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Joint Venture pressures PNG by setting deadline for LNG project

James Marape - unsure about the benefits locals will see from a multi-billion-dollar LNG project


SYDNEY - Oil Search has accused Papua New Guinea of backtracking on a deal to build a new liquefied natural gas project and set a 31 August deadline to resolve the dispute.

Oil Search is working in partnership with France's Total and US-based ExxonMobil on the US$13 billion site that would roughly double Papua New Guinea's exports of LNG.

The deal was signed in April, but since coming to office in May PNG's prime minister James Marape has raised concerns that locals will not receive enough benefit from the project.

"While initially indicating that the government had decided, in principle, to stand behind the agreement, more recently it has signalled its desire to renegotiate some of the agreed terms," Oil Search said.

Stressing that the agreement was "legally binding" and "fair and balanced", the firm said the "joint venture is seeking resolution by the end of August" when front-end engineering contract bids expire.

Although PNG's government is desperate to increase revenue and help develop one of the poorest countries in the Pacific, the new LNG project remains politically contentious.

A forecast windfall from an earlier multibillion-dollar LNG project -- which also involves Oil Search and Exxon -- has been much smaller than expected.

Researchers estimate the project created fewer than 1,500 post-construction jobs for Papua New Guineans and a fall in energy prices saw revenues dry up.


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Arthur Williams

There was time in years gone by when three oil companies colluding was called a cartel.

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