The State of Papua New Guinea has granted the Pandora retention license to Kumul Petroleum Holdings Limited (KPHL), on Friday, 3 September 2021.
KPHL now has four Petroleum Retention Licenses (PRL), containing a total estimate reserve of 2 trillion cubic feet of dry gas.
In April of this year, it was announced that the Government made the decision to award PRL 48, 49 and 50 covering Kimu, Barikewa and Uramu gas fields to KPHL. The three are gas fields with estimated reserves of 233 billion cubic feet (BCF) of gas, 299 BCF and 274 BCF respectively.
The three PRLs were formerly held under Oil Search Limited, which naturally expired in October 2020. Pandora (PRL47) was formerly held by Talisman which expired in 2018.
Minister for Petroleum, Kerenga Kua emphasized that these grants to KPHL represent a new revolutionary approach in the way the State has been conducting its petroleum business.
The Minister said, “Up until now, the law and he practice has been the developer receives the petroleum resource free of charge upon the grant of the Petroleum License. Thereafter, the developer grants the State an option to buyback up to 22.5% equity in that license and resource.”
Minister Kua said the resource license in the hands of KPHL is the same as keeping the resource 100%, therefore saving the State billions if kina in buyback costs.
“In this new scheme where Kumul Petroleum gets the license, the buyback scheme is completely killed,” he said.
In addition, the State, under these grants to KPHL will now be in the position to see out portions of the 4 licenses to other developers and make money from it.
The award of Pandora retention license to KPHL is a clear demonstration of the Government's earliest steps to address the issue of sunk costs in oil and gas projects that have been leaving the State with huge debt burdens.
KPHL Managing Director, Wapu Sonk, thanked Petroleum Advisory Board and the Minister for having confidence in the National Oil & Gas Company’s capabilities and for recognizing it as an important partner in the Government's ‘Take Back PNG’ vision.
Sonk said, “Kumul Petroleum’s commercialization plans will include further to drilling of delineation and development wells ad project capital investments. Hence to mitigate Kumul Petroleum’s associated risk exposures, the company will look to invite joint venture partners and technical service providers with the requisite technical and financial capabilities who will assume critical roles in the development of these gas fields.”
Sonk said Kumul Petroleum will now be able to consolidate this assets and move toward commercializing fields which were previously held by different owners.