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along with US, New Zealand and Japan pledged to assist the Government of Papua New Guinea to roll out the National Electricity Roll Out Plan (NEROP) to meet its target of 70% of its population connected to electricity by 2030 and 100% by 2050. Though the target is ambitious, with the support of all the stakeholders including PNG Power Ltd, we can slowly but surely get there. To achieve the government target, with the help of the World Bank, under my ministry, we have reformed the the newly established National Energy Authority (NEA). This is part of a wider reform effort to realign with government development targets. The NEA is now performing the economic and technical regulatory functions, which PNG Power Ltd used to perform by licensing from the Independent Consumer Competition Commission (ICCC). Utilising gas from the PNG LNG project as part of the Domestic Market Obligation (DMO) gas, two gas-to-power projects (58MW and 45MW) have been constructed and commissioned since 2019 to provide reliable and affordable power supply to the country, particularly supplying Port Moresby’s grid. To enable gas off-take, the department has granted two pipeline licences to NiuPower and Dirio Gas Power – two local companies, taking gas from the PNG LNG plant, feeding a total of nine gas turbines for power generation. The petroleum sector is one of the key extractive industries in PNG and plays an important role in the development and sustaining of the country’s social and economic welfare. Looking ahead, the Marape Rosso Government’s general policy direction with respect to the petroleum and mining sectors is to reform the current mining and petroleum fiscal regime from the current royalty tax-based concession system to an appropriate production sharing arrangement system. This will involve reform of the Organic Law on Papua New Guinea’s Ownership of Minerals and Petroleum to provide the constitutional basis for resources ownership as well as legislative reform to set out the details of the accepted energy sector – the former Energy Wing under the Department of Petroleum and Energy was reformed to become production sharing arrangement. The government will always consider a balanced approach to the development of its petroleum
resources for investors to make a reasonable return on exploring for and developing oil and gas resources in Papua New Guinea. This message has been made clear by Prime Minister James Marape in his speech at the recent 16th Mining and Petroleum Conference in Sydney on 5th December 2022. To further improve and enhance the efficiency and effectiveness of the administrative and
regulatory functions of the department, it is moving into a new “National Petroleum Authority”, which will be independent and self- funded by charging a fee-for-service to sustain its operations. This move
"The National Electricity Roll Out Plan (NEROP) has a target of 70% of the population connected to electricity by 2030 and 100% by 2050"
is the intention of the government contained in the Draft Organic Law on Papua New Guinea’s Ownership of Minerals and Petroleum and Commercialisation of State Business 2020. In that law, the National Petroleum Authority is a prominent feature as an independent and self-funded entity, which will charge and collect fees to sustain its operations. The achievements of key results areas (KRAs) under the Ministry of Petroleum and Energy is fully detailed by the Secretary as further discussed in this report. Going forward, our goal is to secure the social and economic wellbeing of the country with energy driving the way to ensure reliable and affordable energy supply, sustained by sustainable development of PNG’s abundant energy resources in a competitive and environmentally sound manner. As stakeholders of this beautiful country, we are all going to be working together over the course of the years in both the petroleum and renewable energy sectors to achieve our desired development goals and aspirations. Thank you,
HON. KERENGA KUA Minister for Petroleum and Energy, MP
FORWARD
Oil production only started at Kutubu and Agogo in 1991 followed by gas production at Hides with the Hides gas-to electricity project in 1992, further followed by South East Gobe, Gobe Main and Moran oil fields in 1998 and LNG production in 2014. PNG still remains a huge exploration potential today, with four of its five petroleum basins largely under-explored as most explorations and discoveries are happening in and around the Papuan Basin. Unlike in the past where there has been a rush in exploration activities, continued interest in the exploration for new oil and gas discoveries remains a bigger challenge for the industry. The department is looking into ways including improving policy environment as well as offering new incentives to attract further interest as the future of the industry remains in unlocking the potential of the under-explored petroleum basins, namely: Cape Vogel Basin, New Ireland Basin, North New Guinea Basin and the Bougainville Basin. The PNG LNG project remains to date one of the biggest capital- intensive investment projects undertaken in the history of the country at a capital investment cost of US$15.7 billion, injecting millions of foreign currencies into the local economy at the time of construction. After eight years of production (from 2014-2022), the PNG LNG project has contributed a total of K16.5 billion to the state coffers. This includes: K7.5 billion to Kumul from the state’s 19.4% equity, K1.3 billion paid to MRDC as equity for project area landowners, K0.8 billion as royalty payment, K0.7 billion development levy payment and K6.2 billion in tax payments. In 2018, according to the PNG EITI Final Report, the extractive sector including mining contributed 89% of PNG’s total exports, mainly
Secretary for Department of Petroleum MR. DAVID MANAU
On behalf of the Minister of Petroleum and Energy Hon. Kerenga Kua, I, as the Secretary of the Department of Petroleum, have great satisfaction in providing this brief update on the current happenings in the petroleum resources sector as well as highlighting the significant role the industry plays in the social and economic development of the country. This report is part of an ongoing campaign to promote the petroleum industry in the country to generate public interest in the industry. Looking back, oil was first discovered at Vailala in Gulf Province in 1911 but commercial discovery was not until the 1980s. The first well commenced drilling at Kariava in Gulf Province in 1941. The discovery of oil has attracted a number of major international oil and gas companies including Oil Search, BP, Chevron and Mobil, all rushing to explore for oil and gas. A number of oil discoveries were made since then including Kutubu in 1986, Agogo in 1989, South East Gobe in 1991, Gobe Main in 1993 and Moran in 1996. The Hides Gas field was discovered in 1987.
VOLUME 34 2023
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