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authority, which will be independent and self-funded by charging a fee-for-service to sustain its operations. The move is already a firm commitment by the government contained in the 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 gazettal of the fees and charges is still pending with ongoing discussions with the Chamber of Mining and Petroleum and industry stake holders. 10.4. National Content Plan: The NEC Decision 112/2016 directed the Department of Commerce and Industry to work with the Department of Petroleum and Energy (DPE) to draft the proposed National Content Plan and Local Purchase Obligation Policy. Other relevant state agencies were also required to work with DPE to implement the proposed plan and policy. Since then, DCI and DPE worked together with other stakeholders to ensure NEC decision No. 112/2016 is fully implemented. With the facilitation of the gas project coordination office, a draft petroleum sector local content policy was developed with the objective to maximise benefits for nationals through contracts, employment and training, and other opportunities in the development of petroleum resources and provide national content plan and guidelines for the different phases of a project’s life, starting from early works, construction, operation and decommissioning. This work is at an advanced stage waiting for all necessary ministerial approvals and endorsements before being sent to NEC for gazettal and implementation. 10.5. Amendments to Oil and Gas Act, 1998 : The department has amended certain sections of the Oil and Gas Act, 1998 with the Oil and Gas (Amendment) Act 2020 to improve the current legislation and regulatory framework of the petroleum sector consistent with the Marape government’s overall drive to maximise the state’s benefits from the development of petroleum resources in the country. Changes to the act were enacted by the National Parliament into law in its May-June 2020 session and certified on 26 June 2020. The changes provide more clarity in the signing power of the Minister and the matters to be contained in such agreement. In addition, amendments are proposed to Section 169 to make clan vetting or LOBID mandatory in law as well as proposing amendments to Section 47 to include social mapping as a regulation. 10.6. MOA Reviews: All oil project MOA (memorandum of agreement) reviews are outstanding including the PNG LNG licence based benefit sharing agreements (LBBSA). The department is working closely with relevant state agencies to identify possible solutions to address these tasks. In February 2012, the department attempted to hold the Kutubu MOA review in Moro, Kutubu. However, due to a leadership tussle and various court cases on the issue of the forum and state commitments, the review was deferred indefinitely. Also, in April 2012, the department attempted the Moran DA review in Mt Hagen but it also failed due to infighting among landowner leaders themselves. The department is currently assessing whether it should pursue the Gobe MOA. 10.7. Licence Reviews : The department carried out a full and comprehensive review and audit of the petroleum licence systems from 15 June – 2 July, 2020. The objective of the review was to audit all petroleum licences and, where necessary, improve the licensing systems and standards in the country. The review has resulted in a number of findings, recommendations and policy suggestions to better manage and administer the licensing process in the country. With declining exploration activity, this work is necessary to ensure appropriate policies are drafted in line with government policy objectives to revive interest in the exploration sector including encouraging exploration in the four under-explored petroleum basins. 10.8. Capped MOA Grants : The capped MOA (memorandum of agreement) emanated from the outstanding commitments made by the state including various ministerial commitments to landowners from oil project and brown field areas, mainly landowners from Kutubu, Moran, North West Moran, South East Gobe, Gobe Main and Hides since the commencment of oil production in 1991. The commitments made by the state are strictly project grants, and
were made in accordance with Section 173 (5) of Oil and Gas Act 1998 to the affected project area landowners, in addition to grants made to affected local-level or provincial governments. The outstanding state commitments were then renegotiated during the UBSA in May 2009 and the respective LBBSAs in December 2009 in Kokopo between the oil project area landowners and state, resulting in the Memorandum of Agreement (MOA). The total outstanding commitment made by the state was K235 million to be disbursed in accordance with NEC Decision No. 86 of 20ll. A total of K115 million from the K235 million was disbursed to the affected project area landowners. The outstanding K120 million was endorsed by the National Executive Council (NEC) through NEC Decision No 119 of 2021 through two separate warrants released on 3 December and 7 December 2021 respectively. For the outstanding K120 million capped MOA, the department received more than 3000 infrastructure project submissions from various affected landowners. The disbursement of the K120 million outstanding capped MOA funds is strictly in accordance with the requirements under the act and criteria set out in the NEC DECISION NO 96 OF 2010. A total of K80 million out of the K120 million was released in 2021 and paid to various landowner groups for impact infrastructure projects such as schools, clinics, bridges, water supplies etc. A total of 242 projects from Hides, 122 projects from Moran and 18 out of 96 projects from Kutubu were approved and funded from the K80 million allocated. The K40 million outstanding from the K120 million is included in the supplementary budget for 2022. Once the funds are made available, the department will pay 89 approved projects from Gobe and the To differentiate between the SMLIS12 process and LOBID13 process, SMLIS is a fundamental component stipulated under Section 47 of the Oil and Gas Act, undertaken by the developer as prerequisite of the APDL process, while the LOBID exercise is an ongoing administrative process undertaken by DPE to fulfill the requirements of Sections 169 and 170 of the Oil and Gas Act, 1998. Its objective is to verify, authenticate and finalise the major beneficiary tribes/clans by utilising all relevant data including social mapping and landowner studies (SMLIS), Land Court decisions, land compensation records, rental payment records etc, for the purposes of disbursing royalty and equity benefits to the affected beneficiaries. 11.2. Background Following the signing of the UBSA in May 2009 and the respective LBBSAs in December 2009 in Kokopo, there remained the outstanding task of verifying and confirming the legitimate impacted clans along the footprint of the PNG LNG Project. There was a need to develop a workable benefit distribution mechanism for the purpose of disbursing royalty and equity benefits earmarked for the affected project area landowners as per Sections 167 & 168 of the Oil & Gas Act. 9. In 2013, the DPE, being the regulator, was tasked to implement the LOBID process for the PNG LNG Project. Other key stakeholders were also part of the LOBID exercise, including MRDC, KPHL, departments of Treasury, Finance, National Planning & Monitoring, Lands & Physical Planning. All field logistics support were facilitated by the project – ExxonMobil PNG Ltd and Oil Search Ltd. The results of the 2013 LOBID exercise for all the licence areas of the PNG LNG Project were published in the Interim Ministerial Determination Gazette No. G192 dated 19 May 2014. 11.3. LOBID Status for Each Licence Area The status of the LOBID exercise undertaken by the DPE since 2013 is outlined as follows: PPFL 2 – LNG Plant Site Landowners: The LOBID process for the PNG LNG plant site areas was successfully completed in 2015 with the publication of the final Ministerial Determination Gazette No. G692 of 23 October 2015. Total of 83 major clans from Porebada, Boera, Papa and Rearea villages were confirmed as affected beneficiary clans of the PNG LNG plant site area. So far more than K50 million in royalty and equity benefits has been paid to the affected beneficiaries of the PNG LNG plant site – PPFL 2. Pipeline Landowners: The LOBID process for the PNG LNG remaining 78 of 96 projects from Kutubu. 11.0 LOBID – SPECIAL PROJECT 11.1. What is LOBID?
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