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B U E E R L O O F R M ET IN D P ES AN Vol 5 Issue 1 Jan - Feb 2017

Landowner business Papua LNG important Muruk discovery exciting guide launched to for PNG P3 P6 P10

President’s message Executive Director’s viewpoint HELLO members, THE PNG mining and petroleum industry is going through a chal- Welcome to the first issue of lenging period. our bi-monthly newsletter for 2017. I would like to thank Although commodity prices have all members for their support improved for PNG’s resource in 2016 and going forward in commodities, including oil and 2017. gas, they are still relatively low. Gerea Aopi CBE It was not an easy year for the Greg Anderson This was reflected in Papua New industry and for many of our members in 2016. Guinea’s national budget passed Commodity prices, although improved, were still in November 2016 which includes estimated com- low, and most businesses were hard hit by the pany tax from the resource sectors of only K21.9 shortage of foreign exchange coupled with the million. economic downturn the country was going through. Although we have now progressed into a new year, Despite this, major positive developments were these challenges remain very much alive. Howev- achieved last year. er, despite these challenges many of our projects performed significantly well. TheExecutive Direc- Within a space of a month in June 2016, PanAust tor’s Viewpoint will further highlight some of these Ltd, the Australian miner owned by China’s Guang- positive developments. dong Rising Assets Management Co Ltd, on behalf of its joint venture with Highlands Pacific applied to 2016 culminated with the Chamber hosting the the Mineral Resources Authority (MRA) for a Spe- 14th PNG Mining and Petroleum Investment Con- cial Mining Lease (SML) for its Frieda River Project ference in Sydney, . Over 1,100 delegates in Sandaun, while the Morobe Mining Joint Venture from 16 different countries attended the event made up of Newcrest Mining Ltd and Harmony which was themed ‘Delivering on Growth Oppor- Gold applied for a SML for their Wafi-Golpu Project tunities’. It was a great success and the Chamber in Morobe Province. would like to thank all the delegates, the sponsors, the speakers, and most importantly the Prime Although both projects are still awaiting approval Minister Peter O’Neill, State Ministers, Members from MRA which could happen within the next 12 of Parliament, Department heads and other State- months, they are still a long way from being devel- owned enterprises for supporting the event. oped. Both projects could progress into construc- tion provided market conditions are favourable, This year, the Chamber will be hosting another and the legislative and fiscal regime welcoming. important event, the PNG Mining and Petroleum These projects are very critical to the PNG econ- Conference and Trade Fair at the Stanley Hotel in omy as existing mines like Ok Tedi, Porgera and from November 28 - 30. Please con- Lihir are in a mature stage. Impacted communities tact the Chamber if you wish to attend or become a and host provinces will also benefit significantly sponsor or exhibitor. from these projects through employment, business and social benefits. With that, I wish you all the best in 2017. Enjoy your reading and please do send us any feedback • Continued on Page 2 regarding this newsletter. • From Page 1 Gold production, previously PNG’s lead revenue earner, recovered well in 2016. The expectation was it would reach 57 tonnes by end of 2016 after significantly improved production at Lihir and Simberi. Output at Lihir at around 900,000 ounces was the highest ever achieved there. Newcrest Mining after achieving its target of an annu- alised mill throughput rate of 13 million tonnes per annum (mtpa) The PNG LNG plant located outside Port Moresby. by December 2016, has set a new target of a sustainable mill last year when it poured its first well. The discovery was big throughput rate of 14mtpa by gold in October from its Iru- news as it holds a lot of promise the end of December 2017. In mafimpa deposit. This achieve- for the expansion of the current parallel, projects and studies are ment was testament to the LNG project. underway to increase this further operator K92 Ltd who invested with an aspirational target of significant resources in rehabili- Oil Search stated in its 2016 17mtpa. tating the mine after taking over results that Muruk, which is lo- the project from Barrick Niugini cated along trend from the Hides Lihir’s operation achieved the in 2015. K92 is now planning field, has the potential to further significant increased production on ramping up production to an increase the resources available as a result of debottlenecking annualised production rate of for expansion and has upgraded and improved efficiencies in the 52,000 ounces per annum. several exploration prospects plant. nearby. Given Muruk’s proximity to infrastructure, unit technical All in all, PNG mine production The PNG LNG project continues costs are likely to be low, which, has improved significantly as a to perform well above nameplate with appropriate field phasing, result of significant cost reduc- capacity since it began opera- could potentially improve expan- tions, plant upgrades, rational- tion in 2014. In 2016, the project sion economics. isation and restructuring that produced at an average rate of have been implemented in the 7.9mtpa during the year, com- So despite the many challenges, producing mines. pared to nameplate capacity of PNG could still benefit signifi- 6.9mtpa. cantly from the many positive Ok Tedi which only resumed op- developments that are happen- erations a year ago after being The steady improvement of ing in the industry, provided suspended for almost 10 months the PNG LNG project has also commodity prices improve and due to an El Nino induced helped Oil Search achieve a there is stability in government drought has employed signifi- historical performance for 2016. policies. cant cost reduction measures, Its annual production of 30.24 rationalised its entire operations million barrels of oil equivalent Stability in the fiscal, legis- and restructured its workforce. (mmboe) and sales of 30.59 lative and regulatory regime Production at Ok Tedi is also mmboe were the highest in the underwrote the robust period expected to increase this year. company’s history, up 3 per cent of growth enjoyed by PNG’s re- and 6 per cent, respectively, source sectors during the period Simberi’s increased perfor- on last year. This reflected an of high commodity prices from mance is a result of continuous excellent performance from the 2003 to 2012 and will be critical improvements in mine plan- PNG LNG Project, as well as to driving a resurgence in the re- ning, equipment upgrade and better than expected production source sectors when commodity improvements in equipment from the mature oil fields. prices recover. reliability and availability. The Kainantu mine in the East- Just before the end of 2016, ern Highlands Province also an exciting gas discovery was achieved a significant milestone made at Muruk 1 exploration

