We must prepare our communities to adapt to changes in the modern world.
This includes dealing with natural disasters brought a...
**** Prime Minister Hon. Peter O’Neill 2018 Independence Day Message ****
September 13, 2018
Prime Minister Peter O'Neill, CMG MP says it is by law that all District Development Authority meetings be held in the districts, for service delivery...
**** PM: It is by law that DDA meetings be held in Districts for real service delivery to our people. ****
August 23, 2018
**** Opposition Boycott of National Economy is Nonsense, Public Service to be Business as Usual ****
The Chief Secretary to Government, Ambassador I...
**** Opposition Boycott of National Economy is Nonsense, Public Service to be Business as Usual ****
October 24, 2018
**** Speech by Hon. Peter O’Neill CMG MP - Prime Minister At the Inaugural PNG Petroleum and Energy Summit - 28 February 2017 ****
February 28, 2017
It is good to be with you today to deliver the keynote address at the nation’s first Petroleum and Energy Summit.
This event is long overdue.
I thank all of you who have come from around the world to be here.
I also thank Kumul Petroleum for being the host sponsor, and all of the other sponsors supporting this event.
I hope this summit will become an annual event for our petroleum and energy sector.
The past few years have been tough for the petroleum and energy sector – in Papua New Guinea and around the world.
Commodity prices dropped from record highs – to unsustainable lows.
This was on the back of a slowdown in markets like China, and political instability in several parts of the world.
In Papua New Guinea, these global pressures saw our income from the oil and gas sector drop by around 85 per cent in the space of a few years.
At the height of commodity prices – our Government revenue from this sector was more than two billion Kina a year, and this dropped to 260 million Kina last year.
This left a huge gap in our national budget.
But we were careful, we did not lose our grip on the economy and we did not cut essential services to our nation.
We maintained our core Government polices that we have had in place since we were elected in 2012.
We did not cut our free education program.
Since the start of our Government we have placed an additional one million children in school – by providing free education.
Now more than two million children are being educated, of which half of them are girls.
These two million children are our future energy sector workers, our future engineers and doctors, and our future business leaders in our country.
We did not cut back on our rollout of universal healthcare in the nation.
This is a core Government policy that is restoring lives and medical care.
Despite the global economic challenges we faced, our Government maintained our expenditure in the law and justice sector.
We continue to train more police, and strengthen our judiciary, and continued to expand the infrastructure in that sector.
And despite the challenges, we continued with our delivery of critical infrastructure.
The past five years has seen the greatest delivery of infrastructure in the history of the nation.
This includes building and improving more than 3,000 kilometres of road to a maintainable condition.
We have constructed new sea ports, built new airports, and rebuilt many hospitals around the country.
Much of this infrastructure is essential for the oil and gas sector and make business much easier.
From a Government perspective, the global pressures had to live with provided a wake-up call for our public service machinery.
We introduced reforms, we cut non-essential spending and we increased efficiencies in many sectors.
With a steady hand on the economy of our country – our economy has weathered the storm.
We continue to enjoy positive GDP growth, and the outlook for the coming two years is sound.
The reports on our economy, and our fiscal position from both the IMF and the ADB, indicate that they are positive about our economy.
They are tough in their reviews, but agree that we are on the right track.
With improvements in the global economy, and the rebound in commodity prices, we can see positive change taking place.
We are not out of the dark yet, but there is light ahead.
The national budget this year factored-in an oil price of 50 dollars a barrel, and for the entire year the oil price has been above this 50 dollars.
These improvements are welcome, but not an excuse for us to ease up on the measures we have implemented so far.
The future for the resources sector in Papua New Guinea is bright, and with the return of commodity prices, now is the time to invest.
Companies that already have projects underway, or are about to launch new projects, are in a strong position to make healthy returns on their investment.
It is not necessary for me to remind you just how successful the development of our first major gas development has been for our country.
This is a blueprint for the future, and a project we are all very proud of.
I am sure the new United States Secretary of State, Rex Tillerson, a very good friend of Papua new Guinea, will look back fondly on his leadership role, as the CEO of ExxonMobil, in the successful delivery of this great project.
The contribution that the PNG LNG Project to our economy has been substantial.
Even before the first shipment of LNG left our port nearly three years ago – the project had seen the creation of thousands of jobs, increased skill levels and the stimulation of small business.
