Prime Minister James Marape has commended Gulf and Central leaders, landowners and communities for reaching an 80:20 benefit-sharing agreement on Papua LNG, clearing another major step towards the project’s targeted Final Investment Decision on December 15.
The agreement was reached last Wednesday, October 7, following negotiations involving political leaders, landowners, facilitators and national petroleum authorities.
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Mr. Marape, in a statement today, described the agreement as a major milestone towards FID and commended both provinces for putting aside differences to reach what he described as a fair and equitable arrangement.
“This is a very important milestone in our march towards Final Investment Decision for Papua LNG.”
“I commend the leaders of Gulf and Central provinces, the landowners, the facilitators and everyone involved for putting aside differences and reaching an agreement that is fair and equitable,” he said.
The Prime Minister also acknowledged Petroleum Minister Jimmy Maladina and national petroleum authorities for their leadership and coordination during the negotiations.
Mr. Marape said the agreement reflected the longstanding relationship between Gulf and Central, dating back to the traditional Hiri trading system.
“Gulf and Central are not strangers to each other. From ancient times, through the Hiri trading system, our people understood trade, cooperation and the principle of equitable benefit-sharing,” he said.
He said Gulf provided the gas resource and hosted important pipeline infrastructure, while Central hosted the gas processing and export facilities and sections of the pipeline.
“Both provinces have a legitimate stake in this development,” he said.
Mr. Marape said the 80:20 arrangement was consistent with the broad principles established under the existing PNG LNG Project, where benefits were distributed among upstream resource areas, downstream facilities and pipeline corridors.
He congratulated Gulf Governor Sir Christopher Haiveta, Acting Gulf Governor Morris Taudevin, Kikori MP and Minister for Provincial and Local Level Government Affairs Soroi Eoe, Kerema MP and Finance Minister Thomas Opa, Central Governor Rufina Peter, Hiri-Koiari MP Keith Iduhu, Kairuku MP Peter Isoaimo and landowner representatives from both provinces.
“This agreement is a credit to all of you. It demonstrates that when our leaders sit together in good faith, we can reach outcomes that serve our people and strengthen investor confidence,” Mr. Marape said.
Mr. Marape said the agreement would allow Petroleum Minister Maladina to bring submissions to the National Executive Council on the distribution of project benefits.
These will include infrastructure development grants, business development grants, equity participation and other government policy-based benefits for the two provinces and their landowners.
He reaffirmed the Government’s policy intention for 40 per cent of the State’s project equity participation to be allocated to provincial governments and landowners, with the remaining 60 per cent retained nationally for redistribution through the national budget.
“Under our Government’s policy, 40 per cent of the State’s equity participation must flow back to the provinces and landowners where resources are developed,” Mr. Marape said.
“In the case of Papua LNG, we are working within the State’s 22.5 per cent equity participation to ensure that our resource owners and provincial governments receive their rightful share,” he said.
The Prime Minister said Cabinet would also consider infrastructure tax credit projects extending beyond the immediate Papua LNG footprint to communities throughout Gulf and Central provinces, including neighboring areas.
He said the Government would work with provincial authorities to identify customary landowners, pipeline interests and other legitimate beneficiaries to ensure benefits were distributed transparently and equitably.
“Our commitment is that no rightful landowner or beneficiary will be left behind. Those entitled to royalties, equity, levies, infrastructure development grants, business development grants, contracts and other economic opportunities must be properly identified and included,” he said.
Mr. Marape also announced that Cabinet had approved a petroleum financing plan to support the State’s participation in Papua LNG, including financing for its 22.5 per cent equity interest.
He said the financing would be pursued through domestic and international sources.
“Cabinet has approved our petroleum financing plan. We are now mobilizing the financing arrangements required for the State to participate in this major project. All systems are gone,” he said.
The Government will also bring legislative and regulatory amendments before Parliament next week to provide legal certainty for Papua LNG and associated PNG LNG transactions.
“These amendments will ensure that the agreements we have entered into are properly protected in law, giving confidence to our investors, financiers, provincial governments and landowners,” Mr. Marape said.
Mr. Marape described Papua LNG as a US$14.5 billion investment expected to generate economic activity, employment, business opportunities and infrastructure development.
He said PNG had already demonstrated its capacity to deliver major petroleum projects through PNG LNG.
“We have done this before. We have the experience, the institutions and the people to deliver another world-class LNG project,” he said.
Mr. Marape said investors and financiers could be assured of the Government’s commitment to its agreements and a stable investment environment, while ensuring Papua New Guineans benefited from the project.
He reaffirmed the Government’s target of achieving FID by December 15, 2026.
“The State has a binding agreement with TotalEnergies, ExxonMobil and our other development partners, including Kumul Petroleum Holdings Limited and Mineral Resources Development Company, as we work towards Final Investment Decision,” he said.
“This agreement between Gulf and Central is another important box ticked. We are moving forward together.”
Mr. Marape thanked provincial leaders, landowner groups, facilitators, government agencies and development partners involved in the negotiations.
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He said the Government would continue working with Gulf and Central provincial governments and landowners to identify those entitled to royalties, equity, development grants, levies, contracts and other project benefits.
“Papua LNG must not only be a major investment for Papua New Guinea. It must become a lasting source of opportunity, development and prosperity for our people.
“We will leave no one behind,” Mr. Marape said.