Offshore gas discoveries and their potential for development has prompted the state to review the country’s Oil & Gas Act.
Director of the Gas Projects Coordinating Office (GPCO), Peter Koim, tells Loop PNG that there are currently some loopholes that need to be addressed before a fully-fledged offshore project takes place.
“Our different laws have been initially designed to host on-shore projects, whether it be mining, LNG projects, or oil projects,” said Koim.
“There are some deficiencies in the existing laws to address a full fledged operation offshore. And I think our state solicitors office and our legal experts are looking at those missing links so there will be amendments to close in on those gaps before we move offshore projects into the development forum and actual development.”
One of the loopholes that Koim pointed out in the current act is the free carry two percent equity for landowners.
He said this clause is not applicable for an offshore project,” Koim said.
“When the law was enacted, this particular area was not looked at.
“Like now the Pasca Project, we’re using the oil and gas act to try and address the issue but then, the project has to make available two percent free carry equity to the landowner. But we don’t have landowners in the ocean. So who benefits from that two percent?
“How are you going to answer that question so these are things that within the state we are looking at and we will find some answers and address it by way of amendment to the act.”
Two offshore gas discoveries include the Pandora Field, between Torres Strait and PNG, and Pasca A, located in the Gulf of Papua. Twinza Oil has acquired a majority of interest in both gas fields.
Other potential offshore projects include Petroleum Prospecting License (PPL) 374 and PPL 375, which is operated by ExxonMobil, of which Oil Search has in each a 40 percent interest.
Loop file photo