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Kumul Consolidated Holdings (KCH), the trustee shareholder of the country’s state-owned enterprises (SOE), and PNGX Group Limited (PNGX Group), the holding company of PNGX Markets Limited, operator of Papua New Guinea’s national stock exchange, have signed a memorandum of understanding (MOU) aimed at improving SOE governance and unlocking new investment potential. The MOU outlines a strategic collaboration between the two institutions to apply the PNGX Corporate Governance Code as a benchmark for SOE governance practices. The objective is to enhance governance, increase transparency, attract private sector investment, and support the long-term sustainability of both Papua New Guinea’s SOEs and its capital markets. To achieve these goals, PNGX Group and KCH will work together to promote understanding of the PNGX Corporate Governance Code, support the development of a tailored governance code for SOEs, and raise awareness of the PNGX Listing Rules and the responsibilities of listed companies. The partnership will also explore pathways for listing eligible SOEs on the exchange and seek to expand investment opportunities in SOEs for both domestic and international investors. The initiative aligns with Prime Minister James Marape’s renewed commitment on 10 February 2025 to reform SOEs to operate more efficiently and contribute to economic growth and improved service delivery. “Corporate governance is the foundation of public confidence in SOEs. Working with PNGX will help develop governance standards and disclosures that build that confidence,” said Prof. David Kavanamur, managing director of KCH. For his part, PNGX Group chairman David Lawrence said that the bourse’s strategic partnership with KCH reflects a shared vision of building robust, transparent and inclusive capital markets in Papua New Guinea. “PNGX Group welcomes the opportunity to work with KCH on this important issue. Twenty-six years ago, PNGX was established with the vision of listing SOEs. This work brings that vision closer to reality and opens up potential new investment opportunities for Papua New Guineans,” Lawrence said.

The Papua New Guinea Chamber of Resources & Energy (PNG CORE) is calling on community leaders, landowners and small-scale miners to unite in tackling the escalating issue of unregulated alluvial mining across the country. Unregulated alluvial mining poses a serious threat to the mining industry, local communities and legitimate small-scale miners. Recent reports have highlighted a surge in illegal mining practices, gold smuggling and a decline in lawful alluvial gold production, raising alarm across the sector. In response to these developments, the Mineral Resources Authority (MRA) has issued a public stop-work notice targeting unauthorised alluvial mining operations involving heavy machinery. This enforcement followed confirmed reports of individuals and companies conducting illegal mining activities in designated alluvial mining districts and other regions. The MRA emphasised that these operations violate the Mining Act 1992 and warned that further breaches would result in legal consequences. Echoing this regulatory stance, Mining Minister Rainbo Paita issued a strong warning to all operators, stressing that all mining activities must comply with the terms of their permits and licences. “Operate within your permits or leave,” Minister Paita said, as he reaffirmed the government’s zero-tolerance approach to illegal mining, Paita said, emphasising that failure to do so undermines the integrity of the sector and will not be tolerated. As the peak body representing the minerals sector, PNG CORE is deeply concerned about the environmental damage, social disruption and economic harm caused by these unregulated activities. Such operations not only endanger surrounding communities but also erode sustainable development opportunities and fair competition for compliant miners. PNG CORE urges community leaders and landowners to take proactive steps to protect their land and people’s future. This includes refusing access to illegal miners, reporting suspicious activities to the authorities and verifying all mining engagements with the MRA before proceeding. Small-scale miners are also strongly encouraged to pursue legal operations by securing the necessary licences and permits for machinery use. Legal compliance ensures safer, environmentally responsible mining practices and contributes meaningfully to both community welfare and national development. Addressing illegal and unregulated alluvial mining requires a coordinated multi-stakeholder approach focused on formalisation, environmental stewardship, community health and strengthened governance. PNG CORE Vice President Mr Assik Tommy Tomscoll reaffirmed the Chamber’s commitment to responsible and sustainable development across the resources and energy sector, saying “PNG CORE unequivocally condemns unregulated alluvial mining.” “These activities are not only environmentally destructive and socially harmful but also represent unfair competition that undermines legitimate regulated alluvial miners and the broader resource sector committed to operating sustainably, safely and in partnership with landowners and communities. PNG CORE fully supports the national mining laws and the essential regulatory role of the Mineral Resources Authority,” Tomscoll said. PNG CORE remains steadfast in its mission to promote responsible resource development that delivers genuine sustainable benefits for all Papua New Guineans, he added.

ExxonMobil recently appointed Dinesh Sivasamboo as its new Chairman and Managing Director of ExxonMobil PNG Limited. This appointment will be Sivasamboo’s second leadership position with ExxonMobil PNG Limited, having previously served in PNG from 2016 to 2019 as its Vice President for Production. Sivasamboo has held numerous, global senior leadership positions over the course of his 30-year career at ExxonMobil. Most recently, he held the position of Chairman and President of ExxonMobil Exploration and Production Malaysia Inc. Prior to that role, he was the President and Managing Director of ExxonMobil Kazakhstan Inc., and held positions in Qatar and the United States. “I am honored to be returning to PNG as Chairman and Managing Director of ExxonMobil PNG Limited. The PNG LNG Project has – through the strength of its partnerships – achieved so much during its first decade,” said Sivasamboo. “I look forward to both leading it into its second decade, as well as building upon its success to help deliver the next phase of LNG projects for this country.” Sivasamboo becomes the company’s fifth Chairman and Managing Director, joining an esteemed list that includes his immediate predecessor, Tera Shandro, as well as Peter Larden, Andrew Barry and Peter Graham.

