PNG PM Tries to Reassure Investors

Papua New Guinea's (PNG) Prime Minister James Marape said the government would not change its fiscal regime without consulting industry and promised to provide more clarity toward the end of June or July. PNG's LNG potential and proximity to Asian markets make its investment climate worth watching (LNGI Jun.2'21). Marape assured investors that there would be no immediate change to the fiscal regime currently being applied in the mining and petroleum sectors. Unclear Signals “Whether it’s a production sharing regime, or a hybrid between production sharing and existing regimes, there is a view that I take from these presentations ... that the signal we are giving is not absolutely clear," Marape told a webinar organized by the PNG Chamber of Mines and Petroleum. "So I will take the month of June to ensure that clarity is made to the mining and petroleum sector with respect to the direction we are trying to go,” he stated. “Right now, let me inform everyone, [fiscal] regime change is not taking place as yet," he said, adding that "the intention is there, but whatever form it will take ... 2025 is an important benchmark date." Marape said the government recognized that the mining and petroleum sector remains the top economic sector in the country. “Toward the end of June or July, the industry will know with clarity what the government wants for the sector. It does not dilute the fact that PNG remains a very robust place of investment, and we are open for business," he said. Marape Misstep Marape was sworn into office in 2019, promising to extract more value from foreign investors. Last year, the government announced changes to the fiscal regime when it promulgated a law to migrate to a production sharing regime starting from 2025 (LNGI Jun.15'20). The changes were criticized for increasing risks for investors, which would affect the bankability of projects, and that government had failed to consult stakeholders (LNGI Jul.8'20). One of the critics was the PNG Chamber of Mines and Petroleum itself, which cautioned the government that any changes should satisfy the needs of the country and optimally develop resources. Decoupling Papua LNG Following the uncertainties caused by the fiscal changes, the government signed a fiscal stability agreement with Total in February. This enabled development of the major's Elk-Antelope gas fields, which are designed to feed its greenfield Papua LNG project. This effectively decouples the two-train, 5.4 million ton/yr project from a brownfield expansion of Exxon Mobil's PNG LNG project (LNGI Feb.9'21). French TotalEnergies is now looking to take a final investment decision for Papua LNG in 2023. Exxon remains in negotiations with the government over a gas agreement for its P'nyang gas field, whose output could instead act as backfill or as supply for a debottlenecked PNG LNG, according to Oil Search, which is a partner in both Papua LNG and PNG LNG. Clara Tan, Singapore