Papua New Guinea government to ‘stand behind’ Papua LNG gas agreement


Papua New Guinea’s Petroleum Minister Kerenga Kua has announced that the National Executive Council (PNG’s cabinet) has ‘in principle’ agreed to ‘stand behind’ the gas agreement signed in April for the US$10 billion (K33.7 billion) Total-led Papua LNG project.

Petroleum Minister Kerenga Kua

In June, incoming Prime Minister James Marape signalled that his new government would review the Papua LNG gas agreement signed in April between the previous O’Neill Government and the project developers, Total SA, ExxonMobil and Oil Search.

The agreement covered the development of the Elk and Antelope gas fields (contained within the PRL15 petroleum lease) in Papua New Guinea’s Gulf Province and the creation of PNG’s second LNG project.

Clarifying the purpose of the review at the time, Petroleum Minister Kerenga Kua indicated it was to ensure that the agreement was signed ‘in compliance with all applicable laws.’

At the same time, Kua signalled a desire to reform the regulatory environment for petroleum and gas development, notably PNG’s existing Oil and Gas Act ‘to see at what levels it can be adjusted and increased, without making an investment unprofitable for other shareholders.’


The announcement of the review has effectively delayed the commence of the pre-FEED (front-end engineering and design) stage of the project and has caused some concern among investors, with Oil Search shares losing some 10 per cent of their value in the past three months.

Yesterday, Kua issued a statement suggesting that the government has agreed to accept the terms of the April gas agreement:

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‘NEC met Friday 2 August and has discussed the result of the review conducted by the State Negotiating Team and has agreed in principle that State should stand behind the signed agreement in the best interest of the State.’

Nevertheless, the review and negotiations with the project’s developers are not yet complete.

‘The State has reserved its rights to discuss a shortlist of matters to be discussed with the developers,’ said Kua.

‘We believe that what we have discussed and agreed to are favourable and will not affect the general economics and fiscal terms of the Papua LNG Gas Agreement, however those matters are of relevance to the State and this will be placed on the table for consideration by the joint venture partners.

‘In view of the very limited agenda items identified for discussion the NEC does not believe it will take more than two weeks to conclude.’


It is not yet clear what is on the ‘shortlist of matters’ the Minister mentioned in his statement, but the statement has been welcomed by the project’s developers.

Oil Search’s Peter Botten. Credit: Oil Search

‘We are encouraged by the statement made by the Minister for Petroleum, Mr Kerenga Kua, that the PNG Cabinet (National Executive Council) has agreed, in principle, to stand behind the Papua LNG Gas Agreement,’ said Peter Botten, Oil Search’s Managing Director.

‘Oil Search is committed to supporting the operator of Papua LNG (Total SA) and the Government, in resolving any final questions on Papua LNG Gas Agreement, so that the P’nyang Gas Agreement can be finalised and the PRL 15 and PNG LNG Joint Ventures can proceed into the Front-End Engineering and Design phase of the integrated three train development in a timely manner.

‘The Papua LNG Joint Venture is also working collaboratively with the PNG Government on finalising the National Content Plan for Papua LNG. This Plan is aimed at maximising the involvement of PNG citizens and local businesses in the development and operation of the Papua LNG Project.’

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