Gas amendments to allow for domestic use

Amendments will be made to the Oil and Gas Act to allow for future gas development projects to make available a certain percentage of the resource to be used for domestic use.

Minister for Petroleum, Fabian Pok, says currently the Domestic Market Obligation (DMO) Policy is currently before the NEC for endorsement.

He said if the policy is approved, it will pave way for legislative amendments to the Oil and Gas Act to ensure gas resources are also used for domestic consumption.

Gulf Governor, Chris Haiveta, informed Parliament this week that while the current legislation allowed for DMO, it worked in the interest of developers.

“The provisions are focused entirely on commercial arrangements for our domestic market obligations. Now our countries expectations is that some of the gas be reserved entirely for PNG to use for its own requirements,” said the Governor.

To avoid a repeat, such as the case with the PNG LNG Project with upcoming gas projects such as the Pasca and Papua LNG it was important that the DMO Policy was in place.

“Could the Minister ensure that all future commercial agreements relating to oil and gas agreement reservation is strictly adhered to by the developers?”

Minister Pok said the Government has taken steps to ensure current projects allow for resources to be used in the market.

And he said the same will be applied to all future projects.

“The Chief Secretary and the Government working team that are working with the developers will ensure that the policy comes into place and a certain percentage of the gas agreed on from the fields will be made available for domestic obligation,” said Minister Pok.

Meanwhile he said a ‘Strategic Pipeline Policy’ is being considered by the Government.

The policy aims to generate revenue through tariffs when third party’s aim to access major and strategic gas pipelines.

He said currently the Joint Venture partners of the PNG LLNG Project own the main gas pipeline to Port Moresby.

Currently there are proposals in place by the Kumul Petroleum Holdings Limited (KPHL) for the Western Pipeline and Kikori Energy Hub which aim to connect all stranded gas fields and transport them to a central location.

“There are many stranded gas fields in Gulf, Western, and Southern Highlands, Hela and many places, that need to be brought to a central location for domestic market use.

“Because there is only one pipeline, and there will be one of two pipelines coming, which will become strategic pipelines, the Government has brought in a policy or ‘Strategic Pipeline Policy,’ where third parties can put their gas through  and pay a tariff so that we can access this gas easily,” said Minister Pok.

Cedric Patjole