PNG Signs Historic First Offshore Gas Agreement
Papua New Guinea [PNG] has made history by signing its first offshore petroleum gas project agreement, the Pasca A Gas Agreement, at Government House in Port Moresby yesterday.
Minister for Petroleum, Jimmy Maladina, emphasized that the agreement ensures an unprecedented 70% state take, making it one of the most equitable deals in the nation's history.
He highlighted that the state would hold a significant 22.5% equity in the project, giving Papua New Guinea a direct and substantial stake in its success.
"The project operator, Twinza Oil, will be taxed as a PNG corporate entity at the standard 30% corporate tax rate," Maladina stated.
He also revealed that an additional profit tax of 15% would apply, with a further uplift of 30% afterward, ensuring the country reaps maximum financial benefits.
The fiscal measures are designed to bolster state revenue while maintaining transparency and fairness. These include royalties of 2%, a development levy of 2%, and a production levy of 3%.
According to Maladina, these levies will channel funds toward critical infrastructure, essential services, and community development.
To strengthen the domestic economy, the agreement mandates a Domestic Market Obligation [DMO], requiring 5% of total gas production to be supplied locally at a favorable price of 4.5% of the Japanese Customs Cleared Crude [JCC] price at the Twinza platform.
Maladina stressed that this provision ensures that PNG’s resources directly contribute to the country’s energy security and industrial growth.
Additionally, Twinza Oil is required to deposit USD 20 million into the Bank of Papua New Guinea, a move aimed at stabilizing foreign exchange reserves. The agreement also mandates maintaining a minimum balance of USD 10 million to support ongoing economic activities.
"There will be no exemptions on foreign exchange controls, and all sunk costs will undergo an independent audit," Maladina added.
The Pasca A Gas Project will operate as an unincorporated joint venture [JV], with the Mineral Resources Development Company (MRDC) and the Gulf Provincial Government as key partners.
The project will prioritize local content, targeting 80% local workforce participation within five years.
Furthermore, 25% of goods and services suppliers must be locally owned businesses, ensuring direct economic benefits for Papua New Guineans.
The project will be rolled out in two phases. Phase 1 will focus on liquids production, while Phase 2 will transition to Liquefied Natural Gas [LNG] production.
Maladina announced that the joint venture agreement will be finalized within 90 days to ensure national participation.
Strict conditions have been set to prevent delays in achieving the Final Investment Decision [FID] and securing the Petroleum Development License [PDL].
"This project marks a turning point for PNG, as it not only enhances our energy security but also boosts our economic resilience and ensures direct benefits for our people," Maladina concluded.
This landmark agreement sets a strong foundation for PNG’s offshore gas exploration and establishes the country as a competitive player in the global energy market.
