Latest update November 26th, 2024 1:00 AM
Papua New Guinea demands 65% from Exxon in new deal
– Also calls for increased local content
Prime Minister of Papua New Guinea, James Marape recently renewed calls for a better gas deal with ExxonMobil, demanding a bump up from 40 percent in existing deals to 60 percent for newer projects.
Papua New Guinea Prime Minister, James Marape
The PM, who gained popularity for condemning unfair exploitation by extractive companies, decried the lopsided deals the poverty-stricken nation had signed with several foreign companies. He also committed to demanding that developers show an increased commitment to local content by cleaving to local labour, goods and services wherever possible.
Marape’s calls come months after talks broke down due to Exxon’s resistance to offering the state fairer terms on the intended P’nyang gas project.
The oil major heads joint ventures in the country for the development of onshore Liquefied Natural Gas (LNG) fields, which started in 2014.
One former Australia senator, Scott Ludlam several years ago criticized the current Exxon-led operations as “economic parasitism”.
A 2018 report by the Jubilee Australia Research Centre titled “Double or Nothing: The Broken Economic Promises of PNG LNG” reveals how the results the LNG project produced for the State fell way below expectations, with one author positing that the country would have been better off if the project didn’t happen at all.
Marape said on Wednesday that the country has been “unfairly held to ransom” by Exxon and its partners, and told the Parliament his administration would forge ahead with plans to increase the state’s take.
“We are on the right course and the journey that we are taking will not be easy,” Marape said. “But we must remain united and resilient in this course, because PNG will be a winner in all aspects.”
According to Bloomberg, Marape told the Parliament that Exxon Chief Executive Officer Darren Woods understood the government’s position on P’nyang, and would respond following consultations with the joint-venture partners.
“I am hopeful that both parties can find a mutually acceptable pathway when we re-engage, as a no-deal would have far reaching consequences for both parties,” Marape said.
PNG has had to learn fast about the modus operandi of oil, gas and mining multinationals. Its experience with Exxon gave it ample opportunity, when the PNG public was wowed with promises of great wealth and economic growth for the populace. However, the people soon realized that the promises did not come to fruition. This time around, the country is being told that the new $13B venture would double its gas exports in just a few years. But PNG looked at what its Southeast Asian neighbours got from Exxon and companies, and found that it received a share far lower than the other countries.
“We are happy to wait for a few weeks, months, years.” Energy Minister, Kerenga Kua had told ABC Australia in February. “If it happens, it happens. But it’s going to be on our terms.”
Guyana struggles with a similar issue now, wherein ExxonMobil and its surrogates continue to purport that production under the current 2016 Stabroek Block deal will revolutionise Guyana’s economy. However, Kaieteur News’ extensive coverage of this sector over the years has found the deal to be rife with provisions that shackle the government’s regulatory capacity and the government’s share to an industry low, despite the world-class quality of oil in Exxon’s discoveries.
President of the Center for International Environmental Law, Carrol Muffett has said that Guyana is the last growth story for Exxon to sell to its investors because the deal is so fundamentally unfair that it amounts to Guyana giving away free oil to Exxon.
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