The International Court of Arbitration of the International Chamber of Commerce yesterday dismissed Oil Search’s claims over 40% of the Elk-Antelope gas field in Papua New Guinea’s Gulf Province.
Gas flare at the Antelope gas field in Gulf Province. Courtesy: InterOil
The disputed portion of Petroleum Retention Lease (PRL) 15, in which the Elk/Antelope fields are situated, was sold by InterOil to French resource giant Total SA in March 2014 in a deal worth up to US$3.6 billion (K9.01 billion).
InterOil yesterday issued a statement confirming that the arbitration decision had confirmed Total as a party to the joint venture operating agreement for PRL 15 struck last year.
Oil Search, which has earlier acquired the assets of another venture partner in the project, Pac LNG, last year disputed the sale, claiming it had pre-emptive rights to the share through to its ownership of Pac LNG.
Here come the French
While there appear to be some issues to resolve regarding the March 2014 transaction, the arbitration result paves the way for ‘super major’ Total SA—one of the world’s largest oil companies—to take a major role in the development of what could well be PNG’s second liquefied natural gas project.
Not only will this add diversity to PNG’s economy, which already hosts another super major in ExxonMobil; it also makes it more likely that the project will develop its own infrastructure—the stated preference of Total and InterOil.
It was considered likely that Oil Search would have used a larger holding in the project to push Elk/Antelope to use existing infrastructure from the existing ExxonMobil-led PNG LNG project, in which it is a partner.
Oil Search sanguine
Meanwhile, Oil Search, which brought the case to the court, appears to looking on the positive side of the deal. It is still left with a 22.8% interest in the lease due to its acquisition of Pac LNG.
While taking the opportunity to point out that the judgment (which is binding) was ‘complex’ and ‘non-unanimous’, Oil Search Managing Director Peter Botten said in statement:
‘The company intends to work constructively with its Joint Venture partners to resolve all outstanding transfer and joint venture management issues.’
According to InterOil’s estimates, the US$20 billion (K50 billion) project—should it go ahead—will take at least five years to build, with construction due to start within 14 months and the first LNG export due in late 2020 or early 2021.
The Independent State of Papua New Guinea has the right to buy into the venture, should it go ahead, through its nominee, the National Petroleum Company of PNG.
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Why cant the government speak up on this development issues foreseeing the future developments of the country. Land owner cannot be a joint venture party of a wealth that was meant for him but give away lured by short term sweets. It should be kind of leasing agreement to other parties who wish to exploit the resources. We should have our own experts to work on such and present to outsiders what we have/owned. Enough is enough of making blunt decisions and damped the country’s future to a foreigner. Come on PNG decision makers, wake up and be determined and solid for our future.
I agree with Sibona. We should automatically own at least 10% of all natural resources. We owned it. We don’t have to buy into the project
Very, very interesting!
State involvement, process and position?
Equity participation for resource owners?
Checks and balances?
Why should we buy into the venture when it’s our natural resources that they will be exploiting? It’s into a leasing agreement and an entirely foreign company that will be making billions of profits out of us. Where do we stand in this? What is PNG’s position in this project?