State negotiating team questioning Exxon’s intentions

  • Dec 03, 2019
  • The National

THE State negotiating team (SNT) for the P’nyang gas project is questioning whether developer, ExxonMobil PNG Ltd, is serious about developing the gas field.

Chairman Isaac Lupari said a timeline for the project’s development needed to be one of the fundamental conditions in any agreement.

“The key issue for PNG is to learn the lessons from the PNG LNG project and the recently signed Papua LNG project agreement,” he said in a statement yesterday.

According to Lupari, there were two aspects to this; one of which was the current arguments about the commercial terms.

“In essence, PNG has already determined that we can achieve state benefits that are far greater than Papua LNG, while delivering an attractive return to the developer,” he said.

“We’ve already suggested to Exxon how we can resolve this sharing of benefits of the project based on international best practices.”

Lupari said the other critical aspect was the certainty of the field being developed, according to a reasonable timeline with clear milestones.

“Yet Exxon won’t commit to this before the minister issues the petroleum development license (PDL),” he said.

“What Exxon has demanded is we deliver a PDL before they complete industry standard prerequisites required for a final investment decision, which could give them an excuse to defer the development.

“Not agreeing to this makes us wonder if the developers really have any current plans to develop the project, or instead, intend to warehouse the field.

“That kind of flexibility means the country may get no benefit – only costs – in the foreseeable future.

“We welcome the developer’s participation to resolve these issues and achieve a mutually beneficial outcome.”

However, from a recent query raised with ExxonMobil regarding the issue, a spokesperson from the company told The National that: “Discussions with the PNG Government to complete the required gas agreement for the P’nyang project are ongoing.

An agreement is needed before decisions can be made regarding front-end engineering and design for the three-train development at the PNG LNG plant site.

“As a matter of practice, we don’t comment on commercial discussions.”