2 Mining and Petroleum Review Chamber News Landowner business guide launched A guide that will assist resource two-part study undertaken by velopment and Current State of companies, government organ- Professor Richard Jackson, an Landowner Businesses Associ- isations and community repre- international consultant special- ated with Resource Projects in sentatives establish and manage ising in social and community Papua New Guinea’ was com- resource landowner businesses affairs. pleted and published in August has been launched. 2015. Prof. Jackson was commis- ‘A Guide to the Establishment sioned by the Chamber to The second report which was and Support of Landowner compile an analysis of landown- compiled into a guide provides Businesses Associated with er businesses at PNG resource a template and guideline for Resource Projects in PNG’ was projects. The study focused resource company management published by the PNG Chamber on the magnitude, scope, and and business development of Mines and Petroleum in No- contribution of the resource officers, government officers, vember 2016 and launched by project landowner companies landowner directors and leaders; Prime Minister Peter O’Neill at and businesses as well as an basically anyone responsible the 14th PNG Mining and Petro- assessment of issues and chal- for establishing, managing or leum Investment Conference in lenges common to these opera- regulating resource landowner Sydney in December. tions with recommendations for businesses. possible improvement. The guide is the second of a The first report titled‘The De- Copies of both reports can be purchased from the Chamber by contact- ing +675 321 2988 or emailing info@pngc- hamberminpet.com.pg.