Prime Minister Hon. James Marape has announced a key Cabinet reshuffle, following the swearing-in of Hon. Peter Isoaimo, Member for Kairuku, as the new Minister for Energy. Minister Isoaimo replaces Kerema MP Hon. Thomas Opa, who has been appointed as Minister for Finance, while outgoing Finance Minister Hon. Miki Kaeok retains his Transport portfolio. Prime Minister Marape thanked Minister Kaeok for his tenure at Finance Speaking after the swearing-in ceremony at Government House, Prime Minister Marape praised Mr Isoaimo as a seasoned leader and dedicated member of the government coalition, noting his long political service since entering the National Parliament in the 9th Parliament through a by-election and his earlier years in the Central Provincial Assembly. “Minister Isoaimo has been a loyal and humble servant of this government,” Prime Minister Marape said. “He brings with him a wealth of experience, having previously served as Vice Minister for Works and Highways, and has consistently demonstrated patience, loyalty, and sincerity—qualities we value as we build the next generation of Papua New Guinean leadership.” Mr Isoaimo’s appointment also restores Cabinet representation for Central Province following the departure of Hon. Walter Schnaubelt, National Alliance Party leader, who moved to serve as Governor of New Ireland Province. PM Marape acknowledged the continued partnership with the National Alliance Party, a coalition partner of Pangu Pati since 2019. “We are keeping faith with the coalition arrangement. This was not just about politics—it was the right choice based on experience, region, and merit,” said PM Marape. The Prime Minister emphasised the growing importance of Central Province in the national energy and development agenda, pointing to strategic projects including Papua LNG, the Wildebeest gas fields, and the reopening of Tolukuma Gold Mine. He highlighted the underutilised agricultural land across Central and Gulf provinces as a major frontier for national development. “Minister Isoaimo’s Kairuku electorate lies between Port Moresby and Gulf, at the heart of emerging LNG, mining, and agricultural corridors. He is well placed to drive the energy portfolio in this critical time,” the Prime Minister added. On the reshuffle, PM Marape explained that the changes were part of a broader performance review aimed at enhancing service delivery ahead of the 2025 Budget and beyond. “All departments and ministers are under review,” PM Marape said. “This is about ensuring the right people are in the right portfolios as we head into our 50th anniversary and beyond. We’re doing this for the country—not for our districts or friends.” Incoming Finance Minister Hon. Thomas Opa was praised for his integrity and capability. Mr Marape, himself a former Finance Minister, urged him to maintain strict financial discipline and ensure that public funds are managed transparently and effectively. In his first remarks as Energy Minister, Hon. Peter Isoaimo thanked the Prime Minister and the coalition for his elevation. “I did not see this coming,” Mr Isoaimo said. “But I am humbled by the trust placed in me. I thank the National Alliance Party and Governor Walter Schnaubelt for their confidence, and I pledge to serve the government and our people to the best of my ability.” Minister Isoaimo reiterated his commitment to the Marape-Rosso Government and the national development agenda, expressing readiness to support the country’s energy ambitions. “God bless Papua New Guinea,” he said. “This is a proud moment for me and the people of Kairuku.”

Prime Minister Hon. James Marape has hailed the inaugural air shipment of Morobe-grown coffee to Dubai as a “monumental breakthrough” for Papua New Guinea’s agricultural exports, marking a powerful step forward in unlocking the full economic potential of rural communities and affirming the Government’s commitment to commercialising agriculture. Speaking in Port Moresby on the occasion of the official export departure, Prime Minister Marape praised the milestone as a profound gift to the nation during its 50th year of independence. “Today, we are not just sending coffee to the world — we are sending a message: Papua New Guinea is ready to compete in global markets with the best of what our people grow,” Prime Minister Marape said. “This airfreight shipment of premium Morobe coffee to Dubai is not merely a trade transaction. It is a symbol of our farmers’ resilience, our land’s richness, and our government’s ambition to transform agriculture into a powerful engine of economic growth.” The shipment, spearheaded by local agribusiness AFIA PNG, included an initial 30 bags of specialty Morobe coffee, with a further 91 bags prepared for subsequent deliveries. The consignment was flown directly from Port Moresby to Dubai, showcasing PNG’s growing capacity to meet international demand through airfreight logistics. “This is history in motion,” the Prime Minister said. “We commend AFIA PNG and the Morobe Provincial Government for their visionary leadership. This is what it means to take back PNG — by empowering our people, our products, and our provinces.” Prime Minister Marape said the Government’s focus under the National Agriculture Sector Plan (NASP 2024–2033) is to support exactly such models of innovation and export-led growth. He reaffirmed his government’s intent to replicate the AFIA approach across all agricultural regions. “Let me be clear — what AFIA PNG has achieved must not remain an isolated success,” Prime Minister Marape stressed. “My government will work to expand this model to other provinces. We want to see vanilla in East Sepik, cocoa in East New Britain, oil palm in Oro, rice in Central, and fisheries in Manus and Milne Bay reach global markets with the same success.” He said that PNG’s growing agricultural exports are being supported by major infrastructure investments across the country, including new and upgraded roads, bridges, ports and airports. “For instance, this coffee is utilising a brand-new airport facility,” the Prime Minister explained. “We are restoring our Air Niugini fleet, and by September this year, we should have new aircraft that will not only serve domestic destinations, but also connect Papua New Guinea to international markets.” “Our investments in infrastructure — roads, ports, bridges, airports — must be complemented by our people producing goods for markets both near and far,” he said. “Our chocolate, our cocoa, continues to maintain markets in Europe, and our oil palm is sustaining its place in international trade. This export to Dubai is a strong signal that we are heading in the right direction.” Prime Minister Marape said the Government’s development priorities are interconnected, with parallel investments in electricity, ICT connectivity and logistics meant to spark productivity and support exports. “Exporting overseas will ensure remittances flow back into our country. We want to fix what I consider a weakness — exporters not bringing the remittance earnings back into Papua New Guinea. Kina must find its rightful place in the global market. Bringing export earnings in foreign currencies back into Kina will boost its value.” He said the Government is making a concerted effort to help people produce and sell to overseas markets, and to ensure that these transactions benefit the broader economy. “We are serious about creating wealth from our land and seas — and putting it directly into the hands of our people.” The Prime Minister said the shipment also sent a powerful signal to international buyers and investors about the quality, ethics, and distinctiveness of Papua New Guinea’s agricultural products. “In an era where the world demands traceability, ethical sourcing, and environmental responsibility, PNG stands out — not only for the uniqueness of our crops, but also the integrity of our communities,” he said. Prime Minister Marape concluded by declaring the Dubai shipment as one of the most meaningful developments of PNG’s Golden Jubilee. “As we celebrate 50 years of independence, this coffee export represents the new direction of our country. We are no longer just a resource economy — we are now a producer, exporter, and competitor in value-added agriculture,” he said. “To AFIA PNG and the people of Morobe: thank you for giving Papua New Guinea a gift of pride and purpose. The world now awaits our harvest.”

