THE State has awarded the long awaited petroleum retention license (PRL47) for Pandora to Kumul Petroleum Holdings Limited (KPHL) as the National Oil and Gas Company (NOC).
Minister for Petroleum, Kerenga Kua made the announcement today after due consideration and upon recommendation by the Petroleum Advisory Board (PAB).
The license is a discovered gas field of around one (1) trillion cubic feet (TCF) of dry gas situated in the Gulf of Papua.
Minister Kua described the Pandora retention license to KPHL as a revolutionary approach or a new scheme that will focus on maximizing opportunity and benefit returns to the people of PNG.
“The PRL47 grant approach focus completely on erasing the buyback scheme by the State to the developer after the license has been awarded,” Kua said.
He said the buyback scheme by law that has been used for the past years has resulted in the State borrowing millions to buy back a 22.5% equity to the developer which can cost billions.
Mr. Kua explained that the new scheme where Kumul Petroleum now gets the License will completely kill the buyback scheme resulting in the government generating much more profit then it ever lose.
“The resource and the license in the hands of Kumul Petroleum is the same as the State keeping the resource 100%, therefore saving the State billions of kina in the buyback costs.
“The second big benefit of the State under these grants is that Kumul Petroleum will now be in a position to farm out or sell portions of those licenses to other developers and make money from it.
“Those revenues will then be contributed back into the construction costs of projects immediately minimizing the level of borrowing for Kumul Petroleum.
“At the end of the day, this will create a pathway enabling the State to receiving not only early revenues from the projects, but also making more money out of it,” Kua said.
Minister Kua further clarified that the new scheme does not change the laws of conducting the petroleum business in the country, however, focus on much better approach of maximizing benefit returns in the petroleum sector.
KPHL Managing Director, Wapu Sonk upon receiving the award said the company will now commit itself to work with the Department of Petroleum in carrying out the license conditions as well as look at the best way possible to commercialize the license so that it benefits the people who have entrusted in them.
A total of five developers have applied for the Pandora license.
The Pandora retention license now marks a total of four (4) PRLs that have now been granted to Kumul Petroleum this year.
All the four PRLs contain a total estimate reserves of 2 TCF have now been placed in the hands of Kumul Petroleum.
