PNG Govt criticised for allowing monopoly in sector, acknowledges Sonk

Since ExxonMobil swooped for InterOil, the PNG government has come in for criticism for potentially allowing the US firm to take a monopoly position.

Speaking during CWC's 8th World LNG Series summit in Singapore, Kumul Petroleum Ltd managing director, Wapu Sonk, acknowledged there were anti-competition concerns, since Exxon would have an interest in all major discovered PNG fields once the InterOil takeover closes.

However, he says there would still be two LNG operators.

InterOil shareholders voted in favour of the takeover in New York on Wednesday and the transaction is expected to close by the end of this month.

"Exxon is not going to be the operator of Papua LNG. Total remains the operator of Papua LNG," he said.

"But as far as the country is concerned, we are actually very happy because it brings two supermajors to work together and explore the synergies with the existing fields and new fields coming on line. The resources are enough to build more trains."

Sonk reiterated Kumul's plan to exercise its right to take a 22.5 percent stake, including 2 percent for landowners, in all future PNG liquefaction trains despite lower cash flow under current LNG prices. "Now we are preserving our cash … and building relationships with different financiers," he said.

On whether it was possible PNG LNG's proposed third train would have a different shareholder structure from the first two, Sonk said it depended on commercial negotiations among Exxon, Total and other partners.

"It depends which is the most capital efficient way to develop the third train. The government will have a say," he said, noting that one possible scenario was to separate the upstream and pipeline business from the downstream development.

(A tanker at the PNG LNG terminal. Picture: LNG World News)

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