Kundu Finance, one of Papua New Guinea’s newest but fastest growing financial institutions, is setting a new standard in responsible lending, one that blends cultural identity, innovation, and a people-first approach. Recognizing the daily demands of the modern workforce, Kundu Finance offers online loan applications that allow clients to apply from anywhere even during working hours. This digital convenience removes the need to visit a branch, making the process faster and more efficient. It's especially helpful for employees and their Human Resource teams, as it reduces disruption to business operations and enables financial support without leaving the workplace. In a country crowded with financial institutions, Kundu Finance stands apart with a philosophy deeply rooted in PNG culture and community responsibility. What makes them unique? Their focus on responsible lending, a value that informs everything from client relationships to loan approvals. Kundu offers accessible and reliable financial services, even while you're at work. This saves time and the cost of travel to Port Moresby for those in other provinces. Kundu Finance aims to reach workforces in Mining, Petroleum, Agriculture, Education, Health, Business, and the Public Sector across PNG. In an exclusive interview with PNG Business News, CEO Benjamin Wong shared, “Our goal is simple: help people within their means. We are not here to burden them with large debts. We want them to grow with us.” The "Kundu" in Kundu Finance is more than just a name, it is a symbol of PNG’s identity and tradition. The kundu drum, an iconic instrument used in storytelling and cultural expression, lies at the heart of the company’s brand. “Our slogan is ‘Our Drumbeat, Our Stories, Our Future…’ It reflects the stories of our clients, our journey, and our future with Papua New Guinea. We are not just a financial institution, we are part of the community,” Mr Wong explained. “Our vision is to be an innovative financial service provider with a strong sense of community responsibility. Every decision, from how much to lend, to how we advise, is based on transparency and empathy.” Changing Lives, One Client at a Time Kundu Finance is not just processing loans, it is /transforming lives. Mr. Wong  shared stories that illustrate the company is unique, client-first approach: A truck driver, already in debt, applied for a second loan to build a home on customary land. Instead of approving the loan blindly, Kundu advised him to wait, recognizing that additional debt would strain his income. “We didn’t make money off him that day, but we gained a long-term client who trusts us.” A health worker from Western Province, stranded in Port Moresby due to medical reasons, approached Kundu for assistance to return home. “We saw the urgency and helped her. To this day, she visits our office just to say hello. That is a connection money cannot buy.” An education officer, misled by high-interest loans from other lenders, was guided by Kundu to repay faster and save on interest. “No one had ever explained it to him before. He walked away financially smarter—and loyal.” A public servant with a poor credit history and school fee obligations was coached to borrow a realistic amount. “Now he has repaid part of his loan and is proud of being a responsible borrower,” Mr Wong added, beaming. Rapid Growth and Technological Edge Though incorporated in 2018, Kundu Finance officially began operations in late 2024. In less than a year, it has amassed over 2,000 clients, an impressive feat for a new entrant. Its rapid growth reflects the power of word-of-mouth and client satisfaction. Kundu Finance is also the first in PNG to operate a cloud-based loan management system, hosted on Microsoft Azure. This ensures speed, security, and scalability. “We chose the cloud for its top-tier security and flexibility. Cyber threats in PNG are real, so protecting our clients' data is non-negotiable.” The cloud also enables efficient nationwide service delivery, positioning Kundu well for national expansion. Speed, Service & Security With a tiered client approach and a streamlined process, Kundu offers fast loan approvals. “We can’t always promise 24-hour turnaround, but for priority clients especially in government departments and corporate payroll systems, we strive for same-day disbursements,” Mr Wong confirmed. The company partners with employers to process salary-deducted loan repayments, simplifying access for employees. We encourage HR departments to work with us to make financing easier and more efficient for their staff. Financial Literacy at the Core Unlike many lenders, Kundu treats financial literacy as a core responsibility. “Why do we run financial literacy programs? Because financially literate clients are better clients. We teach them to plan, manage debt, and borrow responsibly. We want to create a financially strong PNG not just grow our loan book.” This educational approach will inform future products, such as savings accounts, asset financing, and housing loans. The Road Ahead Currently operating from Port Moresby, Kundu is preparing to open a back-office sales and finance center in Waigani and plans to open a branch in another province by early next year. Over the next three to five years, Kundu plans a gradual national rollout, prioritizing areas with the strongest demand. “Our biggest challenge is unrealistic borrowing expectations. Many want more than they can repay. Changing that mindset takes time and trust.” Still, the CEO’s proudest achievement is his team. “The proudest thing? Building a team that shows up every day with integrity and care. We call it the Kundu way.” Mr. Wong ended his interview saying, “I treat everyone with respect staff, clients, partners regardless of background or title. We are building something not just about money, but about people. Something that lasts.”   Kundu Finance is more than a lender. It is a movement with cultural roots, innovative technology, and a deep focus on client wellbeing. A new beat in PNG’s financial rhythm.

