Mineral Resources Development Company (MRDC) Managing Director and Chief Executive Officer Augustine Mano has strongly defended the revised US$14.5 billion Papua LNG Gas Agreement, describing it as a major economic achievement that secures greater State equity, increased revenue and improved benefits for landowners and provincial governments.
Mr Mano said the amended 2026 agreement represented a significant improvement over the original 2019 Papua LNG agreement and the existing PNG LNG Gas Agreement, particularly in protecting Papua New Guinea’s long-term economic interests.
He said the revised agreement increased PNG’s total equity participation in the Papua LNG project to 25 per cent, compared with 22.5 per cent under the 2019 agreement and 19.4 per cent in the existing PNG LNG project.
The additional 2.5 per cent equity, to be acquired on commercial terms, would make PNG entities the second-largest shareholders in Papua LNG after ExxonMobil.
Mr Mano revealed that the State’s share of project benefits would increase to 51 per cent at an oil price of US$65 per barrel and 60 per cent at US$81 per barrel, compared with 50 per cent under the original 2019 agreement.
He said the revised deal also secured significant benefits for landowners and affected provincial governments, including additional royalty and development levy payments of up to 30 per cent between 2027 and 2034.
The agreement further introduces a production levy as an additional State benefit secured through negotiations.
Mr Mano said landowners at the Papua LNG plant site would receive one megawatt of free electricity, benefiting four impacted villages and surrounding communities.
He added that improved domestic gas arrangements could potentially provide 100 megawatts of cheaper electricity to Port Moresby, with gas pricing reduced from nine per cent to five per cent of the Japanese Crude Cocktail benchmark.
Addressing concerns surrounding tax concessions, Mr Mano explained that the agreement introduced a balanced mechanism allowing the State to collect additional taxes when oil prices exceed US$81 per barrel, while providing limited tax relief to developers when prices fall below US$80.
The additional tax benefits and corresponding government exposure are each capped at US$1.95 billion.
Mr Mano also defended the advanced depreciation provisions covering 2029 to 2032, saying they were necessary to make the project commercially viable while protecting the State’s long-term revenue interests.
He explained that the project’s estimated development cost had increased from US$12 billion to US$18 billion before being reduced to US$14.5 billion following a review of engineering designs and project costs.
Despite the reduction, he said the revised tax and depreciation arrangements were essential to achieving a Final Investment Decision.
Mr Mano said the massive investment would stimulate economic growth, generate employment opportunities and create business activities during the anticipated construction period from 2027 to 2032.
He further stressed that Papua LNG would play a critical role in sustaining government revenue as production from the existing PNG LNG project begins to decline after 2030.
As a member of the State Negotiating Team, MRDC has endorsed the revised agreement and commended Prime Minister James Marape and the Marape-Rosso Government for securing improved terms for Papua New Guinea.
Mr Mano maintained that the revised agreement would deliver substantial economic benefits while providing the commercial certainty necessary to advance one of the country’s largest resource development projects.