DEPUTY Prime Minister Sam Abal yesterday said the PNG gas agreement is a well-considered document that will stand the test of time, The National reports.
He refuted claims and inferences that the whole gas agreement and processes had been rushed.
Abal said he had used the Tok Pisin word “hariap” to describe the process of negotiation and signing of the gas agreement in May 2008 in order to secure the 2014 market window, “and this was wrongly reported as a statement that the project has been rushed”. “This is unfortunate.
“I was certainly not trying to suggest that the government has rushed finalisation of the gas agreement, but wanted to convey that we needed to get on with the task of concluding the agreement in a specific time frame,” the deputy prime minister said.
“As a senior member of cabinet, I was aware that the negotiations took a year to conclude and I am confident that it will stand the test of time.”
He said the chronology of events leading up to the financial close and beginning of full execution of the PNG LNG project clearly showed no “rush” in the project.
The gas agreement was negotiated from 2007-08. Gas agreement signing took place in May 2008. Licence-based benefits sharing agreement (LBBSA) was negotiated from 2008-09. BSA was signed in May 2009 and UBSA thereafter in December 2009.
The final investment decision was reached on Dec 8, 2009. Financial close and beginning of full execution took place in March last year.
“The gas agreement is a well-considered document.
“It was essentially negotiated by a team of senior bureaucrats with key economic ministers and the ministerial economic committee endorsed all significant progressive documents with concurrency of the full cabinet,” Abal said.
He said cabinet was always aware that there would be significant benefits to all PNG stakeholders if sales from the LNG project could target a perceived global supply shortfall in the 2013-14 period and “this is what we achieved”.
“Those who follow international trends, particularly since the global financial crisis, would be aware that experts are now forecasting the possibility of a glut in LNG supplies from around 2017.
“Many Australian projects are now in a race to try and beat the deadline.
“In PNG’s case, we have concluded sales for our production at exceptionally good terms starting from 2014 because we remained schedule-driven despite the many challenges we face.”
The deputy prime minister said it was unfortunate that because of news stories suggesting the agreement had been rushed, others were now claiming the gas resources had been “sold cheaply”.
“That is erroneous reasoning without the basis of depth and objectivity,” Abal said.
He said government statements had clarified that this was not the case and international commentators and analysts had embraced the PNG agreement as a model for other countries to follow.