Barakau, a picturesque Motuan village just 25 minutes outside Port Moresby in Papua New Guinea, is making waves in environmental conservation through the Eda Davara Marine Sanctuary Project. Named after the phrase “Our Sea” in the local language, the initiative is driven by passionate youth advocating for traditional indigenous practices and sustainable marine conservation. Founded by Dikatauna Kwa and her university colleagues, Eda Davara began with mangrove research and restoration before expanding into broader ecological and community engagement efforts. With visits to Barakau Primary School, the village ward councilor and a strong network in several universities in Port Moresby, the sanctuary project grew from strength to strength throughout the years. Over the years, it has flourished into a multi-faceted program with six specialized teams: Administration, Marketing, Science, Policy and Governance, Tourism, and Community Projects. A key achievement of the initiative is the EcoScholars Internship Program, which currently involves 13 students from universities across PNG -- University of Papua New Guinea, Pacific Adventists University, and the Institute of Business Studies University. These young leaders bring expertise from fields such as economics, law, science, and tourism, ensuring a holistic approach to conservation. Beyond its local impact, the Eda Davara Marine Sanctuary Project has established international partnerships that enable Papua New Guinea to participate in global environmental dialogues. Its recent selection as a recipient of the Young Pacific Leaders (YPL) Small Grants highlights its growing influence in the region. Eco-tourism plays a crucial role in supporting the project and the local community. Monthly Kohua Beach Tours offer visitors guided hikes, mangrove cruises, and opportunities to engage with conservation activities. Locals serve as tour guides and vendors, selling arts, crafts, and food, making eco-tourism a sustainable source of income. To further its mission, the project organizes an annual Gala Night to raise funds for conservation efforts, including building a Research Wet Laboratory in Kohua. Last year’s event was a success, and organizers are looking forward to another impactful year. For those interested in supporting the Eda Davara Marine Sanctuary Project, contact them via email at edadavara@gmail.com or call 675 7835 4067. With a busy six months ahead, the team continues its dedication to marine conservation and community empowerment, solidifying Barakau as a beacon of sustainable development in Papua New Guinea.

 Michael McWalter picks up his prior discussions of petroleum sector reform (Issue No. 3 2024) and describes in more detail exactly what a Production Sharing Contract, or what a PSC, is all about. In my commentary of PNG Business News, Issue 2, 2023 entitled: Petroleum Sector Reform for Papua New Guinea, I wrote about the need to apply better governance to the sector to achieve optimal outcomes for the State. In particular, I spoke of the need for the petroleum revenues arising from petroleum resource development to be deployed wisely for the benefit of the people of PNG on capital formation activities like: education, health, social welfare, infrastructure, etc. – all of which should promote the National economy to grow, and thus improve livelihoods.  This translation of the value of resources with appropriate management into sustainable development is often called the value chain, and each aspect of the chain needs most serious and competent management.   There is little point in mobilising one’s natural resources to make an income for the State, if that money is not put to good purpose, but rather wasted one way or another by folly or malady.  Those resources may only be produced once, and not again; they are finite and have value now at such time as that kind of resource is sought after in global markets. We must remember that there may come a day when oil and gas are no longer consumed with such avid demand as today. This might eventuate as more investments are poured into the development of renewables sources of energy and advancements are made with cleaner nuclear fission and sustainable thermonuclear fusion. Oil and gas might become a quixotic, antiquated and outmoded source of energy, and thus attract considerably less value.  So, if a government is going to foster investment in petroleum exploration and development, it needs to embrace such grave and important responsibility to ensure that the Nation’s petroleum business is conducted most professionally and with total accountability. Government must ensure that the resultant revenues from subsequent production are appropriate, reasonable and respected as being derived from the overall patrimony of the people of the Nation.  This requires investment by the State in professional excellence to manage, moderate, administrate and regulate the sector and its operations firmly and fairly.  The oft cited National Petroleum Authority (NPA), which was first defined in the Government’s 1976 White Paper on Petroleum Policy and Legislation by two of our greatest leaders, Sir Michael Somare and Sir Julius Chan, has been repeatedly conceived, only to be still born. Into that vacuum, Kumul Petroleum Holdings Ltd, PNG’s de facto National Oil Company (NOC) has steadily and bravely taken the lead and embraced National development in the oil and gas sector, and all that it entails. Meantime, the Department of Petroleum and Energy has valiantly tried to keep up with ever increasing core and essential petroleum sector functions, like licensing, operational approvals, and data collection, whilst otherwise becoming absorbed, and perhaps overwhelmed, in the peripheral though, absolutely essential tasks of dealing with project area landowners, their benefit claims and their many other concerns and worries. Plans for a NPA have been formulated in great detail several times over in the last few decades, only to be forsaken, lost, sidestepped, and derailed time and time again. The whole notion of the NPA was to bring together a cadre of PNG excellence to lead the petroleum sector as the guardian of PNG’s petroleum resources. The members of that cadre were to have been well-paid for their experience and important responsibility, and as an Authority of the Government, the NPA might have been able to retain and attract some of PNG’s finest graduates in such exciting and challenging work.   I also discussed the vital need for the commerciality of petroleum developments without which investment by the industry in field development would be withheld.  I discussed how the 2020 amendments to the Oil and Gas Act imposed a test on a proposed petroleum development project that the applicant’s proposals should reflect a minimum expected return to the State over the life of any recovery of petroleum. However, that minimum expected return to the State is not specified in law and is only examined and determined by the Petroleum Advisory Board (PAB), and then considered by the Minister at the time of application for a development licence.  This leaves investors with great uncertainty and unnecessary risk throughout the period of exploration, appraisal, development planning and the application phase of petroleum resource development.  There is thus now no absolute certainty of development if a discovery of commercial extent is made. Either the PAB or the Minister may set a threshold minimum expected return to the State during the consideration of an application for development. This is at a very late stage in the cycle of petroleum resource development investment and comes just before the investing companies have to elect to develop their discovered petroleum accumulation, or not. If a field development is marginally economic, the setting of such a minimum expected return to the State might in some circumstances make corporate consideration of development uncommercial, and as a consequence the field might be left undeveloped. In any normal distribution of petroleum accumulations, there are a few large fields, a fair number of medium size fields and many smaller fields. It would not be wise to disadvantage the development of smaller and often smaller marginally economic fields, which tend to be developed after the larger fields have been found and produced, and which can readily sustain a domestic petroleum industry populated by smaller, and likely, local companies with smaller investments.  