Petromin slams InterOil but PM slams back

Curious stuff, some comments from us..

Here is the article from The National

Petromin slams InterOil’s over shift in gas devt plan
The National, Wednesday 30th November 2011

PETROMIN Holdings Ltd yesterday revealed that it has invested almost K40 million (US$16 million) in the upstream exploration programme for the Elk/Antelope gas fields in anticipation of a large scale single LNG development plant. In a statement yesterday, it expressed disappointment that developer InterOil Corp of Canada has deviated from the original 2009 project agreement without consulting the company.

However, it said it was prepared for a review of the agreement.  “The board of Petromin Holdings Ltd is disappointed that InterOil has again not involved Petromin as the state nominee in its recent off-take agreement with Gunvor in respect of the Elk/Antelope gas fields,” board chairman Brown Bai said.

Bai said in anticipation of the project specified in the project agreement which was a single, 7.6 million metric tonnes per annum to 10.6mpta capacity plant, Petromin invested US16 million in the upstream exploration programme and had an equitable interest in petroleum retention licence 15 (Elk Antelope).

“Petromin has therefore not been consulted on how Petromin’s share of the gas at Elk/Antelope is being committed,” Bai said. “InterOil has not informed or consulted Petromin on the commercial terms of the MoAs that is has executed to date, including the off-take arrangement recently signed with Gunvor.”

He said his board believed that it was critical for the success of the project that a world-class operator “with proven track records of LNG development is again engaged in delivering the second LNG project for the country.” “In light of recent developments, Petromin as state nominee in the Elk/Antelope LNG project looks forward to being involved with the state in any review of the project agreement,” Bai said.

———–[End of article]————-

This is extremely curious, not to say bizarre.

  • The Agreement with the PNG Government was signed on December 10, 2009.
  • The first HoA with EWC was on September 27, 2010 (which effectively changed the plan from a big LNG plant at Napa Napa to a smaller modular plant in the Gulf, much closer to the Elk/Antelope field)
  • That’s more than a year ago, and one can be sure that negotiations had started long before that date.
  • It is simply impossible that Petromin wasn’t aware of the change of plans at the latest on September 27, 2010, but most likely, way before that.
  • Only now, do they complain that they have made some investments and they weren’t consulted

And basically, what’s the problem? As long as the gas gets monetized. In fact, the new plan can be executed much quicker and cheaper. Luckily they seem to be open to renegotiating the existing agreement. On the positive side, there’s also some reassurances (once again) from PM O’Neill:

O’Neill vows stable industry climate
The National, Wednesday 30th November 2011

PRIME Minister Peter O’Neill told investors yesterday his government did not believe in use of confrontational and obstructive attitudes “to have our way” when dealing with foreign investors in the natural resources sector. “We are committed to providing a stable and conducive environment for all stakeholders in the industry,” O’Neil said in a speech at a mining and petroleum seminar at the Gateway Hotel in Port Moresby yesterday.
“This includes provision of legislative predictability and stability of fiscal regimes.

“There is no immediate desire on the part of government to review existing mining and petroleum legislative and fiscal frameworks. O’Neill said his government expected new investors and returning investors to respect companies that had taken the risk to invest and remain in Papua New Guinea for the long haul. “Our government will not tolerate situations that will create Papua New Guinea as an undesirable and politically risky foreign investment destination. “We invite everyone to come through the front door.

“We can all share fairly and equitably in the profits and benefits derived from development of mining, oil and gas projects. O’Neill said enabling laws in both the mining and petroleum sector had already allowed for the State to acquire equity positions in all mining and petroleum projects. “As a nation we have exercised these obligations in the past, at present and we will do so in all future projects,” he said.

“In an environment where there is demand for more shareholding by various stakeholders, the government is committed to accommodating the demands within existing legislative provisions. “No one should ever have the illusion and expectation to come here, take what they want and leave without giving back fair value to Papua New Guinea.

O’Neill had reassured investors that his government was committed to fast-tracking and facilitating processes that would enable start-up of new ventures awaiting regulatory clearance and licence approvals. “I note that most of our existing mines continue to fare well on the back of stable commodity prices.

I also note that the multi-billion dollar LNG projects are moving along according to development plans by the respective companies leading their development. “These are very strong positive development signals and our government is fully supportive of these projects.
“Our government is here to help

O’Neill told investors: “We are your partners and we want to deliver our commitments and our obligations as is expected of a partner. “We want to cut down on time loss, cost, wastage and government red-tape to ensure everyone is moving in a commonly desired direction to achieve our mutual interests,” he said.

“Although our government has been in office for less than four months and five months to go to the national election, we are focused on ensuring that our people and our country’s interest will be continued to be enhanced and protected. “PNG has many challenges but there are many opportunities as well. “For the first time in many years we are heading in the right direction. “Please join us,” he said.

——–[End of article]———

O’Neill: Mining, oil drive economy
The National, Wednesday 30th November 2011

PRIME Minister Peter O’Neill yesterday acknowledged that PNG’s mining and petroleum sector has been the most “aggressive driver of our nation’s good economic fortunes for almost a decade”.
Speaking at the opening of the four-day mining and petroleum conference in Port Moresby’s Gateway Hotel yesterday, he said his government took note of the sector’s contribution to “stabilising and growing our economy since the economic melt-down of the 1990s.
“Indeed the mining and petroleum sector continues to enjoy exciting new discoveries and developments. We support and share in the excitement.
“Our government expects that the strong performance in the sector will prevail over the next decade and beyond,” he said.
O’Neill said his government would not take a confrontational approach to have its way against resource developers and make specific mention of his support for all the LNG projects being developed including the US$15 billion PNG LNG project.
Horizon Papua will soon start construction work on its gas stripping project in the Stanley gas fields near Ok Tedi mine.
Talisman Energy and its partners, including Kina Petroleum, were also on the verge going into production at the Ketu and Elevala gas fields.
InterOil Corp was making steady progress in the Elk/Antelope gas fields with O’Neill’s support despite reservations from Minister William Duma and his departmental head Rendle Rimua and the state-owned Petromin Holdings Ltd.
At a press conference, O’Neill gave his undivided support for the InterOil Gulf LNG project even in its fragmented form of gas stripping that involved an LNG plant and a floating LNG, instead of a single large scale project as previously determined under an agreement signed between the State and InterOil in December 2009.
He indicated that the government would rescind previous NEC decisions and allow InterOil to proceed with its re-scoped and phased project.
O’Neill said the Gulf province was one of the least developed and neglected provinces in the country for a long time.
The province had produced some well-educated manpower for the country and it was only fair that the province should host the US$6 billion project with the support of Gulf Gover­nor Havila Kavo, he said.

One thought on “Petromin slams InterOil but PM slams back”

  1. Once again the National spins it “slams Interoil” I would hardly call being “Disappointed ” and being “prepared to review the agreement” a slam.

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