Left: Prof. Jackson and President of the PNG Chamber of Mines and Petroleum Gerea Aopi showing a copy of the guide that was recently launched. Right: Copies of the two reports which are now on sale at the Chamber. Win inspires Kamasua to teach others about writing A winner in the 2016 Crocodile categories. Prize says he is now more determined and motivated The winners were announced at to teach children and young a presentation held at the Aus- adults about writing. tralian High Commission in Port Moresby on February 16. John Kamasua, currently a lecturer at the University of “It (the award) will be a source Papua New Guinea, was of motivation for my children selected as the winner for the and a sense of accomplish- Essay and Journalism cate- ment for myself. I will continue gory sponsored by the PNG to write and encourage many Chamber of Mines and Petro- more students that I teach at the leum. university to write. On behalf of my family, and myself, I wish to Mr Kamasua speaking at the He was among eight other sincerely thank the Chamber,” presentation night. winners who won in different Mr Kamasua said.

www.pngchamberminpet.com.pg 3 Chamber staff farewelled THE PNG Chamber of Mines Mr David will and Petroleum has farewelled be undergo- one of its long serving staff. ing further studies in Emmanuel Powuh David who Australia to worked with the Chamber for attain his eight years as a Projects Officer Masters in and later as the Senior Projects Project Man- Officer was farewelled on March agement. 24. He thanked Mr David started with the Cham- the Chamber ber in September 2008 after including the graduating from the University Executive Di- of Papua New Guinea with a rector, Greg Mr David, centre, flanked by Mr Anderson (left) and Bachelor in Economics. Anderson, and Mrs Warupi-Morlin. his supervisor saying he was an integral part of He contributed greatly to the Leah Warupi-Morlin for mento- the Chamber team and some- Chamber, performing various ring and supporting him in his one who was dedicated, hard duties including organising con- career growth. working and professional in his ferences and workshops, project work. management, editing Chamber Mr Anderson thanked Mr David publications, and representing during a small farewell kaikai for The Chamber wishes him the the Chamber on various pro- his contribution to the Chamber very best in his studies. grammes. PanAust, Interplast complete surgical assessments PANAUST and Interplast Fiak and Telefomin and carried Government and Community Australia and New Zealand out surgical assessments of Relations (PNG), Glen Connell recently completed surgical villagers who had conditions re- said: “As a mining company assessments of villagers living lating to plastic and reconstruc- operating in developing coun- in communities close to the tive surgery. tries, PanAust is in a position Frieda River project. to make a significant contribu- The program was the continua- tion to improving the standard The team comprising of a plas- tion of a successful partnership of living for current and future tic and reconstructive surgeon between PanAust and Inter- generations. We are pleased and a nurse from Interplast plast since 2012 in Laos where that we can play a role in bet- and PanAust Community PanAust runs two mining oper- tering the lives of those living Affairs personnel, visited the ations. close to where we operate.” villages of Paupe, Wabia, Ok Isai, Oum 3, Iniok, Sokamin, PanAust General Manager

4 Mining and Petroleum Review PNG’s gas must be cost competitive PAPUA New Guinea faces stiff “China is understood to be competition from other world gas developing its own resource, so suppliers as the global demand China will compete and will do for energy increases. its best to increase production. Australia has the North West This is according to Professor shelf and will soon be the largest Peter McCabe, Head of the LNG exporter in the world,” he Australian School of Petroleum added. at the University of Adelaide who spoke at the 14th PNG Mining Prof. McCabe also said PNG’s and Petroleum Investment Con- gas reserves were relatively ference in Sydney, Australia last small and that the country’s December. Prof. McCabe speaking at the challenge moving forward will be conference. to ensure its gas is cost compet- “There has been a huge in- itive. crease of gas supply in the United States,” he said.

Huge potential for alluvial mining THE alluvial mining sector has “The last few years have seen the potential to directly benefit an increase in applications for people living in the rural areas, alluvial mining leases; and ef- according to the Mining Minis- forts are being made to properly ter Byron Chan. regulate this sector and increase greater levels of mechanisation,” Mr Chan told delegates at the he said. 14th PNG Mining and Petro- leum Investment Conference The minister said it was esti- that there has been a marked mated that by the end of 2016, increase in applications made total income from alluvials would to the Mineral Resources exceed K330 million. Authority for alluvial mining Alluvial mining can benefit leases. many rural people if regulated properly

www.png.OresomeResources.com 5 Govt wants key resource projects developed THE Government will continue to support key projects that are in an advanced stage such as the Wafi-Golpu, and the Frieda River projects.