Oddly, as I said in 2023, the potential introduction of Production Sharing Contracts (PSCs) would obviate such a risky situation because the terms of development are normally locked into a PSC when originally negotiated and agreed between the State and the investing companies as contractors to the State at the outset. Being a contract, any capricious demand by the State for unexpected returns on petroleum development pursuant to a PSC would end up with the contract being the substance of legal proceedings.  I now want to pick up on my themes of a year ago and discuss optimal and necessary arrangements for petroleum development in the light of some creeping petroleum policy change in recent years, and a keen desire by the Government to change the PNG petroleum regime and to adopt the use of PSCs. I particularly wish to demystify PSCs. Figure 2: Much has been written on PSCs. Celebrated analyst, Daniel Johnston, is prominent with his simplified mapping of fiscal and commercial regimes. King & Spalding, an American multinational corporate law firm, has also written a most comprehensive book on the topic, ex libris McWalter.   WHAT ARE PRODUCTION SHARING CONTRACTS?   The notion of a Government sharing the production of oil and gas arising from the development of a successful petroleum exploration campaign by companies as part of a commercial venture was first developed and employed in Bolivia in the 1950s. A Production Sharing Contract (PSC) is an arrangement between a host Government and an international oil and gas company (IOC) for the division and allocation of the oil and gas produced between those two parties under a contract which provides for the exploration for and the development and production of petroleum resources. The allocation of a share of the production to the IOC serves to recompense the IOC for its investment and to provide a reasonable reward for its success. The Government, as owner of the resources, also provides a mechanism called a cost recovery allowance to the contractor for its work, but keeps the rest of the petroleum produced. The PSC was introduced in Indonesia in 1966, and PSCs of this kind or variants of the same are used extensively to agree the arrangements for oil and gas exploration, development, and production with oil and gas companies. PSCs of one kind or another are used in over 40 countries, throughout the world.   The PSC is not the only manner by which a government may grant oil and gas exploration, development and production rights to commercial investors and gain a share in the value of successful petroleum production.  Prior to the development of the PSC, exploration and production of oil and gas was typically governed by way of a licence or a concession agreement, and such regimes still remain in effect in many different places around the world. In many developing nations, the PSC is now the most common means by which a government allows corporate investment in the oil and gas industry. It provides a company or consortium of companies the right to explore and produce oil and gas.  In many jurisdictions, there are political or nationalistic reasons for the adoption of PSCs as they perceptibly provide the Government with greater and more direct control over its resources and the ability to exert National sovereignty over the industry more readily.   After gaining independence in 1945, Indonesian’s concessions regime came under attack by certain nationalist groups leading to the nationalisation of Royal Dutch Shell’s assets. Indonesian Law 44/60 abolished the old concessionary system and specified that: “Oil and gas mining shall only be carried out by the State and implemented by State enterprises,” and further that, “the Minister may appoint other parties as contractors of the State enterprises.” Alas, a decline in foreign investment in Indonesia’s oil and gas sector inevitably ensued. To mitigate this decline, the government eventually negotiated and agreed in 1962 with the Pan American Indonesia Oil Corporation, a subsidiary of Standard Oil of Indiana (later to become Amoco), a new contract based on legislation that was much more favourable to the Government.  The other large foreign petroleum investors, Caltex (a venture of Chevron and Texaco), Shell, and Stanvac (a venture of Socony [Standard Oil of New York] and Vacuum Oil and Standard Oil of New Jersey, later to become Exxon) followed by signing Contracts of Work in September 1963. These early PSCs were widely considered to be less controversial than the previous concessions system, as they enabled the government to maintain formal ownership of the resources until sold, while permitting the IOCs to exploit them for and on behalf of the Government. These contracts provided for the recovery of the costs of the contractor up to an agreed percentage of overall production plus an agreed, but often scaled, share of the produced oil and gas as a reward for its investment. Although often cited as the example of the use of PSCs, in 2017, in a somewhat odd twist, the Indonesian Government established a new form of PSC called the Gross Split PSC. This completely abolished cost recovery systems pioneered in the classic PSCs of the 1960s. Instead, this new arrangement simply relies on an agreed split of the actual production between the Government and the IOCs, typically 43% to the contractor for oil and 48% to the contractor for gas production, with the balance of production going to the Government. Due to a loss of faith in Pertamina (Indonesia’s national oil company) in the late 1990s (an audit had shown that Pertamina had allegedly lost about US$6.1 billion from inefficiency and corruption in 1997 and 1998) the Indonesian Government took steps to rein in control of the industry at the Ministry level, but they had no financial ability to manage the proceeds of the sale of oil and gas which were remitted to the revenue account of the National government.  Without any retained funds, this then entailed the Ministry having to seek parliamentary appropriations to pay the cost recovery allowances to the IOCs, but then the Indonesian Parliament questioned these payments. This brings home the need to think through the implications of changes in regime and the management of any given regime, especially if one is contemplating changing from a licence or concessionary regime to a contractor-based one. What is a PSC? In a PSC, a government makes a contract with an IOC to provide the necessary and requisite financial, technical, management, environmental, social, planning and logistical skills in order to explore for, and hopefully, if successful in finding oil and gas accumulations, to produce the oil and gas. The host State (that throughout most of the world, normally owns the subterranean resources) will usually be represented by the Government or a Government Petroleum Ministry, Department, Authority or quite often some other type of agency of the State, such as its National Oil Company (NOC), which will take delivery of the State’s share of production and generally manage the commercial aspects of the PSC. The IOC is typically granted an exclusive time-limited right to explore for petroleum accumulations, appraise any discovery, plan and execute development and produce oil and gas within a defined area, generally known as the contract area. Under the PSC arrangement, the IOC bears the entire risk of the project, both technical and financial. If a commercial discovery is declared, the IOC becomes entitled to a portion of any subsequent petroleum produced as an effective payment for its efforts, in addition to recouping all its costs from the production. Conversely, if no discoveries are made, the IOC receives nothing. The Government retains ownership of all the oil and gas produced, save for what oil and gas is allocated to the IOC as cost recovery petroleum, or is the subject of sharing between the IOC and the NOC as profit petroleum. This causes the Government to be involved in selling its share of the produced oil and gas.  