was done; the commercial agreements, the various agreements with landowners, the various agreements with government all of which came before the financing. And the financing of this project was done at the depths of the financial crisis in 2009 yet we managed to borrow very substantial funds to underwrite our greenfields LNG project in a developing country. All of that gives some satisfaction but in reality we all move on to the next one so we are very much focussed on LNG expansion and further growing our business here and with the track record of PNG LNG we hope that will be an easier process.
GARRETT: Oil Search has been a great performer on the stock exchange. Last year your share price went up 15 per cent and in ten years it has gone up an amazing 640 per cent. With that sort of success and the transformation you are seeing ahead you have become a bit of a takeover target. In fact, Woodside is sniffing around. Will you and Oil Search survive to enjoy the rewards of the PNG LNG project?
BOTTON: Look I am a believer in saying that if shareholders want to sell their shares at the right price and the time they chose to, they have a right to do so. And our focus in the company is to continue to deliver the value of our assets and deliver them in a responsible way. So if we can do that and continue to grow our business, and we think we can, then obviously that gives our shareholders options to continue to hold our shares and hopefully deliver superior returns but if they don't, and they sell out, well, so be it. That is their choice. They own the company. Our focus if really to further build the business and frankly the platform we have right now is better than any platform we have had in the past. We see potentially at least two more trains (gas processing trains) out of PNG over the next five to seven years and again we therefore believe we have the capacity to more than double our production again over that period of time so, hopefully the value accredtion will continue and that is our best defence against a takeover but shareholders have that choice.
GARRETT: Oil Search has been in PNG since 1929 and it has a lot of local knowledge. What would a takeover mean for Papua New Guinea?
BOTTON: There is no doubt our business has a great understanding of how business is done here, how the interface between the private sector and government can be worked effectively, and I think most importantly right now, we are facing some of the biggest challenges of maintaining a stable operating environment that we have ever faced. We have enormous revenue streams and benefits that are coming into the country with the advent of PNG LNG and it is realy essential that the private sector play a role in helping government deliver services through various public-private partnerships to the communities that have reasonable, but large, expectations about service delivery. Now, helping government in their ability to do that, and deliver services through those partnerships, I think is important to maintain a stable operating environment here, and do our part as a PNG company to deliver some wealth creation to the stakeholders in this country. And we have that responsibility and that challenge has never been greater with the advent of production from PNG LNG.
GARRETT: The governor of the Central Bank in Papua New Guinea has warned people not to get too excited about the scale of the revenue from the PNG LNG project. What is your perspective on that?
BOTTON: look, there are material benefits that will flow and will flow reasonably quickly. Clearly people are, if you live in a village near Hides, are undoubtedly looking for basic services such as power water, a decent school to go to and a decent operating hospital. I have recently returned from Tari with our Board, to look at what our health foundation might be able to do to work with the Hela provincial government and the national department of health to help reconstruct and manage the Tari hospital. And clearly, they are the sorts of things I think all developers should work with government to try and deliver on the expectations of the local people. It is a challenge and people will need to be patient. As these things happen, the services don't get delivered overnight but the expectations are high and if they are not addressed the certainly there could be problems down the track."
