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market. Bottleneck studies conducted on the LNG Plant resulted in the production capacity increasing by 20% from 6.9 to 8.3 MTA and subsequently production rate increased from the initial design rate of 960 to 1230 Mscfd. 12.3. Benefits to the State As of 2022, 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 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. Landowner issues have consumed a lot of time and resources, especially the LOBID exercise which often has been delayed due to different landowner factions fighting among themselves over leadership, resulting in certain landowner groups taking out court injunctions to frustrate the LOBID exercise. Also, landowners have been frequenting the department’s headquarters for outstanding infrastructure development grants (IDGs) and ministerial 13.0 KEY CHALLENGES 13.1. Landowner Issues commitments by former ministers. Lack of political action and timely funding by the government has compounded the landowner issues. 13.2. Capacity Building One of the key challenges the DPE faces is the lack of technical capacity such as specialsed software specially used in the petroleum industry for modelling and simulations, and skilled technical officers who are able to use such software. Software is needed to independently verify and validate technical information normally submitted to the department by operators in support of their licence applications or meeting licence conditions or reporting requirements. Also, qualified skilled technical officers are required to fast-track the timely review of licence applications for petroleum projects. Lack of timely funding support to address these critical issues has intensified these challenges. As a result, it has caused long delays in the turnaround time for timely regulatory approvals. The unnecessary delays in regulatory approvals are factored negatively into calculating the competitiveness and ease of doing business rankings of the country by the World Bank and other reputable institutions. 13.3. Budget Cuts The DPE runs important work programs and activities to achieve key government targets and results in promoting and developing the petroleum sector in the country. In order to achieve the desired results, making funds available in a timely manner is essential. The department normally identifies the important areas and captures them in its annual work plans and operational budget, which is submitted to the government for funding allocation. Despite the submissions, the department has been experiencing budget cuts every year, resulting in the delay of the implementation of some of the key work programs. With further budget cuts, the department will continue to experience delays in the timely implementation of its key work programs and activities. 13.4. Data Storage and Management Systems Lack of digital data storage and data management systems for storing and accessing data about PNG's petroleum sector is also one of the key challenges for the department to promote the potential of the sector to attract potential investors. There are five petroleum basins in the country. The Papuan Basin is
Pipeline segments one to eight were successfully completed in 2017 with the publication of eight separate Ministerial Determination Gazettes. Total of 300 major clans from the PNG LNG pipeline areas were confirmed as beneficiaries. The first batch payment of royalty and equity benefits for segments one, four, five, seven and eight were done in 2020. The other remaining segments were due to be paid in 2022. Hides - PDL 1 and 7 Landowners: The LOBID process for Hides PDL 1 and Hides PDL 7 was successfully completed in 2019 with the publication of separate Ministerial Determination Gazettes. Total of 150 clans were confirmed as beneficiaries of Hides PDL 1 while 280 clans were confirmed for Hides PDL 7. Certain individuals decided to file for judicial review challenging the results. Of 14 JR cases filed, six were successfully dismissed by the state legal team while the others are still pending. MRDC has completed the establishment of clan bank accounts for all the beneficiary clans of Hides PDL 7 and has successfully conducted the election of directors for Gas Resources Hides 4 Ltd. Hides PDL 7 will be the first from the green field area to receive their royalty benefits in 2022. PDL 9 Landowners: The LOBID process for Juha PDL 9 is completed, but pending legal clearance before the publication of the Ministerial Determination Gazettes. PDL 8 Landowners: Angore PDL 8 is under the ADR process therefore LOBID was not conducted, however the Ministerial Determination Gazette will be published based on the ADR completion reports. Kutubu, Moran and Gobe Landowners: For the existing PDL areas (brown fields) such as Kutubu, Moran and Gobe, the beneficiary clans have been identified and are receiving royalty and equity benefits from the oil projects. The same shall be applied to the PNG LNG benefits. 12.0 SPECIAL REPORT ON PNG LNG 12.1. PNG LNG Project The PNG LNG Project is one of the single biggest resource development projects ever undertaken in PNG, with a capital investment of US$19 billion. The project started construction in 2009 and first LNG was shipped to Japan in 2014, allowing PNG to join the league of LNG exporting nations. Based on an open-book economic model, the project will generate for PNG an estimated US$57 billion or PGK199.5 billion at current interest rates, over the 40 year lifespan. The annual estimated state revenue from the PNG LNG Project is US$1.5 billion or PGK5.25 billion. 12.2. Reserves and Production The PNG LNG project commenced production in 2014.The initial foundation volume underpinning the project was 9.5 trillion cubic feet of gas (tcf). The initial capacity of the LNG plant was designed at 6.9 million tons per annum (MTA) at a rate of 960 million standard cubic feet of gas per day (Mscfd). The recoverable reserves for the PNG LNG Project have been reported to be increased by 25% as a result of ongoing assessment and field appraisals. See table (below). The production profile for the PNG LNG Project has shown that about 20% of the foundation volume (9.5 TCF) has been produced with more than 56 million barrels of condensate since May 2021. LNG cargo shipment occurs twice a week from the LNG Plant’s marine facility, with an estimated total LNG volume of 51 million tonnes exported since May 2021. So far, more than a thousand shipments of LNG cargo have left the country, mainly to contracted buyers in Japan, China, and South Korea, and some sold on the spot Recoverable Reserves for PNG LNG project, as of March 2021
Source :ExxonMobil PNG LNG Project Footprint
Source : Coordination Branch
VOLUME 34 2023
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