Prime Minister Peter O’Neill told delegates at the 14th PNG Mining and Petroleum Invest- ment Conference in Sydney in December that the Government is fully committed to these two mining projects including oth- ers that are at various stages of development and approval processes.

“There are a number of reforms that are underway in our re- Newcrest Mining Managing Director and Chief Executive Officer Sand- source sectors as we seek to in- eep Biswas speaking to Mr O’Neill during the conference. crease productivity in the tough obligations. party access to the pipeline, as global economy,” Mr O’Neill stated in the Oil and Gas Act said. “We are working to ensure that and our national content must some of our gas is used for do- be taken into account so that we In the petroleum sector, Mr mestic use and downstream pro- can improve local participation,” O’Neill said the government’s cessing. We will allow for third he said. focus was on domestic market Papua LNG a top priority for the government Mining and Petroleum “The project partners have Investment Conference in announced a certified gas December last year. reserve estimate of 6.5 trillion cubic feet (tcf), however work He said the Government is continuing in the Elk/Ante- will continue to support lope fields and we anticipate the TOTAL SA-led project positive results of an upside, despite its many challeng- which may be higher than es as it has the potential anticipated,” he added. to benefit the lives of many people and also Mr Duban said the Elk/Ante- transform PNG’s LNG lope fields could have a com- A roadshow organised by TOTAL E & P market. bined resource of between 4.8 in Port Moresby last year provided its – 9.0 tcf of gas and 98 - 128.9 stakeholders an extensive update on “The successful realisa- million barrels of condensate. the Papua LNG project. tion of this project will be THE Government believes a significant milestone for PNG Total is the operator of the Pe- development of the Papua as the country will export LNG troleum Retention Licence 15 LNG project will unlock many from two separate LNG projects. Elk/Antelope fields. It holds the benefits for Gulf Province and Producing and exporting from largest shareholding of 31.1 the rest of Papua New Guinea. two successful LNG projects will per cent interest, alongside also elevate the profile of PNG partners Oil Search (17.7%) Petroleum and Energy Min- as a safe investment destina- and ExxonMobil (28.3%), post ister Nixon Duban said this tion,” Mr Duban said. the government back-in right when speaking at the PNG of 22.5%.

6 Mining and Petroleum Review Mining Environment Impact Statement for Frieda mine lodged PANAUST has submitted to sive biodiversity survey ever tainability, with well-established, PNG’s Conservation and En- undertaken in PNG; a significant proven environmental manage- vironment Protection Authority addition to the existing scientific ment standards,” he added. Frieda River’s Environmental body of work on PNG biodiver- Impact Statement (EIS). sity. “We recognise the importance of the Sepik River basin to PNG, The EIS which was submitted PanAust Managing Director, both from an environmental late last year was the statutory Dr Fred Hess said the project’s perspective and the valuable basis for the environmental as- EIS demonstrated the compa- contribution it makes to peoples’ sessment of the project and was ny’s world-class, best-practice lives and livelihoods. in line with the project feasibility environmental management study which was lodged together standards. “PanAust’s proven excellence in with its application for a Special the management of tailings and Mining Lease on 24 June 2016. He said it also indicates its waste rock in similar conditions ongoing commitment to respect- in Laos will guide the compa- The EIS, prepared by Coffey ing the natural environments in ny’s environmental manage- Environment Australia Pty Ltd in- which PanAust operates. ment programs at Frieda River, corporated the results of numer- ensuring that impacts to natural ous surveys covering both social “PanAust is an internationally environments, including local and environmental aspects of recognised leader in environ- waterways, are minimised,” Dr the project, including what is mental management and sus- Hess said. arguably the single most inten- 20 million ounces and going strong THE Porgera gold mine in ed the efforts of those who had community, the government Enga Province reached a been involved with the operation and all other stakeholders. To significant milestone in March since the first pour in 1990 and those who work behind the when it achieved 20 million those who were still with the scene to make it possible to ounces in gold production project working safely, 20 million achieve this result, congratu- since the mine started opera- ounces later. lations. Not many mines meet tion in 1990. 20 million ounces…..it is a rare “This has been a great effort by achievement,” Mr. Shaw said. The project which is a joint everyone; the employees, the venture between Barrick Gold Corporation, Zijin Mining Group and Mineral Resources Enga (MRE) Limited reached the milestone on March 6 when 7,044 ounces was pro- duced for the particular day.

