Page 15 - AsianOil Week 16 2021

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Twinza’s negotiations

with PNG break down

PROJECTS & THE Papua New Guinea (PNG) government’s
COMPANIES pursuit of better terms on Twinza’s offshore
Pasca A oil and gas project has seen the develop-
ment enter limbo.
The independent said on April 19 that it had
stood down its project team after the govern-
ment insisted on April 16 that it would not sign a
gas agreement for the field unless the production
levy was increased from 2% to 6%.
Port Moresby’s demand came just four days
before the two sides were expected to sign the
agreement, for which comprehensive terms had
been outlined in September 2020, according to
the developer.
Twinza added: “The additional levy which
has been requested would make the Pasca A
project unfinanceable for any investor.”
The government asked in February that its While PNG Oil Minister Kerenga Kua has
fiscal take in the project be set at a 55-60% nom- acknowledged Twinza’s concerns, he argues that
inal share, or 75-85% of the actual project value, the government is firmly within its rights to seek
a request Twinza claimed would render the pro- the best possible outcome in its negations with
ject “unviable for investors and financiers alike”. oil and gas developers.
The company said it had offered to increase “Until the signing takes place, the window
the production levy to 4%, with a further for negotiation is still open. As Minister for
increase to 6% at higher oil prices, “in an effort to Petroleum it is imperative on me to seek the best
close-out the agreement”. This would have given outcome for PNG.” Kua told the Post Courier on
the state a 55-60% nominal share, or 65-70% of April 20.
actual value. He added: “I understand that Twinza nego-
Twinza had been planning to enter the front- tiations have taken several months to reach this
end engineering and design (FEED) phase once point and the company has invested heavily in
a gas agreement had been finalised. A final time and resources. But given the uniqueness of
investment decision (FID) had been slated for the project’s relation to other existing oil and gas
2022, with first production anticipated in 2025. projects in the country it would be negligent for
Company chairman and CEO Ian Munro the State not to demand more benefits from this
said: “It is disappointing that at the closing stages deal.”
of a drawn-out 10-month gas agreement process, Munro said Twinza had invested more than
the state is now seeking to again revise terms to PGK350mn ($99.7mn) in developing the field
ones that are demonstrably unacceptable to any since its award nearly 10 years ago.™
investor.”

Week 16 22•April•2021 www. NEWSBASE .com P15