I think the reason for cancellation of Western LNG project licenses, is about allowing the PNG Gov to frame a new set of terms and conditions for its development.
A new agreement will be structured to more fairly represent the PNG nation and the license will be returned to the original consortium. Of high significance, is the fact that WLNG pipeline access will be incorporated into the new agreement.
I have heavily edited this story, which has been presented in full and discussed on the board recently. See the link containing the full story again, if you wish to read it in full.
My editing, highlights a desire by PNG to reappraise what has happened in the past to better reflect the benefits flowing to the country. It does seem the country may have shortchanged themselves in the past. (See link at very bottom).
The delays in these major gas developments, are happening right now in PNG because of the complexity of the negotiations and stretched government and administrative/legal resources.
The cancellation of the license (my view) is a rather drastic step to allow new terms and a start again approach. The original partners will be reinstated under the new license. Such a license be complex and legal and may be 800 pages. Those type of resources as highlighted in the story, are just not readily availability in the country.
It is apparent now, that the Government will insist pipeline access be made available to Stanley licenses.
Maybe investors could do well to listen to the audio of the Horizon AGM earlier this month. It is business as usual for the PNG development. The massive blue sky opportunity in PNG is again highlighted. Wonderful and still exciting opportunity here.
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....................But as signalled by that announcement, the timetable for the project has slipped, with the partners now only set to start initial engineering and design work on the expansion in the June quarter of 2019 after the delayed “gas agreement” setting out fiscal terms and other conditions is finalised in March.
Oil Search MD Peter Botten had hoped that the “gas agreement” with the government would be announced during the APEC summit. But the complexity of the negotiations and stretched government resources are understood to have contributed to the delay. Louie Douvis
The schedule represents a delay from that previously outlined by project partner Oil Search, which was targeting a final investment decision in 2019 and start-up in 2023.
Oil Search managing director Peter Botten had voiced hopes that the “gas agreement” with the government would be announced during the high-profile APEC summit. But the complexity of the negotiations and stretched government resources are understood to have contributed to the delay.
Mr Botten told the PNG Mining & Petroleum Investment Conference in Sydney on Monday that he still expects Papua LNG to capture the market opportunity seen opening for global LNG demand in 2023-24 but underlined the importance of the timing staying on track.
“Everyone can see [the market window in 2023-24] and the competition is starting to ramp up,” confirmed Andrew Barry, managing director of ExxonMobil PNG, which is a major partner in the expansion.
“PNG has got to get at the front of the line,” Mr Barry said, to capture both the market opportunity and to avoid cost escalation arising from increased demand on contractors.
Alongside the obligation to supply the domestic market, the LNG expansion project will have to allow third-party access to its pipelines to avoid stranded gas fields held by other companies, said PNG minister for petroleum Fabian Pok. National content obligations will also be imposed to ensure business opportunities for local companies.
Dr Pok said the PNG government had learned lessons from mistakes made with the initial PNG LNG project and would ensure conditions around the expansion would guarantee revenues for the government even during a price slump and would support local development, including using gas for power generation and to develop local industries..................................
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(20min delay)
