As someone from Western Province, I was absolutely disgusted to learn that the P’ynyang Gas field in the Star Mountains has been slated into the existing PNG LNG project. What’s worse is the fact that the lame Parliamentarians from Western Province haven’t raised a single protest against the move.
In 2013, I attended a press conference where Gulf Governor Havila Kavo rallied Kikori and Kerema MPs to stand by his side to block moves by InterOil to court Exxon. The MPs were concerned that InterOil’s Elk-Antelope project would either be integrated into the PNG LNG project or would be a floating LNG project. The politicians were adamant that Gulf Province had a standalone LNG Project.
Fast forward to 2015 and with the plummeting oil and gas prices, Exxon and the State have made some very irritating announcements in the New Year. (Some analysts believe prices will remain low over the medium term)
Oil Search (Exxon’s partner in the PNGLNG Project) is hoping to convert its Petroleum Retention Licence (PRL 3) over P’nyang into a Petroleum Development Licence. In doing so Oil Search hopes P’nyang will provide gas for a third train (3rd processing facility) of the PNG LNG Project (there are currently two trains).
I’ve been observing from the sidelines hoping to hear a squeak from my MPs but the silence has been deafening.
Back in 2013 when I asked Mr Kavo why he was opposed to anything but a standalone Gulf LNG Project, Kavo told me that a standalone project would create jobs for Gulf people and contribute to infrastructure development in the Province.
Western Province MPs should be screaming their heads off for a standalone LNG Project in the Province. The fact that P’nyang alone is capable of supplying one train means that Western Province is past the half way mark in terms of providing the gas reserves needed to justify a standalone project (If we use the two-train PNGLNG project as our yardstick).
Right now, many of the small players in the province are keen on selling out given the downturn in the resource sector. Talisman, the developers of the Stanley Gas Project have been bought off by Spanish interests.
Western MPs need to be working towards consolidating Western Province’s gas assets and attracting major oil and gas players to acquire these resources. This shouldn’t be something new to Governor Wobiro, since he would probably be familiar with similar efforts undertaken by the PNG Sustainable Development Program (PNGSDP) to consolidate the province’s gas resources.
The benefits of a standalone gas project in terms of jobs, training opportunities, business activities and infrastructure development would be immensely beneficial to the people of Western Province. These opportunities for the people of Western Province will be lost should gas from P’nyang simply be siphoned off to the PNG LNG Project.
To add salt to injury, I was sickened to learn that Exxon Mobil had signed a gas for electricity MOA with the state. Back in 2013, when supporting Governor Kavo, Kikori MP Mark Maipakai railed against Exxon Mobil for giving PNG a raw deal in the PNG LNG Project.
What Maipakai was referring to then, is supported by the fact that the Government has to sign another MOA with Exxon to supply electricity to Port Moresby. Exxon hates PNG but loves our gas that is why in the original PNGLNG Gas Agreement, Exxon didn’t want any clause for Domestic Market Obligations. Maipakai called the Gas Agreement a bad deal because the agreement doesn’t obligate Exxon to supply gas locally either for electricity or the creation of a local petrochemical industry.
In other words Exxon Mobil never wanted some black people in the city of Port Moresby to have access to cheap gas so they never wanted that to be included in the original PNGLNG Gas Agreement. That is why the Government needs a new agreement with this greedy monster in order to improve electricity supply to Port Moresby.
Since much of the Gas slated for the current PNGLNG trains has been sold on forward contracts, Exxon Mobil would have to cover up for its greed by sourcing extra gas to meet the requirements of the gas for power MOA.
Enter the P’ynang Gas Field owned by Oil Search.
By tying up the government in the Power Deal, Exxon Mobil hopes to skip away from a Standalone LNG Project in the Western Province.
Anyone who has lived in Lae, Tari, Angore, Hides, Omati and Port Moresby during the PNG LNG construction phase knows about the economic opportunities associated with the construction phase of a standalone LNG project.
The people of Western Province would be stupid to let their gas be siphoned elsewhere instead of being processed in the province and providing the economic benefits associated with a standalone gas project
In signing up to the gas to power MOA with Exxon Mobil, the State is forfeiting potential economic benefits that could transform Western Province. This is in direct contradiction of the spirit of PNG’s Constitution with regards to the Second National Goal and Directive Principle - Equality and Participation. A standalone LNG Project in the Western Province enables equitable participation by the People of Western Province in the development of the Oil and Gas industry in PNG. Siphoning P’ynang gas into the PNG LNG project promotes economic marginalisation of the People of Western Province whilst increasingly centralising economic activity in Port Moresby.
Yes, Port Moresby needs electricity. But P’nyang should not be used to cover up for Exxon Mobil corporate greed. Parts of the PNG LNG Gas Agreement need to be revisited to allow gas from the two trains to be used to power up the city.
The People of Western province deserve to enjoy the full economic benefits of the exploitation of their natural gas resources rather than being hoodwinked by greedy multi-national corporations.