In some jurisdictions, the IOC is allowed to keep the physical oil for itself, and the IOC makes just cash payments only to the NOC, based on the sale of the NOC’s petroleum entitlements; in others, physical oil and gas allocations are used to reward the IOC. The extent to which the NOC is involved with the exploration, development and production process varies from country to country with some NOCs seeking to take a significant lead in the business other than a just managing the PSC, whilst other NOCs take only a small participating interest in the commercial venture, so as to be within the operating consortium and to learn from it. There are commonly four key financial aspects to a PSC: royalty, cost recovery petroleum, and profit petroleum, though many other relevant matters are agreed in the PSC. Figure 3: Contents of a PSC: A sample from Equatorial Guinea, after the Republic of Equatorial Guinea, 2006    Royalty Most often and foremost, the IOC is typically expected to pay a prescribed or agreed royalty as a percentage of the gross value of oil and gas production to the State as valued at the point of export from the contract area. The royalty is often, at the State’s option, taken as a physical share of production, or alternatively by way of a payment by the IOC equivalent to the sale price of the State’s royalty share of production. Sometimes, the percentage rate of royalty may be the subject of bids for a contract area by competing oil and gas companies when bidding for the same or similar areas.  Royalty is a payment made in kind or related to produced volumes and price without regard to the profitability of the business. Therefore, in times of low petroleum commodity prices it has the effect of digging deep into profitability.  However, for a host Government, royalty is an assured payment regardless of profitability, but proportionate to the value of the produced oil and gas. Cost Recovery Petroleum Following payment of any royalty, the IOC is normally entitled to a pre-determined maximum percentage of gross production from which it may recover all its genuine costs, with any costs not recovered being carried forward to the next accounting year. Such production is known as cost oil and cost gas, and again may be taken in cash or kind. Obviously, the IOC attempts to maximise cost recovery early in the cycle of production up to the agreed maximum percentage limit, so as to recoup its expenses soonest, and likewise the Government will scrutinise the costs submitted to it for recovery as to their genuine eligibility. That scrutiny involves approval of all procurements and sub-contracts of the IOC, and represents an enormous accounting burden for the Government.   Profit Oil The oil and gas remaining after the payment of royalty to the Government and the cost recovery allowance to the IOC by the host Government is known as profit oil and profit gas, and it is generally divided between the IOC and the Government in accordance with the production sharing provisions agreed and defined in the PSC. Quite often the Government’s share of profit oil and profit gas increases as the production rates increase. Income tax Finally, the IOC is quite often required to pay income tax on its share of net benefits which should strictly amount only to profit oil, as cost oil and cost gas represent only a recoupment and recovery of costs. However, the application of income tax varies from jurisdiction to jurisdiction and in some cases the IOC’s notional income tax due is often paid by the NOC, or the State on behalf of the IOC, such that there is no financial impact on the IOC, there being just a journal entry between different parts of the Government. An income tax superposed on the PSC regime without appropriate tax deductions can rapidly make a fair PSC regime become a very hostile one.  In the calculation of the net take to the State under a PSC, one has to include the results of any Corporate Income Tax and all and any other taxes, levies or imposts that affect the outcome of the overall PSC.  In some PSCs, there is simply no tax, and the royalty, cost oil and gas, and production share are deemed to be final fiscal devices. Figure 4: It must be noted that the production or profit oil split is not the same as the overall net take to each party, after Daniel Johnston in International Petroleum Fiscal Regimes and Production Sharing Contracts      Government Involvement The objectives of the parties when negotiating a PSC and its terms will generally be diametrically opposed.  An IOC will strive to negotiate for itself as much independence and control as possible over operations, and it will want any State intervention in the running of the project to be kept to a minimum. Naturally, it will be keen to keep its costs low, by negotiating the highest cost recovery allowance and the largest production share it can, and it will seek the full recovery of all its costs. The Government will wish to have an overall say in the development of its resources in an orderly and systematic manner that creates synergies for future development. The Government will also wish to make as much money as possible, reduce cost recovery allowances, and have access to an IOC’s resources and relevant expertise, without spending much time and money. The Government may also have economic priorities for domestic petroleum supply to its economy to mitigate energy import requirements and obviate foreign exchange requirements. Throughout the contract from exploration to development to production, the Government will want to ensure that the IOC is undertaking a technically appropriate exploration work programme with appropriate levels of investment and that the exclusive right to access land or the offshore area is being used efficiently. In addition, the Government will typically be concerned to secure as many rights and benefits for the people and local businesses, including affected local communities, as possible.  This is generally accomplished by the optimisation of jobs and training for local workers through requirements to use local goods, services and contractor and subcontractor services as far is feasible and practical – this is what is typically called local content. Figure 5: The main elements of a PSC, after Hassan Harraz, Tanta University, Egypt, 20106   Why the PSC Model? The obvious advantage of the PSC model for a government is the minimal risk on its part throughout the value chain of the enterprise. It is thus able to reap the benefits of its natural resources without having to spend its own time and money even for development. This is not to say that the State does not pay. It inevitably pays for its share of all and any costs of exploration, development and production through the cost recovery process payable to the Contractor. In most cases, the Government will not have the technology needed to explore for and produce oil and gas, and so contracting the help of an IOC that has the appropriate skills, capacities and technology is usually necessary in order for the Government to exploit its natural resources optimally, especially in the offshore areas. The same is, however, also true for licence and concessionary arrangements where even if the host Government has an equity option to take up a participating interest in a petroleum development project it will still pay for at least its pro rata percentage share of sunk and past exploration, appraisal and development planning costs up to the point of the establishment of facilities for development and the commencement of the recovery of the petroleum. As and when exploration proves to be successful, the Government can secure long-term supplies and/or exports of oil and gas in a PSC regime, which it can trade as it sees fit. The long-term nature of a PSC enables the Government to predict future levels of oil and gas for domestic use, export and to make provisions in the national budget accordingly. Alternatively, the PSC model can be most lucrative for the State, if it takes the option of taking its share of production as a cash payment, rather than in kind. It is also very common for PSCs to contain provisions that as the production rate increases, the proportion of the production attributable to the Government may also increase, meaning that a significant and increasing proportion of the value of profit oil is paid to the host Government and its representative entity defined in the PSC. In all cases, at the initial stage of petroleum resource development, the IOC bears substantially all the financial risk. If, and only if, exploration proves successful and the discovered oil and/or gas accumulations are developed and produced, the IOC may be able to recover its costs through cost oil and/or cost gas and an agreed share in the profits of the remaining quantity of oil and gas. As to whether the PSC model is more favourable to the State than to IOCs in contrast to the licence or concessionary system, ultimately depends on the rates used for the various fiscal and commercial parameters in each system. In a concessionary regime, costs are only recovered slowly as depreciation allowances against assessable income. The speed of the recovery of costs depends entirely on the terms set by law and those allowed to be negotiated in the framework of a PSC. It may or may not be possible for an IOC to negotiate the terms of a PSC with more, or less financially and commercially attractive terms for petroleum development than a licence or concession arrangement might otherwise have offered under a prior regime. It is all about the terms of the selected regime, whichever is applied. Figure 6: Some terms of the petroleum regime may still be contained in legislation whilst others will be negotiable depending on the particular regime, after Daniel Johnston in International Petroleum Fiscal Regime and Production Sharing Contracts.     