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not expected to pay a PRRT during a 30-year operational window. This is despite some projections that the Japanese developer would export A$195bn ($132.17bn) worth of liquefied natural gas (LNG), liquefied petroleum gas (LPG) and condensate over that timeframe.
“Australia is literally giving away its natural wealth,” news.com.au quoted IEEFA gas analyst Bruce Robertson as saying on November 22. “There is so much that can be done to fix this situation. All it requires is a small amount of political will.”
Robertson pointed out that BG Group, now a unit of Royal Dutch Shell, had pledged A$1.3bn ($881.5mn) per year in taxes and royalties from the QCLNGexportprojectinQueensland.Butheadded: “The reality is BG Group paid no tax in 2016-17, nor did its parent Shell Australia. Royalty rates have in fact been so low that the Queensland government increased the rate, although the amount received is still a fraction of what’s expected.”
IEEFA is not alone in its criticism of the PRRT, with the Australia Institute recommend- ing in 2017 that the tax be increased from 40% to 70% for certain projects.™
PNG “disappointed” by Exxon’s rejection of P’nyang terms
PROJECTS & COMPANIES
PAPUA New Guinea (PNG) Minister for Petro- leum and Energy Kerenga Kua has said he is disappointed with ExxonMobil’s rejection of the government’s terms for the proposed P’nyang natural gas project.
Kua said on November 22 that the govern- ment’s negotiating team had drawn up terms that were “in line with international standards”. He added: “It is disappointing ExxonMobil has refused to even consider these terms and we urge them to reconsider their position.”
The P’Nyang project, located in the Western Highlands, will support a three-train expan- sion of ExxonMobil’s PNG LNG terminal at Caution Bay near Port Moresby. Under the pro- posed expansion, one train will use gas from the P’nyang and PNG LNG fields as feedstock, while another two trains will use gas associated with the Total-led Papua LNG project.
The government approved the Papua LNG gas agreement in September after Total agreed to make several minor concessions. However, Kua warned at the time that Port Moresby would press ExxonMobil for “far better” terms on P’nyang.
While the minister’s statement last week did not detail the new terms offered to the US super-major, Kua noted that they were com- parative to similar projects in Indonesia and Malaysia. The Australian Financial Review, however, reported that the government’s terms included a higher tax rate and a higher domestic gas requirement than had been stipulated in the Papua LNG deal.
The minister said: “The [negotiating team] is committed to working with international oil com- panies to develop our natural resources as quickly
as possible to support the development of PNG – but our resources cannot become money‐making machines for oil companies at the expense of the nation. We must get a fair deal.”
He said the government intended to invest the country’s share of revenue from P’nyang in national electrification and infrastructure initiatives.
Kua has previously said PNG’s government has the option of deferring the P’nyang project until proposed new oil and gas legislation and a revised fiscal regime are introduced in 2020. But he added that it was more beneficial to have the P’nyang agreement negotiated and signed under the existing Oil and Gas Act 1998.™
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