http://ramumine.wordpress.com/2012/12/03/...sion-on-png-energy-deals/
Peter O’Neill to set out his new vision on PNG energy deals
Rowan Callick | The Australian
PAPUA New Guinean Prime Minister Peter O’Neill will today turn the page on the country’s mining and energy policy, acknowledging Australia’s $16 billion investment in the sector and urging a new dialogue with its government and the industry about ways to reduce costs and boost productivity.
In a keynote speech to the country’s biannual mining and investment conference in Sydney today, he will offer to fast-track investments in energy projects that focus on domestic supply rather than exports.
But he will admit the country has “been far too complacent about cost blowouts in the construction phases of our major projects” — with the liquefied natural gas project being built by ExxonMobil recently announcing a 20 per cent cost surge, to $19bn.
He is expected to announce plans to establish a Productivity Commission to advise the government on making the economy more competitive.
He will encourage fly-in, fly-out schemes within PNG, rather than involve Australia.
And he will provide some details about guidelines for the wide-ranging review, announced in the recent budget, into taxes and other charges that affect mining and petroleum.
Mr O’Neill is expected to stress that the country needs “a modern and competitive resource tax regime”, and that any changes resulting from the review should not “act as a significant disincentive to investment or international competitiveness”.
But he will add that he “cannot hold out the promise of massive cuts in taxes and charges”.
The country had a resource rental tax — introduced at the suggestion of Australian economist Ross Garnaut, who was in the Finance Department in PNG during its independence period in the 1970s. It was abolished in 2003.
Among the issues to be canvassed in the new review, the Prime Minister will say, is “whether the cost and time consumed in lodging returns and reporting can be cut”.
The country’s economy will grow 9 per cent in this year and growth is expected to peak in 2015, when the first exports will be shipped from the Exxon LNG project.
But Mr O’Neill will anticipate that “the record capital spending now under way in the petroleum sector will slow significantly from 2013 unless we bring new projects to the approval and development stages soon”.
While his government is “fully committed” to that, “we don’t just want projects that have an export focus alone”.
His government is seeking the “right mix” of more LNG projects and others “totally focused on our domestic gas and energy needs, including gas capable of driving rural and regional electrification and meeting the energy needs of new mining projects”.
Mr O’Neill is expected to pledge to speed up the approval process for projects and to support the early development of stranded gas and other gas resources “that will create jobs, boost investment and meet domestic energy needs”.
“We also need new mining projects, not just large-scale projects.”
Mr O’Neill also wants investors “to look at taking on board Papua New Guinean investors and partners from the outset”.
He will tell the conference: “We have successful contractors, transport operators, engineers and other professionals, retailers, farmers and manufacturers and processors, all with funds, or who can get access to funds, that can be used to participate directly in the next phase of the development of the resources sector.”
The government, he will say, wants to help PNG businesses “get the lion’s share of work that is undertaken by contractors and suppliers”.
Mr O’Neill is expected to say that while PNG governments have been “reasonable, if not generous” about fly-in, fly-out arrangements for major resource projects, “I want to encourage a review of these arrangements so that more of our own resort areas and regional centres, can benefit”, with companies given incentives to operate FIFO schemes wholly within PNG, instead of rotating staff out of Australia.
He will also stress that his government “will not tolerate the speculative trading” in exploration licences where no activity has taken place for a long time.
Such licences would be forfeited and the areas advertised and put to tender, “as happens here in Australia”. -----------
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