And to mark its significance, six of its longest serving employees, including some of the production and processing staff were invited by the mine’s management to witness the historic gold pour event.

Porgera Joint Venture (PJV) General Manager Operations, PJV staff together with some of the mines longest serving employ- Damian Shaw on behalf of the ees including Mr Shaw (standing, 4th from right) celebrate with gold PJV management commend- bars produced on the day.

www.pngchamberminpet.com.pg 7 St Barbara wins award for third consecutive year THE operator of the Simberi Government statutory charged ee consultation, preventing gold mine in the New Ireland with promoting and improving sex-based harassment and Province, St Barbara has been the role of gender equality in discrimination, and targets awarded the ‘Employer of Australian workplaces. It collab- for improving gender equality Choice for Gender Equality’ for orates with employers by provid- outcomes. a third consecutive year by the ing advice, practical tools and Workplace Gender Equality education to help them improve St Barbara has set targets for Agency (WGEA). their gender performance. the representation of women across the company, as well St Barbara Managing Director To qualify for an award, organ- as in leadership roles and and Chief Executive Officer isations must demonstrate how Board representation. Bob Vassie said the award they are addressing various shows that it is possible to benchmarks for gender equality The company also provides address gender equality in such as leadership, learning and industry best practice parental what has traditionally been a development, gender remu- leave and return to work provi- male-dominated industry. neration gaps, flexible working sions, and special paid leave and other initiatives to support for domestic violence victims. The WGEA is an Australian family responsibilities, employ-

High speed broadband for Lihir gold mine NEWCREST has partnered with telecommunications and technology company, Telstra to become the first gold miner in the southern hemisphere to deliver O3b’s high-speed broad- band through its new 100 mega- bits per second (Mbps) satellite link to the Lihir gold mine in New Ireland Province.

The new medium-earth-orbit (MEO) satellite link, which has increased bandwidth to Lihir by over 600 per cent, is the result of a partnership between Newcrest, Telstra and satellite Newcrest’s Lihir gold mine in New Ireland Province. Picture courtesy service provider O3b Networks. of Newcrest Mining Ltd. “Newcrest is proud to make use dia and Lihir, Craig Jetson said Under the agreement, New- of this innovative new service to that the Lihir workforce and com- crest’s Wide Area Network ser- significantly improve the network munities were already benefiting vice will be extended by Telstra experience at Lihir,” Chief Infor- from the improved technology. via a constellation of MEO satel- mation Officer Gavin Wood said. lites. This new satellite service is “This new satellite service has an exciting addition to Telstra’s “As well as enabling better IT provided us with the opportunity world-class network and will see and digital solutions for our to access technologies that are enhanced connectivity delivered operation, the new link will help reliant on high bandwidth plat- to more remote locations around make Lihir a better place to work forms. This further streamlines the world. and live for our workforce,” he our operations, making us more added. efficient and cost effective,” he said. Executive General Manager Ca-

