Opinion: Papua New Guinea could provide a model for the developing world says Oil Search MD Botten

Peter Botten, Managing Director of Oil Search, says including communities in the development agenda is a way that resource developers can engage with governments and other stakeholders. He explains that what his company has done in PNG can be a model for other developing countries.

Oil Search’s Peter Botten. Source: ABAC

I represent a Papua New Guinean company, Oil Search, which, although a relatively small oil and gas producer in a regional context, is one of, if not the largest, private sector investor in PNG.

We have significant interests in PNG LNG, the newly developing Papua LNG Project, we operate all the country’s oil fields and we have the largest exploration portfolio in the nation.

Since 2003, we have invested almost US$11 billion in exploration and development in Papua New Guinea.

‘What happens here in PNG can be a model.’

With almost all our assets here in this country, our future is inexorably linked to the successful social and economic development of this nation.

Social development

Developers in PNG have to address and participate in the social, as well as the economic, development of the country and its people.

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There is a compelling business case and strong social responsibility to play an active role in working with Government and, most importantly, our communities—in true private-public partnerships, to ensure developments are done in a sustainable way.

What happens here in PNG can be a model for economic and social development in other developing countries.

‘In lieu of paying project tax directly to the Government, we use those funds to carry out important infrastructure development programmes.’

PNG is blessed by having abundant natural resources. Although relatively small on a world scale, oil and gas reservoirs are generally prolific.

It is a pretty good place to find and develop oil and gas, although logistics challenges do not make this work cheap.

Reputation and stability

Loading LNG. Source: Oil Search

Investors in oil and gas in PNG have benefited from a stable, consistent and fair fiscal regime, over many years.

This has helped develop an impressive track record of reliable project delivery and stable operations, highlighted by the outstanding development of the world class PNG LNG Project.

Our total shareholder return since production started has been over 1400 per cent and in the last 15 years, since taking over operatorship of the Kutubu fields, has been 915 per cent.

Success has been driven by the prospectivity and favourable geology, by fiscal stability and a tax credit scheme, where, in lieu of paying project tax directly to the Government, we use those funds to carry out important infrastructure development programmes.

These programs are chosen by the Government and communities. They are delivered using our operational expertise and supply chain, in a transparent and cost-effective way, without waste or corruption.

‘The private sector is recognising that business will thrive if it can improve society, whilst generating a fair return.’

Under this scheme, Oil Search has delivered more than 280 projects over the last 20 years, to a total value of around US$400 million.

Projects have included major infrastructure, such as APEC Haus, the National Football Stadium, Government office refurbishments and numerous regional road projects.

They have also involved school and hospital buildings, government workers’ houses, numerous other medical and educational facilities and churches.

Capacity

Leveraging the capacity of the private sector through innovative partnerships with Government, community and stakeholders has resulted in definition, and then delivery, of agreed development objectives.

Increasingly, the private sector is recognising that business will thrive if it can improve society, whilst generating a fair return.

The private public partnerships we have developed in PNG between National and Regional Governments, churches, donor agencies and NGOs represent a new and efficient model in improving social and development outcomes.

It is a model that can be exported across the developing world.

This is an extract of a speech given to the 2018 APEC CEO Summit.

Comments

  1. John Wilkinson says:

    The successful development of PNG’s Oil and Gas Resources, plus the creation of a middle class and the many benefits and changes in living standards in PNG, is down to one person, and that is Peter Botten. In Kainantu in the seventies, we used to buy Oil Search shares at 0.15 cents or cheaper, sell on at 0.20 cents, then buy again later when they dipped. One person who benefitted more than some from this trading was Fred Pratt. He shared an office in my fertiliser store in Kainantu. He bought his first bulldozer, and it was flown by chopper in pieces to drill sites at Kutubu.
    Peter Botten’s foresight and sheer hard work, his ability to talk up the markets, and his ability to talk to landowners and staff have persevered over the years. The name Botten is synonemous with raising the profile of PNG more than any other person either in government or the private sector.

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