Papua New Guinea is delivering its second major gas project and progressing improved terms for the country. This was described as another milestone for PNG by the Deputy Prime Minister and Minister for Treasury Charles Abel.
“It has a US$13 billion construction phase to deliver gas and oil through a conditioning plant, pipeline and two 2.75 million tonnes per annum trains, which will create 10,000 jobs over five years and boost local businesses and the economy”.
This project will deliver US$20 billion direct cash flow to the State, Provincial Government and landowners over a 25 year lifespan through company tax, dividends, landowner royalties, Provincial and Local Level Government development levy and a new production levy for the State, said Minister Abel.
He said, we have not had everything our way and made some compromises, but it represents a significant improvement on the PNG LNG Project. This agreement divides the net free cash flow 50/50 between PNG and the Total led developers.
“The key terms of the Agreement include a company tax of 30%, Production Levy of 2% to the State, another 2% to the Provincial and Local Level Governments for Development Levy.
“Also in the agreement includes the improved royalty and levy formula and additional profit tax.”
“It also contain the commercial carry financing for 75% of State Equity rights of 22% to which the Central Bank of PNG has agreed to maintain a stable minimum balance of foreign currency of US$250 million onshore and the domestic market gas obligation of 5% at $US4.50 fixed price.
Prime Minister Peter O’Neill upon witnessing the signing of the Papua LNG Gas Agreement stated that with this project, cheaper gas will be available to our country so that we can generate power and promote opportunities in the petro chemical industry.
Minister Abel added that this will be a massive boost to our economy in more ways than one.