Govt signs deal

The Government has signed an agreement with Oil Search Limited for the domestic commercialisation of the country’s gas reserves.
The memorandum of understanding (MOU) was signed in Port Moresby yesterday by Minister for Petroleum and Energy, William Duma and Oil Search managing director Peter Botten.
It was also witnessed by Prime Minister Sir Michael Somare, government ministers, departmental heads and industry representatives.
The deal will pave the way for the Government, its agencies and Oil Search to work together to commercialise the remaining 40 per cent of discovered gas resource that is not currently dedicated to the PNG LNG project.
The signing of the MOU, dubbed the domestic gas agreement, comes two months after the gas agreement was signed by the Government and LNG project partners (Exxon Mobil and Oil Search) for FEED (Front End Engineering and Design) to commence. State entities like Mineral Resources Development Company, Independent Public Business Corporation, PNG Sustainable Development Program Ltd, PNG Power and Petromin Ltd will get involved in the planning and delivery of the next set of gas projects in PNG.
Mr Botten said: “While the Exxon-Mobil operated PNG LNG project is our top priority, only approximately 60 per cent of our gas resource in PNG is committed to PNG LNG.”
Sir Michael congratulated the state and Oil Search for signing the agreement, adding the LNG project will still remain one of the government’s top priorities.
“PNG has much more gas than what is dedicated to the PNG LNG project and there are several fields outside the fields that are tied to this project.
“We need to start planning now as to how these fields would be commercialised thus giving added value for our gas,” Sir Michael said.
He said the domestic gas plan would include the possible use of methanol, fertilisers, gas to liquid, CNG, power, and floating LNG.
Under the agreement, Oil Search together with the Government and other state entities will study gas development hubs and consider various options to commercialise and gas infrastructure.
Discussions will also progress with local gas suppliers and potential users of gas for both domestic gas-based industries and export.
Included in the deal are core initiatives such as:
* The establishment of a Southern Highlands regional energy joint venture, to assess the potential for provision of power in the region as well as other micro-gas opportunities.
* The formation of a Western Province gas development study joint venture together with PNG Sustainable Development and the State.
* The establishment of a joint venture with Itochu/Mitsubishi Chemicals to review a methanol/DME project fuelled by non PNG LNG project gas.
* A study on the provision of reliable power to the Port Moresby region and;
* A study of the Eastern Forelands and potential offshore hub developments.