The Papua New Guinea (PNG) parliament passed legislation this week giving the government more power over the issuing of exploration and development licences, aiming to achieve a greater economic share from upstream projects.
The passing of the law governing the issue of licences for upstream exploration, production, processing and the sale of oil and gas in PNG, comes at a time when there is a deadlock between the government and the partners in the 6.9mn t/yr PNG LNG and the 5.3mn t/yr Papua LNG ventures about future developments.
The new law will undo historical legacies and move PNG to a production-sharing regime from 2025 from the previous law where upstream firms would directly own the licences and pay royalties based on production, said PNG prime minister James Marape.
"To our investors, as I said in the past, we will not break legitimate contracts or agreements or licences, be it exploration or development," Marape said.
Australian listed upstream group Oil Search said the purpose of the new legislation is to clarify the government's intentions and objectives in a transparent manner. "We remain confident that the PNG government is fully supportive of LNG expansion and the oil and gas industry as a whole."
The PNG government under the previous legislation had the right, but not the obligation, to acquire all or any part of a participating interest not exceeding 22.5pc in each petroleum project.
"I can assure our investors that we know they must make money for their shareholders too so we will not be greedy but we just asking for a fair share, if they want to harvest our resources," Marape said.
