PNG State Not Honouring Terms in Pasca A Gas Agreement which were Announced by Prime Minister 13th July 2021
Published on 9th August, 2021
The PNG Government and Twinza agreed final terms on the 6th July 2021 for the Pasca A Gas Agreement, which were reflected in an agreement that both parties committed to use (Attachment). Subsequently, the Prime Minister, the Hon. James Marape announced on the 13th July 2021 that negotiations had concluded, with a scheduled initialling of the agreement on the 19th July and signing on the 29th July 2021.
After a month of silence on the State-side, the SNT Chairman returned an extensive mark-up of the agreement late on the 6th August. This document bears no resemblance to the agreement of the 6th July 2021, containing over 2,400 changes in only 76 pages, and is essentially a new agreement which was provided “with endorsement of SNT, State Solicitor and Minister Kua”. The agreement would be unacceptable to any investor and introduces new fiscal terms and inexplicable new conditions, several associated with Kumul Petroleum, that would make the Pasca A Project, or indeed any project in PNG, non-commercial and unfinanceable. Twinza can provide a copy of the State’s new agreement on our website to ensure full industry transparency.
For reasons unknown to Twinza, it would appear that the Prime Minister’s strong support for the Pasca A Project, expressed most recently at the media conference of the 13th July 2021, is not being actioned by the State Solicitor and is being openly undermined by elements within the SNT. This is both disappointing and surprising given that negotiations have concluded, and what should be a routine close-out process is being stewarded by the Minister for Petroleum, the Hon. Kerenga Kua:
“As Minister responsible my next step is [to] ensure that the processes leading to the Gas Agreement signing takes place swiftly to meet the timeline of tentative date for signing at 29th July 2021”.
Twinza is urgently seeking clarity from the Minister for Petroleum as to whether there is support for foreign direct investment into the country and that the State will honour the deal of the 6th July 2021. As announced by Minister Kua on the 13th July 2021, Twinza can confirm that the Gas Agreement delivers all of the Government’s stated objectives from the project and would provide the highest State take of any resource development in PNG, over 60% of project value (55% nominal State take).
Chairman and CEO, Ian Munro, stated that,
“it is extremely disappointing that certain State actors appear to be following their own agendas rather than those of the Prime Minister, demanding new terms and revising terms that were announced on the 13th July 2021. Indeed, this is the third time since the negotiations commenced over 12 months ago that the SNT has changed agreed terms, which were originally announced by the Prime Minister on the 24th September 2020. Twinza, as a company with a proud investment history in PNG, will naturally continue to honour the deal struck on the 6th July 2021”.
“Other operators and investors are closely observing whether the Pasca Project can effectively navigate the State’s bureaucracy and vested interests of some individuals in the SNT, to progress toward FEED entry. Notwithstanding this setback to investor confidence in PNG, I remain hopeful that the Minister for Petroleum, an experienced lawyer, can ensure the State agencies honour the agreed terms to sign the first Gas Agreement under this Government. The signing would indeed set a new fiscal precedent for the industry and finally supersede the Papua LNG Gas Agreement, announced by the O’Neill Government some two and a half years ago”.