Working with ExxonMobil, we have further been able to secure gas for electricity generation, and the opportunity to expand on this production.
Now we are on the eve of our second LNG project.
TOTAL from France is moving forward with its investment in the Papua LNG project.
This will generate thousands of new jobs, both in Port Moresby and around the country.
The project will bring billions of dollars of investment, and provide further stimulus for economic growth.
We appreciate the ongoing confidence that TOTAL’s CEO and Chairman, Patrick Pouyanné, has shown in the economic opportunity of our country.
We will continue to hasten the further development of our vast petroleum and gas resources.
The sector will continue to contribute to strong GDP growth, and revenue flows to the national government – so that we can continue to fund our country’s growing expectations in many sectors.
Our Government wants the early development of our second and future gas projects to be approved, and developed, and delivered in the earliest possible timeframe.
I note the positive comments from Peter Botten, the CEO of Oil Search, last week that the “stars are aligning” for the next LNG project.
The national government is fully engaged with project proponents, and now legal obstacles are being cleared – we want to see substantial progress.
We are now a participant in the international LNG market, and that role will grow.
More broadly, I want the petroleum and gas sectors, and not just LNG, to be world leaders when it comes to efficiency, quality and reliability.
The benchmark we draw from the PNG LNG Project, is sound in that regard.
We can, and we must, do even better.
We are privileged to be supplying the best quality LNG to the key markets in the Asian region and beyond – and we are supplying it in an efficient and reliable manner.
We are doing so in an environment in which the number of new players, including new country participants, is growing.
That surely means we don’t have to be the biggest – but we must be amongst the best, and the most reliable.
CHALLENGES AND OPPORTUNITIES FOR THE PETROLEUM AND GAS SECTORS
That brings me to the central points I want to leave with you today – an outline of some of the challenges and opportunities that the energy sector faces today and tomorrow.
The list I will outline is not conclusive – I am sure your discussions over the following days will identify and address many of these challenges before us.
BETTER LANDOWNER ENGAGEMENT AND PARTICIPATION
The central role of landowners, and local communities, in the negotiation and development of major resource projects in Papua New Guinea is essential.
The same goes for districts and provincial authorities.
We have learnt much, since our very earliest projects, such as the BCL Mine and Ok Tedi were negotiated, approved and developed.
The treatment, back then, of landowners and impacted communities, remains a national concern – and one that has not been fully or justifiably remedied.
This is always a complicated area in which emotions run high.
We do have had some challenges when it comes to engagement with landowners and local leaders with regard to the development of the LNG Projects.
But, on balance, I believe we achieved and have maintained a sound arrangement.
This has largely contributed to the project being completed ahead of time, and operated successfully ever since.
But there are lessons to be learnt and this is occurring, and I will address these further today.
I acknowledge the leadership of Minister Duban, his Officials, and the Chief Secretary, in this very important and complex area.
Much more needs to be done – but the progress has been substantial.
We also need to educate landowners, and communities, on the contribution the development of our resources is making in their communities and around the country.
This is not just to national economic growth, but also to providing all of our people with the quality services to which they are entitled.
I urge all stakeholders, and especially project developers and managers, to embrace this vital challenge.
We are a robust democracy in which the rule of law, and the will of the people, must be respected.
That also means respect for the rights of landowners.
We have learnt from experience.
We are doing better – but we can do even more.
The Government of Papua New Guinea also has a very clear direct interest in the petroleum sector through investment in Kumul Petroleum Holdings Limited.
As the State Owned Entity, responsible for holding the nation’s investments in this sector, Kumul Petroleum is principally an investor and a promoter of the petroleum industry in Papua New Guinea.
Kumul Petroleum is not the industry regulator and has no role in the awarding of licenses, but is in a position to provide input to the State on the development of policies that will attract investment.
Kumul Petroleum further also assists project developers in enabling an effective interface with government and government agencies.
At this time Kumul Petroleum holds the State’s interests in the PNG LNG project, in the Oil Search Operated oil projects at Kutubu, Gobe and Moran, and also holds the State’s interest in Oil Search Limited.
During the downturn in commodity prices, the management of Kumul Petroleum had to carefully balance between the nation’s need for resources to makeup revenue shortfalls – and the role Kumul Petroleum has in promoting the petroleum industry in Papua New Guinea.
