In the meantime, there are related problems to be solved. The Purari Development Association, an umbrella organization that claims to represent eight tribes in the Baimuri sub-district in the Gulf province – supposedly the title holders registered “on the high and medium-speed segments” of the project – has sent an open letter to Prime Minister Peter O`Neill, calling for the agreement to be postponed. The companies had insisted that Total comply with the LNG agreement signed in April, and Oil Search warned in August that the cost of the project could increase if it was delayed by protracted discussions. “These agreements will allow the construction and operation of the downstream facilities for Papua LNG in the current PNG LNG facility area near Port Moresby,” said Oil Search. “We look forward to working with the PNG government to finalize the gas agreement needed for the P`nyang project,” Exxon Mobil said in an email, referring to the second of the two necessary agreements. The agreement also provides for a deferred payment mechanism for the payment of previous costs by the State, which reduces the financial burden of the state`s acquisition of participation in the Papua LNG project. Doubts about the gas deal intensified in August, when the government suddenly called for talks on revising the agreement. Kua said the government`s negotiating team had expressed concerns about regulatory, tax and other issues regarding the Papua LNG deal at Total and its two company partners, ExxonMobil Corp. and Oil Search Ltd. This had resulted in numerous concessions from the joint venture, detailed in an August 31 letter from Total to the Minister. Oil Search shares, which have fallen over the past three months amid uncertainty over gas deals, were up 2.1% shortly after the government`s announcement in a broader flat market. The signing of this agreement will allow all partners in the Papua LNG project to continue engineering and design activities (FEED) that will begin with the selection of contractors and the engineering contract. As a result of the review, the NEC also departed from the current licensing system for the oil and mining industries, which will be replaced by a production-sharing agreement system for future licensing agreements.
Peter Botten, Managing Director of Oil Search, calls the agreement an “important milestone” for the Papua LNG project. The agreement provides for national content to support local human resource development, the participation of local businesses and the socio-economic development of the communities involved in the Papuan project. Total and its partners ExxonMobil and Papua New Guinea have signed a gas agreement with the independent state of Papua New Guinea (PNG), which sets the tax framework for the Papua LNG project, as Total announced on Tuesday. Oil Search stated that its objective now was to cooperate with ExxonMobil, operator of PRL 3, and the state to reach an agreement with the state on the development of the P`nyang field and the start of the FEED phase for the integrated development of three trains at the LNG site. Kua said the new concessions were not available in Papua New Guinea in the future as part of the agreement originally signed. Papua`s natural gas agreement provides for a domestic market commitment (DMO) that will provide gas for sustainable future domestic consumption, Oil Search said in its statement. Tuesday`s agreement allows the partners to enter the FEED phase of the study that will lead to the final investment decision in 2020. Peter Botten, chief executive of Oil Search, welcomed the government`s announcement that the gas deal would continue.