One possible negative aspect of the PSC model is that it is an agreed and contractual arrangement, and not the product of binding and enforceable legislation. Thus, any breach of the PSC by either party will constitute a breach of contract for which civil relief may be obtained.  Pursuant to the PSC model, the State always remains the owner of the resources, with the contract establishing the applicable compensation arrangements and level of NOC or Government involvement in the asset. The negotiation of a PSC is up front before any investment is made in exploration by the IOC, so the terms are locked in.  PSCs tend to afford IOCs less freedom to run an asset, with Contractors being subject to restrictions and required approvals in addition to those contained in the applicable legislation and regulation. Commonly Used Alternatives to the PSC There are several substantial alternatives to the PSC model. The differences in these alternatives are mainly in relation to the level of control granted to the IOC, the level of involvement of the NOC, and the compensatory arrangements for the investment made. Licences Generally, under a licence arrangement, there is normally little scope for an IOC to negotiate specific fiscal or commercial terms in relation to its exploration and production rights. Licensing regimes and their terms and conditions are typically standardised and embedded in legislation, such that the terms of each licence are near identical. This regime is most common in developed countries, e.g. UK, Norway, the Netherlands, and Australia. The terms of licences may change from time to time as the Government seeks to restrain or encourage sector investment.  The IOC is typically granted complete control over the contract area and complete ownership over any oil and gas that it successfully produces. Unlike PSCs, where ownership of the resources always remains with the State, in licence regimes ownership generally passes to the IOC at the wellhead, with the IOC’s profits from the sale of the oil and gas produced being the subject to general tax legislation, or specific petroleum taxation legislation. Like in PSCs, if the IOC fails to find commercially producible oil and gas within the limited terms and periods of their licence, they go home empty handed.  In some jurisdictions, the Government has an entitlement to join in at the development stage when the risks of finding oil or gas have been mitigated and it may either chose to pay its proportionate share of costs of exploration and development and participate alongside the IOCs, or be carried in some form or another. This can be a very profitable feature for the Government, but it essentially takes a slice of the venture away from the IOC venture at the proportionate sunk costs only, without any regard or compensation for the commercial value of any oil and gas discovered by the IOC. Concessions A concession arrangement is generally subject to a greater level of negotiation than a licence. The IOC is typically granted proprietary rights over the contract area and complete ownership over any oil and gas that it successfully produces, subject to the payment of a royalty and income tax, each of which may vary in rate depending on the level of production as negotiated and agreed. There may be specific taxes like the Additional Profits Tax (APT) which progressively applies further amounts of tax, the greater the rate of return of the production project. In some jurisdictions, licences have become more concession-like as the terms and conditions of the licences have increasingly become the subject of Agreements with the Government defining those agreed terms which are supplementary to or adjust the current and applicable legislation as sought by and agreed by both the Government and/or the IOCs. Service Contracts Under a service contract, the IOC provides its technical services to the State to explore and develop oil and gas resources, and therefore in so many ways, it is similar to a PSC. However, remuneration to the IOC is usually by way of a service fee or payments based on the value of oil produced in US$ per barrel for oil and other hydrocarbon liquids, or per million British Thermal Units (BTU) of energy for natural gas. The term of a service contract is often very short, leaving an IOC with considerable risk and no guarantee of a long production period Services contracts are common in Iran, Iraq and Kuwait and have also been used from time to time in Indonesia and the Philippines. The Overall Picture By and large, about half the world’s petroleum prospective Nations use licence/concessional systems and about half use PSC arrangements, though many of each of these are strictly hybrids involving features of one regime and the other. No particular petroleum regime is superior to any other and much depends on the degree to which the host Nation wishes to promote or reduce exploration investment according to the terms applied. Sometimes, the IOC will tolerate a slightly tougher regime, if they know that it will be stable and well-implemented in a professional and organised manner. Good subsurface prospectivity and a consequent high chance of finding accumulations of oil and gas can often be spoilt by self-imposed surface risks. Factors that may induce surface risk are Governments that: successively make petroleum regime changes, politically drive or make unqualified determination of fiscal and commercial terms without regard to the ultimate take to each party in the case of success, and the poor governance of the sector in general leading to untimely and late decision making. Indeed, a good regime whether it be a PSC-type or a licence/concessional one, will depend on the enforcement of its terms and conditions and the values agreed for those terms and conditions that determine economic outcomes.  The great difference between PSCs and other arrangements is that PSCs keep control over the produced oil and gas and its sale and disposal with the State, whereas licences and concessions leave such matters and the fate of the industry more to the will and imperatives of the corporates.  The intrinsic control of a contractor by the NOC under a PSC means the Government has to be better equipped, more efficient and more knowledgeable to operate such a regime than under a licence or concessionary regime. The State or its representative (usually its NOC) needs to make the PSC work in its favour as it is the manager of the entire enterprise and needs to lead the way. Any failure to step up to such challenges will result in a poorly planned development of the industry with delays, unrealised synergies leading to lost production, and overall loss of value from the resources. No matter what regime is applied to the development of petroleum resources, there is no doubt that resolute and appropriate petroleum policy formulation and firm and fair administration of the sector will pay dividends for any host Government willing to invest in such. The definition of a petroleum regime is not a new game; it has been done many times across the world by many Governments and there is very sound collective advice on the subject which is relatively inexpensive to access compared to the enormity of the task and the value of managing a Nation’s petroleum resources optimally. Figure 7: The IMF has some excellent specialists in its Fiscal Affairs Department who advise Governments on resource regimes and it has often commissioned books and studies on such matters as in the excellent handbook on Administering Fiscal Regimes for Resource Industries by Jack Calder, formerly of the Oil Taxation Office of the UK, ex libris McWalter.    

