Photo Credit: Oil and Gas Today
By a vote of 79 to 0 in Parliament, the Oil and Gas (Papua LNG Project) Amendment Bill 2021 was approved, granting Total – the Papua LNG project's developer – unrestricted rights to proceed with the pre-FEED and FEED procedures before seeking a development license.
The bill, which was introduced in Parliament by Minister of Petroleum Kerenga Kua, is in accordance with the conditions of the Papua LNG Project Gas Agreement, which was signed in April of this year.
The Oil and Gas (Papua LNG Project) Amendment Bill 2021, according to Kua, explains the changes to the Oil and Gas Act 1998 made by the Oil and Gas (Amendment) Act 2020 (No. 11 of 2020), often known as the "2020 Amendments."
According to Kua, the Oil and Gas (Papua LNG Project) Amendment Bull 2021 only affects the Papua LNG Project Gas Agreement and any application for a petroleum development license for the Papua LNG project, not any other gas agreement, project, or petroleum development in Papua New Guinea, and confirms that, in accordance with the spirit and letter of Clause 9.6 (a) of the Papua LNG Project Gas Agreementment.
He stated that the Papua LNG project participants are now working on the technical modifications required so that the two Papua LNG Project liquefaction trains can operate independently of the previous third train at the PNG LNG project's Caution Bay location.
He went on to say that after that's done, and once FEED begins, they'll file an application for a petroleum development license.
He also stated that, due to the Papua LNG project's high capital intensity, it must be financed using a combination of loans from lenders and equity from the project's sponsor.
“Prompt passage of the proposed bill during this parliamentary session will demonstrate to sponsors, LNG buyers, and financiers the State’s continued full commitment to the Papua LNG Project, contract sanctity and the fiscal and regulatory regime contemplated by the Papua LNG Project Gas Agreement.
“This is why we are proposing this bill for approval.”
This oil and gas (Papua LNG Project) Amendment Bill 2021, according to him, is restricted to:
- In respect to the Papua LNG project Gas Agreement and any application for a petroleum license for the Papua LNG Project, restoring the Oil and Gas Act 1998 provisions impacted by the 2020 Amendments to apply as if they had not been modified.
- Makes the Papua LNG Gas Agreement and any application for a PDL for the Papua LNG Project inapplicable to the Oil and Gas Act 1998 provisions impacted or introduced by the 2020 Amendment.
Minister Kua stated that there must be some give and take in any commercial deal and that this law provides assurance to the Papua LNG Project sponsors and financiers so that the project may proceed to FEED in accordance with the mutually agreed timeline announced in May 2021.
“This is pivotal to progressing a timely development of Elk and Antelope gas fields that delivers maximum benefits to recognized landowners, the project-affected communities, the Independent State of PNG and of course the project’s developers and financiers,” he said.
Prime Minister James Marape stated that under the benefit agreements, the government would get 51% of the project's proceeds, while the developer would receive 49%.
He said that, in addition to the 51 percent, the country may gain from more local content, domestic market requirement, and third-party access, among other things.
According to Marape, the bill's approval includes an essential change that is excellent news for the treasurer because it is part of his economic forecast for 2002 and beyond.
The opposition has also endorsed the bill, claiming that it is the greatest and most outstanding initiative available.
Reference: Elapa. Jeffrey, Post-Courier (23 August 2021). “Papua LNG Good To Go”.
