To set out how benefits from the PNG LNG project will be divided between two provincial governments, Papua New Guinea's Governors Hon. Philip Undialu (Hela province) and Hon. William Powi (Southern Highlands province) have recently signed a Memorandum of Agreement.
In 2009, benefits from the PNG LNG Project to the provincial government and landowners were agreed during the UBBSA when the Hela region was still part of the Southern Highlands province, but three years later in 2012, the Hela region became a province.
With oil and gas and wells supplying gas to the PNG LNG Project located in both provinces, leaders decided on a split of the benefits agreed in 2009, and instructed the Mineral Resources Development Company (MRDC) to work out the formula.
“First and foremost, we want to thank and pay homage to Grand Chief Sir Michael Somare for delivering the PNG LNG Project, the single biggest investment ever undertaken in our nation’s history. The project remains a milestone achievement for the nation by the founding father, whose passing we are mourning at this moment.
“We also thank and remember late Anderson Agiru, former governor of Southern Highlands and foundation governor of Hela, for his role in delivering the project, and negotiating the benefits for the landowners and the provincial government.
“At that time, the Hela region was part of Southern Highlands province. Work had begun for the establishment of a new province, and it was agreed that the benefits to the southern Highlands province agreed under the UBBSA would be reviewed once Hela province was established.
“MRDC undertook that exercise and worked out a formula for the split of the benefits between the Southern Highlands and Hela provinces, and we want to thank MRDC for almost their years of hard work put into this document we signed today.
“Essentially, this Agreement allows benefits from oil and gas fields in Southern Highlands to be split 60% (Southern Highlands) and 40% (Hela). Likewise, benefits for oil and gas fields in Hela province will be split 60% (Hela) and 40% (Southern Highlands).
“To illustrate, SHP will retain 60% of the benefits from PDL2 (Kutubu and Moran), which includes royalties, SSG funds, and development levies.
“Hela will retain 60% of benefits from all gas fields, which includes royalties, development levies, and the Kroton Equity as well.
“The Southern Highlands Provincial Government equity in Bank South Pacific (BSP) and Petroleum Resources Kutubu (PRK) will also be split, with 40% going to Hela province.”
“We are proud and honoured to sign this agreement on behalf of our people.
“This split ensures equitable distribution of benefits from this project to the two provinces so that vital social development projects that uplift the lives of our people can continue to be delivered.”