8 Mining and Petroleum Review Petroleum ExxonMobil takes over InterOil after months of delay

EXXONMOBIL Corporation, the pore and Port Moresby. InterOil • A payment of US$45.00 per world’s largest listed oil and gas was listed on the New York and share of InterOil, paid in Exx- company has acquired InterOil Port Moresby stock exchanges. onMobil shares, at closing. Corporation. The number of ExxonMobil In July 2016, former chairman shares paid per share of The takeover was finally ap- and chief executive of Exxon- InterOil will be calculated proved by the Supreme Court of Mobil, Rex Tillerson, now the based on the volume weight- Yukon in February which grant- United States Secretary of State ed average price of Exxon- ed a final order approving the announced it would cost Exxon- Mobil shares over a measur- arrangement between the two Mobil more than US$2.5 billion ing period of 10 days ending companies. to acquire InterOil. shortly before the closing date (Share Consideration). The arrangement was approved “This agreement will enable Exx- by more than 91 per cent of the onMobil to create value for the • A Contingent Resource shares voted at a Special Meet- shareholders of both companies Payment (CRP), which ing on February 14, 2017. and the people of Papua New will be an additional cash Guinea,” Mr Tillerson said. payment of US$7.07 per InterOil Corporation was an in- share for each trillion cubic dependent oil and gas company “InterOil’s resources will en- feet equivalent (tcfe) gross with a sole focus on Papua New hance ExxonMobil’s already resource certification of the Guinea. InterOil’s assets include successful business in Papua Elk-Antelope field above 6.2 one of Asia’s largest undevel- New Guinea and bolster the tcfe, up to a maximum of 10 oped gas fields, Elk-Antelope, company’s strong position in tcfe. The CRP will be paid in the Gulf Province, and explo- .” on the completion of the ration licences covering about interim certification process 16,000sqkm. Under the terms of the agree- in accordance with the Share ment with ExxonMobil, InterOil Purchase Agreement with Its main offices were in Singa- shareholders would receive: Total SA, which will include the Antelope-7 appraisal well, currently in progress. The CRP will not be transfer- rable and will not be listed on any exchange.

The takeover will now give Exx- onMobil access to InterOil’s re- source base, which incorporates interests in six licences in PNG including the Elk-Antelope field in Petroleum Retention Licence 15 which is the anchor field for the proposed Papua LNG proj- ect operated by Total SA.

InterOil was founded in 1997 by Phil Mulacek who was at the helm of the company as chief executive officer until he was replaced in 2013.

A map showing the Interoil petroleum licenses and gas fields.

www.png.OresomeResources.com 9 New exciting gas discovery at Muruk A new gas discovery made at project,” said Steve Greenlee, Muruk 1 late last year could president of ExxonMobil Explo- contribute significantly to ration Company. expansion of the current LNG “Over the coming months we project. will work with our co-ventur- ers to better determine the full In December last year, Exxon- resource potential.ExxonMobil Mobil announced that a new has been involved in exploration gas/condensate discovery in Papua New Guinea since the was made at the Muruk-1 ex- 1930s,” Greenlee added. ploration well, about 21 kilo- meters northwest of the Hides The Muruk exploration success Gas Field. demonstrates the strength of ExxonMobil’s long-term invest- “We are excited by the results ment approach and reaffirms of the Muruk-1 exploration its commitment to Papua New well, which confirms the pres- Guinea.” The Muruk 1 well. Picture cour- ence of hydrocarbons in the tesy of Oil Search. same high-quality sandstone The well is located in Petroleum The well is currently being reservoirs as the Hides field Prospecting Licence 402, which sidetracked to determine the that underpins the PNG LNG covers 510 square kilometers. hydrocarbon - water contact. Santos farms into Muruk days before discovery SANTOS recently announced that it had signed an agreement to farm-in for a 20% interest in Petroleum Prospecting Licence (PPL) 402.

The interest was acquired from both Oil Search and ExxonMobil.

PPL 402 is located approximate- ly 40 kilometres northwest of the Hides gas field and production facilities, and within the highly prospective thrust and fold belt trend. The licence covers an area of 510 km2.

