PPL Terminates Power Deal

Oil Search has received a notice of termination regarding the PNG Biomass Power Purchase Agreement (PPA), which was signed by both companies in December 2015.

In a statement, Oil Search says it received a letter from PNG Power Limited (PPL) and is engaging with all key stakeholders, including Markham Landowners and Development Partners to Assess the potential impact of a cancelled PPA.

Oil Search Country Manager, Leon Buskens said it is important that they find a solution to bring the project’s low-cost reliable energy onto the Ramu Grid.

“We intend to work with PPL to find a resolution to move forward together. We are ready to build the power plant and solar farm.

“We have met all obligations in the PPA in order to reach Financial Close and we have strong funding support from international agencies who recognize the social benefits of this project,” Mr Buskens said.

He said they have a dedicated team ready to work with PPL to support them to meet their obligations. “We are ready to be part of the power solution and the energy mix and help the country transition to 100 per cent renewable by 2050.”

PNG Biomass project is aligned with the Government’s ambition to diversify the country’s energy mix and complement the drive to create jobs and opportunities.

The project will provide more than 500 jobs and stimulate many more across industries in the region. It also has the potential to make PNG a leader in renewable energy and enhance the country’s reputation globally.

The PNG Biomass has enormous energy benefits to provide the Ramu grid with up to 40MW of renewable, clean, affordable and reliable energy from biomass power generation and a solar farm. This will help stabilize the Ramu Grid and reduce blackouts in Lae.

“In 2018, Oil Search lowered the project’s power price significantly at the request of PPL. Ever since, the company has continued to work with all stakeholders, including lenders, grant funders and contractors, to ensure a competitive levelised cost of power that will result in material savings to PPL.

“In the process, Oil Search has attracted grants from the international community to the benefit of PPL worth over USD40 million (K140 million),” said the statement.

Oil Search said this is a compelling project for reliable power generation and creates large financial savings for PPL.

“Our PNG Biomass project is an excellent example of sustainable development, attracting widespread interest and admiration from the international community.

Mr Buskens added that the PNG Biomass is truly a world-class sustainable tree farming and energy operation and is an outstanding opportunity for PNG to showcase what it can do on the global stage.”

Press Release