In the longer term, Kumul Petroleum will have to strike a balance between the State's short-term needs and the funding of future generations through the Sovereign Wealth Fund – that will become operational this year.
Following the establishment of the Kumul structures to deal with the commercial operations of the Government – the economics of many of our SOEs will be revisited and will be adjusted to the commercial realities they face.
The Kumul Petroleum structure has the right balance.
It maintains the right, but not the obligation, to take up to 22.5 per cent equity in petroleum projects at Final Investment Decision.
Kumul Petroleum is further responsible for the servicing existing obligations on existing projects, and for the financing of its equity share of any new projects.
PROMOTING PNG AS A SOUND PLACE FOR INVESTMENT
When we were elected into Government, we were concerned about our standing as a nation, as a sound place for investment.
There were a number of reasons for that – political instability among some of the challenges we faced.
Over the past five years our Government has worked hard to address these issues.
We have delivered political stability and certainty.
Our Government will go to the elections this year with the largest Parliamentary majority in our country’s history.
We have also delivered a high level of policy certainty.
This includes difficult areas such as equity participation in resource projects by the State and by landowning communities.
When it comes to revising policy, or changing legislation, I can promise you of one thing, that we will undertake full consolation with all stakeholders.
Before our Government implements change that could adversely affect your business, we will talk with you, we will seek your views.
Under our leadership, you will not wake up one morning and find legislation has changed without warning.
Particularly in the resources sector around the world, we have seen the negative impacts that ill-communicated policy change can have on a sector.
One thing you can know for sure – we have learnt from the the past and we are putting this knowledge into policy planning.
As we near the end of the term of the current Parliament, we are laying the foundations for the next wave of projects.
We are positioning our country for the next level of development in the oil and gas sector – that will take place in the term of the new Parliament .
There are issues of Domestic Market Obligation, National Content Policy and Third Party access.
Very importantly, through our Domestic Market Obligation policy, our country will be able to access gas for use in Papua New Guinea.
This will include gas for the production of electricity, for which demand in our country today is unparalleled.
We are already planning the expansion of this power generation – that will further enhance energy security for our people and businesses into the future.
Further to this, our country has the potential to create a downstream processing industry from our gas.
The production of petrochemicals for use in Papua New Guinea, and for sale in the global market, is the next logical step for our gas.
This will stimulate employment at a high technical level, and generate increased revenue for our country.
As in other primary production sectors, we should be looking beyond selling raw products, and creating higher-value products.
Through a National Content Policy, Papua New Guinea will strengthen the capacity of our people and our industries.
This will strengthen skills and knowledge in a range of sectors including construction, engineering and small to medium businesses.
Gone are the days where our resource production left value-adding to take place overseas.
By facilitating Third Party Access to our product and processes, we will maximse economies of scale and increase efficiencies.
As a Government, and as a nation, we have to think beyond how things were done before.
We cannot think of five-year Parliamentary terms – we must have long-range vision.
The White Paper is ready, and these policy initiatives are going through the final stages of development for deliberation by the National Executive Council, and we will then take it to the National Parliament.
We have consulted widely with industry and this process of engagement is ongoing.
Once approved, these policies will be in place for the next Parliament and Executive Government – to use to fast track projects that are ready to go for Final Investment Decision.
We are laying the foundations now and the future.
We will move ahead in the next term of Government armed with knowledge of the past, remove potential bottlenecks and provide greater clarity to business from our Government.
THE RIGHT CLIMATE – TIME TO INVEST WITH CONFIDENCE
Now is the right time for all investors and stakeholders in the petroleum and gas sectors, including contractors, to invest with confidence in our future of our sector.
It is absolutely vital there be common agreement across all stakeholders that we need to build the right “mix” of investment.
Of course further LNG development is vital.
There is demand in the global market for high quality and reliable LNG we can provide, and I am vert certain that we can provide this for our country.
I hope that will be a major discussion point during this summit.
The issues on your agenda are substantial, and have far-reaching implications for our country.
Your presence is most welcome – and it is a sign of your confidence in Papua New Guinea and our sector.
I again thank the organisers and sponsors for bringing you all together.
The timing could not have been better.
I hope you enjoy your stay in Papua New Guinea.
I declare the summit officially open….and I wish it every success.