LNG project benefits not meeting expectations: Abel

Deputy Prime Minister and Treasurer Charles Abel

Deputy Prime Minister and Treasurer Charles Abel

The National PNG – The scale of benefits from the PNG LNG Project have not matched expectations fully, especially when commencement of production coincided with a collapse of oil and gas prices, Deputy Prime Minister and Treasurer Charles Abel, pictured says.

Responding to a Jubilee report on the PNG LNG Project outcomes, Abel welcomed any analysis of project arrangements.

“We welcome any analysis of our project arrangements including this one,” he said.

“The Treasury Department has to examine the veracity of their numbers, but we are aware that the scale of benefits from the project have not matched expectations fully, especially when commencement of production coincided with a collapse of the oil and gas prices.
“If the price of oil had remained above US$100 (K328), we probably not be having this conversation.”

Abel said PNG LNG was the first gas project and demonstrated that PNG could deliver large-scale projects.

“It provided a significant boost to the economy during construction and continues to do so through the taxation, royalty and dividend streams,” he said.

“Nevertheless, as I have stated previously, we must learn from past experiences and structure agreements going forward that are simpler to administer and smooth our revenue flows in high and low price situations.”

Abel said in line with the 25-point 100-Day Plan, he had given instructions to Treasury to develop a template for project agreements going forward.

He said this was where the tax regime was more production-based rather than profit-based, where royalty calculations are based on full export value, where a portion of equity was free-carry, and where forex regulations ensured all surplus funds returned to the country.

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