PNG clears Papua LNG deal securing additional benefits

The Papua New Guinea government has cleared Total and its Papua LNG project partners to go ahead with the project.

Following a review of the previously signed gas agreement, the new government secured concessions by Total and its partners which later resulted in an agreement under which Total is ready to progress immediately in preparing a detailed National Content Plan with the department of petroleum and energy as requested by the minister for petroleum.

In a letter sent to the Papua New Guinea minister for petroleum, Kerenga Kua, Total said, that it will also build third party access points and, “if requested by a third party, the participants have agreed to engage in negotiations to enable access by such third party to the pipelines on mutually acceptable terms.”

Additionally, Total has also agreed that after all loans to the Papua LNG project and Kumul carry and past costs have been reimbursed, if the state wishes at that time to acquire a participating interest in the pipelines, project partners will engage to negotiate such an acquisition by the state.

It further stated that the state shall recognize the ‘fair value’ of the investment in considering such an acquisition including a fair tariff imposition for the usage of the pipeline.

Total and Kumul have formed a commercial joint venture for the purpose of marketing their shares together. Total agreed to evaluate together with Kumul the option of using LNG carriers in which participating interest is owned by the state for transportation of Kumul’s share of such jointly marketed cargoes through negotiated arm’s length contracts, the letter reads.

These concessions were not previously available, the minister said, however, adding that the government is aware that the Total letter is not a legal document but it does show to which extent Total and its project partners are prepared to go in accommodating the state’s position on the items of concern.

Following the letter, the government would allow the Papua LNG project to proceed under the terms of the related gas agreement applied in accordance with the Total letter as well as the expectations of the government.

Commenting on the minister’s remarks, Peter Botten, managing director of Oil Search, a Papua LNG project partner, said that the next step in the proposed integrated three LNg train development is the finalization of the P’nyang gas agreement.

“Once signed, the PRL 15, PRL 3 and PNG LNG joint ventures can proceed into FEED for this nationally-important development,” he said.