NiuHomes, from PNG Forest Products, manufacture premium designed, quality kit homes in ranges to suit every budget and lifestyle. Perfect for those starting out on a tight budget, the Baset Range starts at K73,000 and provides low-cost 3 & 4 bedroom (BR) kit homes that are designed to lock-up stage only, with no internal fixtures or fittings apart from flooring and wall frames.  This allows you to complete the inside of the house within your own timeframe and budget, making it truly your home. With 2, 3 & 4 BR options, the Residential and Suburban ranges are complete kit homes with a huge range of quality inclusions, right down to the kitchen sink. In fact, many models have everything you need including electrical wiring and fittings; full plumbing kit including toilet and shower; ceramic tiles; joinery kit; ceiling fans; solar hot water heater, even paint, all included in the price of the kit home! Prices range from K97,000. The Contemporary Range sets a new standard in modern kit home designs with the Komoa and Pacifica models. Their sleek, modern designs uniquely complement the PNG urban landscape whilst providing spacious, elegantly comfortable homes for the extended family. The Komoa starts at K310,000 while the top-of-the-range Pacifica is just over K600,000. For village living, the Haus Ples range offers a choice of high-set and low-set kit homes that start from a low K73,500 for a 2-bedroom Lewa model, up to K107,800 for the 3-bedroom, split-level Namo with bathroom, laundry and kitchen. All prices stated are ex-GST and ex-Lae.  When it comes to quality, NiuHomes are PNG's only preservative pressure treated kit-homes engineered to the most stringent PNG and Australian building code standards. All timber is randomly and rigorously tested in Australia and the Timber Training Institute in Lae to ensure compliance with the relevant Australian and PNG building standards. PNGFP’s ability to produce pressure-treated timber at their certified and international standard compliant plant in Bulolo, ensures quality, durable kit-homes that are protected from termites, rotting and fungal decay. Employing over 1,500 Papua New Guineans, PNGFP is committed to building a better future through sustainable manufacturing practices.  All timber is sourced from renewable pine plantations in Bulolo and Wau, which are managed by the PNG Forest Authority. The manufacturing facilities are powered by PNGFP’s own hydro power stations. All sawdust, woodchips and offcuts are then used to fuel the biomass boiler, which generates heat for the dryers and kilns.  PNGFP’s combination of renewable timber resources processed with sustainable hydro power and biomass heat energy, makes PNGFP’s NiuPine timber truly and uniquely green. So, when you’re investing in a PNGFP NiuHome, you are not only investing in the best quality kit homes in the country, you are also investing in 1,500 local jobs and supporting the PNG economy whilst also supporting the environment. That’s an investment in everybody’s future.

The PNG Resources Golden Expo, hosted by the PNG Chamber of Resources and Energy (PNG CORE), will run this July at APEC Haus, and is free and open to the public daily from 9 a.m. to 4 p.m. Papua New Guineans are invited to explore, learn, and celebrate the vital role of the minerals and energy sector in the nation’s development. The Golden Expo will be officially opened by Deputy Prime Minister John Rosso on the evening of Monday, 7 July 2025, at APEC Haus. This national exhibition will showcase how resource projects—and the Papua New Guineans working on them—have helped shape the country’s economic, social and infrastructure development since independence. Through historical displays, storytelling and interactive experiences, visitors will trace the journey of the sector from early exploration to the present day, and look ahead to the future. Some 30 companies and regulatory bodies will exhibit their histories and share how each has contributed in its own way to building Papua New Guinea over the last 50 years. A historical business exhibition of this scale has never been done before. The Expo will highlight the contributions of landmark projects such as Panguna, Ok Tedi, Misima, Porgera, Kutubu, Lihir, Hidden Valley, Simberi, Kainantu, PNG LNG and others—while also sharing the personal stories of the people and communities behind them. “This exhibition honours the pioneers, workers, landowners, community leaders, public servants, and companies who have built PNG through the development of PNG’s resource sector,” PNG President Anthony Smaré said. “It’s a chance to reflect on how far we’ve come and to inspire future generations to step up to take the industry and PNG further into the future.” The PNG Resources Golden Expo is free and open to the public for three weeks, and families, schools, and community groups are encouraged to attend. With daily activities such as school visits, interschool debates, and engaging displays, the Expo offers a unique opportunity for all Papua New Guineans to connect with the industry that has helped build the nation. This month-long celebration begins with the PNG Resources Golden Exhibition, running from 7 to 31 July at APEC Haus. Key events include the Supplier Development Forum (10 July), the Resources Career Fair (17–18 July), Charity Golf Day (25 July), CANCONEX (28–30 July), and the PNG Resources Summit (31 July). The exhibition invites visitors to reflect on how mining and energy projects will continue to shape the country’s future over the next decade and beyond. It offers a window into the past and a door to the future, encouraging communities to envision a prosperous path forward. “We encourage everyone to come and be part of this national celebration,” Mr Smaré said. “This is your story, your history, and your future—join us in celebrating the sector that continues to shape Papua New Guinea.”