In a statement the company said it respects the Government’s right to set fiscal terms for resource developments, to ensure PNG receives an appropriate share of value.
However, under the terms proposed by the State, the joint venture partners, including Oil Search, were unable to obtain a return on their investment that made the project investable and bankable.
On January 31st Prime Minister Marape announced that negotiations on the P’nyang Gas Agreement stopped, claiming that Exxonon Mobil, on behalf of project partners, showed unwillingness to make concessions when the state was willing to.
Marape said the deal offered was unacceptable as it was not reasonable and well below similar project agreements in other countries.
The Prime Minister said negotiations are stopped while the Government concentrates on developments already in the pipeline.
In a statement Monday, Oil Search Managing Director, Peter Botten, said Oil Search respected the Government’s right to set fiscal terms for resource projects.
Botten said it was unfortunate the stakeholders could not agree on the fiscal terms however, under the terms proposed by the State, the joint venture partners were unable to obtain a return on their investment that made the project investable and bankable.
He said the resource size, cost of development and the challenges of operating in PNG are very different to other countries, and making broad comparisons with the State’s take under other fiscal regimes in our region is misleading.
Botten added they are committed to ensuring appropriate benefits are distributed to the right stakeholders and ensuring long term operating stability for any development.
Oil Search will continue a dialogue with the State on the P’nyang field and will seek to achieve the appropriate balance of risk and reward for all stakeholders in any future development.