PNG's petroleum minister seeks legislative reform

4:45 pm on 19 June 2019

Papua New Guinea's government says legislative reform in the oil and gas sector is imperative.

Kerenga Kua, Papua new Guinea's Minister for Petroleum.

Kerenga Kua, Papua new Guinea's Minister for Petroleum. Photo: Loop PNG

The new Petroleum Minister, Kerenga Kua said the Oil and Gas Act was considered adequate when the legislation was enacted in 1998, but is now in need of change.

He said there's a widespread public view that PNG's burgeoning petroleum sector should provide more returns to the state, including national and provincial governments, and landowners

Mr Kua said this is something that must be addressed in the Oil and Gas Act, and the Income Tax Act.

"Both of them have to be reviewed to see at what levels it can be adjusted and increased, without making an investment unprofitable for other shareholders. So that's a delicate balance that we have to explore. But it is a reform that must take place."

Mr Kua has also confirmed that an internal review will be conducted into the recently signed Papua LNG gas deal will be reviewed.

The move by the former Peter O'Neill-led government to sign with French company Total for the $US13-billion Papua LNG project in Gulf province in April precipitated a series of resignations from cabinet which led to the recent change in government.,

Current prime minister, James Marape, and other MPs who resigned cited concerns that local interests were not being served and claimed mandatory requirements were not fulfilled before the agreement was signed

Mr Kua said the review would be done to satisfy the government and people that the deal complies with all applicable laws and protocols.

He said that as a new government, they had to do their own due diligence to satisfy that two important benchmarks have been satisfied.

"Number one, is that this agreement has been negotiated and signed in accordance with our constitution and our Oil and Gas Act," he explained.

"Secondly, we have to be assured, as a government whose duty it is to look after the interests of the eight, nine million people in PNG, that we are getting a proper return on this investment."

However, the outgoing Petroleum Minister, Fabian Pok, has defended the Papua LNG Project agreement, saying there it was better for the country than the earlier PNG LNG deal.

He said his team had put in a substantial effort to ensure the deal was beneficial to the state, stake holders and landowners.

Meanwhile, Mr Kua is only a couple of days into the new role but has already identified the need for serious changes in a ministry which oversees a sector which is the single biggest source of revenue for the state.

To date, he noted, compliance had been a problem for both developers and the government itself.

From the government side, he suggested the department lacked cohesion because its officers were scattered in various offices rather than one single location. he added that the department had not been resourced properly.

From the industry side, he said despite the government's shortcomings, developers must not be hasty about getting projects up and running in PNG.

What they have to do is go through the checklist, make sure that all the requirements under the Oil and Gas Act are complied with sequentially, instead of jumping a few steps for whatever reason perhaps contributed to by the government, a lack of response or whatever, that should not be the reason for them to jump the steps."

Get the RNZ app

for ad-free news and current affairs