"… be mindful of the growing disillusionment by the majority of our people and our Land owners in particular about the way we have dealt with the exploitation of our non renewable resources which continues to treat our people as mere spectators in this sector… "
Picture: PNG Mine Watch
Source: PNG Blogs
As the Market awaits the Decision of the International Tribunal to be handed down early next year in London in the case referred by Oil Search Ltd against Interoil on its rights as an existing Partner in the Elk LNG project to be offered the first right of refusal to purchase any shares on offer by the project developer, the States own interest relating to pre emptive rights needs to be clearly stated to avoid the situation that has landed the Prime Minister before the Leadership Tribunal with respect to the UBS K3 Billion loan from ever rising again.
All Hydro Carbon resources found beneath the surface of the earth and on our sea bed belongs to the State. Mining Exploration Licences and petroleum Retention Licences are the property of the State which reserves the right to enter into and to invest in these licences if it chooses too. While the Mining Act and the Oil and Gas Act allows the State to exercise its rights to take up to 30% Equity in Mining Projects and 22.5% in all hydro carbon Projects, these Acts do not prohibit the State from making commercial investment decisions for the National Good.
There is a misconception that the Government of PNG cannot enter into any major resource project until after the completion of the Bankable Feasibility study by the licence holder and only at the commencement of negotiations on Mine or Petroleum Development Contract between the Developer and the State. This view is not only misconceived but is dangerous as it perpetuates neo colonialism.
With respect to the case of Elk neither the State or its proxy Oil Search were made an offer to inject additional capital into the Elk LNG project and ultimately on whether Total of France should be the development Partner in the Elk and Antelope Gas Fields. While Oil Search has gone for Arbitration the Government of PNG has been forced to enter into a Commercial decision to enter into the UBS loan to participate in the Elk Project via Oil Search Ltd. The important question that will still be dealt with is the State’s 22.5% interest in Elk and the value of that interest and for the State to enter the project now and participate in the decision as to whether Exxon or Total is made the developer of the PNGs second LNG project.
On this note we also remind our own senior Bureaucrats heading down to Sydney for the biannual shopping and Mining Conference at the Sydney Hilton not to mislead the Australian Mining Community in particular on another similarly large project , the Frieda Gold and Copper Project and the intent of the Government of PNG with respect to the issue of Ownership and Control of our country’s biggest mining project. We remind our Sydney Mining Conference Participants to be aware of NEC decision 265/2014 and to take note in particular to the contents of NEC Policy Submission 242/2014 which gives rise to the said decision.
Let me again caution our leading citizens that while making the case for Foreign Direct Investment in the PNG resource sector in a foreign land that they be mindful of the growing disillusionment by the majority of our people and our Land owners in particular about the way we have dealt with the exploitation of our non renewable resources which continues to treat our people as mere spectators in this sector and not to concede too much to investors whose main driver for investment is guided only by profit motive and not the improved quality of life for our people.
It would appear that while Total has been endorsed as the preferred developer of the second LNG project no such endorsement has been given to Pan Aust Ltd to take on the responsibility of developing the Frieda Gold and Copper project on the contrary the State is desirous of owing and developing this massive deposit itself jointly with Land owners and the two Provincial Governments of East and West Sepik Province and that Pan Aust Ltd and Xstrata-Glencore would do well in accepting the offer made by the State to Xstrata Glenocre to acquire their interest in EL58 on the same terms as reached between Xstrata and Pan Aust Ltd on the 30th of September 2013 and that this is the position of the PNG Government unless overturned by Cabinet.