The new PNG govt.

[admin]

Think Jonleba has it about right:
["Posted MSN Phillipine News: Betha Somare just released a press release on behalf of her father. " PM Michael Somare will immediately form a new cabinet. The restored cabinet will not consist of ministers that have defected and they will be decommissioned. Goodbye Duma. For us investors morally O' Neill was the best. But Somare can move approvals and push bureaucrats better and faster. The majors understand political upheaval and revolutions, SD will not be affected at all, most majors bidding have already done business with Somare, they know what his rules are. Phil is probable having breakfast with Michael right now."]
http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_I/threadview?m=te&bn=26290&tid=312135&mid=312135&tof=7&frt=2#312135

Having said that, I'm a bit wary about Arthur Somare, I vaguely remember him being in the Exxon/OilSearch camp, but perhaps with that now well under way, this might no longer be problematic.

[Palm]

Arthur was very much in Exxon/OSH camp and probably still is. He was one that led move against the IOC/Chinese HOA back in spring of 2009. He and others felt that it was giving away the store and also said they could only deal with one project approval at a time and Exxon had to be first. In the end they were approved within days of each other, but Arthur pushed XOM. Was also rumored to have a bit of XOM and OSH stock. Arthur recently has postured to align with his father, but that probably was as much to try and get himself a cabinet post and/or get to the PM chair until elections. We will now see if Sir Michael is "able".

[admin]

I don't really see any immediate benefits for Exxon/OilSearch of frustrating InterOil anymore, especially if they're going the Flex/EWC route (which seems very likely), they can easily co-exist if InterOil's project doesn't make strong demands on limited resources (like skilled labor) and infrastructure, so I have a feeling this bad blood is largely behind us, unless ego's get in the way.

Companies should just be able to work with the powers that be (unless that gets really uncomfortable). Unless any SC decision descends PNG in chaos, I didn't really see much to really worry about.

So far, the markets have taken it in stride. No notable effect whatsoever.

[Palm]

Agree stp; XOM has its hands full in PNG getting its project done. They need more gas and may come calling at some point. In the 2012 budget narrative it actually mentions how the XOM project will provide synergy for others once their infrastructure is in such as the pipeline, etc.

Somare (assuming he survives any appeals, health issues) will move swiftly; we must see who comes into the position of Duma. Will he survive?

A real friend in this that we have is Sir Rabbie; he will give any necessary guidance to IOC on proper moves.

[Bincbanker]

I should disagree , just to make things lively , but I can't

I see Duma and O'Neill on the same page , Duma whipped the Gulf play to take it away from the somare clan , this so that the care taker Gov't could claim it as their success.

[Tree]

Jonleba has good PNG political grasp.
The matter of amending the 2009 agreement to reflect Somare's blessings to accelerate revenues by allowing IOC to start up in the Gulf is the next order of business. Surely any PNG PM will require a plant in napanapa eventually too as the development, taxes and commerce from a plant near the capitol will not be forfeited. Gulf gets a big project, Port Moresby area gets a another in addition to PNG LNG.

[admin]

Tree, interesting point. However this would involve considerable duplication of infrastructure and I'm not so sure about that. If the modular works as expected, it's MUCH cheaper to add modules versus going for a big plant. On the other hand, if that is the wish of the PNG govt. and/or a new partner..

I'm also not aware of any additional tax benefits of a big LNG plant, but that doesn't mean there aren't any (needless to say). The construction itself would be an impuls to the economy

If they discover so much additional gas in the unexplored prospects, a big plant might become necessary, however.

[Tree]

Original 2009 project agreement allowed for up to 10.6 mmtpa LNG production in napanapa, 2016/17 timeline if I remember correctly. Jan. 2010 article when we first had verification of a project addition of Gulf LNG with FLNGs as as Phil said, I paraphrase, 'we have enough gas for 2 projects in parallel...and we want to keep the project agreement flexible'. Gulf LNG was about early production and cash flow as enhancement to napanapa, not as a a replacement for it. I can't see any pols in PM to allow the $7 billion project and associated jobs and services and infrastructure improvements to be moved to the Gulf for good just because it was better for IOC shareholders. My hunch is Liquid Niugini still owes PNG a LNG project in napanapa. Likely the SD major partner will run that project and feed it from 236 or from the Gulf if 236 proves to be under performing. Perhaps the whole flap about IOC not honoring the agreement by moving to the Gulf is to get assurances PNG gets a napanapa pant still before the legislation to allow Gulf LNG is passed.

[admin]

You could very well have a point. My problem could simply be that I think too much like an economist. If the present project has advantages over a big plant at Napa Napa, those advantages become more, not less pronounced once the infrastructure to the Gulf is in place (these become 'sunk cost,' quite literally).

Another advantage of modular was that it is easily scalable, and most of the construction is off site.

But then again, I'm quite aware politicians have a habit of ignoring basic economics..