Page 5 - GLNG Week 34 2021
P. 5
GLNG COMMENTARY GLNG
The two sides concluded talks on July 6 on What next?
terms for the $2.4bn Pasca A, the country’s first Oil Search said this week that it was in talks with
offshore gas project, with expectations high the PNG government over the proposed merger
that a final agreement could have been signed after Port Moresby warned that the merged com-
as soon as the end of the month. Kua said on pany must not reduce its footprint in the country
July 13 that the deal would mean the state would “We do not wish for the largest oil and gas
receive 55% of the project’s gross income. company operating in our country to simply be
But Twinza said this week that despite Kua’s a branch office of a foreign company,” Marape
statement to Parliament on August 10 that the said on August 5. “Any proposed merger must
two sides had seven days to finalise a draft agree- satisfy the national interest test.”
ment, the SNT had not made itself available to Oil Search has almost 1,000 employees in Port Moresby
meet despite Twinza’s continued efforts. PNG, with nearly 90% of those being nationals,
Twinza, which confirmed that the state acting Oil Search CEO Peter Fredricson told succeeded in
would take 60% of project value or a 55% nom- the Sydney Morning Herald on August 24. The renegotiating
inal take, described the lack of engagement as executive added: “The way we engage with PNG
“disappointing”. will continue to be positive.” the terms for the
Chairman and CEO Ian Munro said: “Twinza However, Credit Suisse has previously cited
remains hopeful that both parties can honour PNG’s “higher political risk” as a question mark 5.4mn tonne per
the terms and agreement of the July 6, 2021 and against Santos’ merger proposal. Indeed, the
that we can move immediately into the [front- Sydney Morning Herald quoted analyst Saul year (tpy) Papua
end engineering and design] FEED phase of the Kavonic on August 24 as warning that Port LNG project.
project.” Moresby could try to use its powers of approval
Twinza is planning to enter the FEED phase to “extract more value”.
once a gas agreement had been finalised. A The PNG government is capitalising on
final investment decision (FID) had been strong LNG prices to force the hand of upstream
slated for 2022, with first production antici- developers. The government is intent that any
pated in 2025. deal it signs must give it the best return possi-
Oil and gas companies are not only being ble. This has slowed down projects and derailed
dragged to the negotiating table over new pro- investment plans and, while higher gas prices
jects, however, with Santos and Oil Search’s give Marape’s administration an edge in cur-
proposed AUD22bn merger also under Port rent negotiations, it will do little to improve the
Moresby’s scrutiny. country’s credibility with future investors.
Week 34 27•August•2021 www. NEWSBASE .com P5