The farm-in resulted in Santos’ participation in the recently com- pleted Muruk 1 exploration well. Chief Executive Officer Kevin partners to explore and develop. Gallagher said Santos had a Completion is subject to custom- The Muruk 1 well targeted the long and successful working ary regulatory approvals. Toro Formation, which is gas relationship with both Oil Search bearing in the nearby Hides and and ExxonMobil. The terms of the agreement are Juha fields, and was originally confidential. The PPL 402 par- estimated by Oil Search to con- Mr Gallagher said the agree- ticipants are; affiliates of Santos tain a potential gas resource of ment demonstrates Santos’ (20%), affiliates of ExxonMobil about two trillion cubic feet. commitment to growing its (42.5%), and Oil Search (37.5%, position in Papua New Guinea operator). Santos Managing Director and and working with its long-term 10 Mining and Petroleum Review Oil Search production rises but sales revenue drops OIL Search reported 30 per cent fall in produc- in its 2016 Full Year tion costs since produc- Results that oil and gas tion commenced in 2014. production was up by 3 per cent to 30.24 million The annualised rate of barrels oil equivalent production of 7.9 million (mmboe) and sales tonnes annually reflected rose by 6 per cent to an a progressive improve- all-time high of 30.59 ment in the LNG plant mmboe. performance during the The company reported an year, which reached an However, total company overall company tax payment in annualised production rate of 8.3 revenue fell 22 per cent to 2016 of US$95.24 million which million tonnes in the fourth quar- US$1,235.9 million in the same included a deferred tax expense ter, the highest since production period. The drop in revenue of US$90.56 million. This was began. was a result of lower oil and gas a sharp fall from 2015 when the prices with the average oil and total tax payment was US$147.6 Besides a strong contribution of condensate price down 12% to million, including a deferred tax 6.83 million boe from the PNG US$45.04 a barrel, while the amount of US$133.56 million. oilfields attributed to reservoir LNG and gas price dropped by The deferred tax payment was management and well inter- a steep 33% to US$6.36 per largely due to expenditure on ventions at Kutubu and Moran, million Btu. exploration, development and higher third party gas sales were production in 2016 amounting to also made from the SE Gobe This resulted in a net profit after US$89.9 million compared with field to the PNG LNG Project, tax of US$89.8 million compared US$139.8 million in 2015. along with increased gas sales to a loss of US$39.4 million in to the Hides gas-to-electricity 2015. The latest figure included Oil Search’s increased pro- project for the Porgera gold a profit, after costs, of US$18.7 duction was due to an excel- mine. million received as a break lent performance by the PNG fee from ExxonMobil over the LNG Project, which produced The excellent results were InterOil takeover transaction. Oil at an average rate of 7.9 mil- achieved despite the LNG plant Search said this was offset by a lion tonnes a year compared experiencing an unplanned shut- one-off, non-cash restatement to nameplate capacity of 6.9 down during the June quarter of a deferred tax balance of million tonnes/year. Unit produc- and a small reduction in gas US$35.6 million, following a re- tion costs fell from US$10.08 flows and LNG production in the duction in oil field tax rates from per barrel oil equivalent (boe) third quarter due to a landowner 50% to 30%. in 2015 “to a very competitive protest at the Hides Gas Condi- US$8.50 per boe”, reflecting a tioning Plant. Oil Search quits Middle East and North Africa OIL SEARCH has confirmed The Taza interest was relin- pected to be completed early its decision to exit from the quished last year following a this year. This decision had a Middle East – North Africa re- comprehensive review and con- small impact on the company’s gion and to maintain its focus tinuing uncertainties about the oil and gas resources with re- “on its high-returning business resource. All operational sites moval of 21.9 million barrels of in PNG.” have been remediated and will oil and 6.3 billion cubic feet of be returned to landowners and gas relating to Taza and Block The company’s 2016 results the Oil Search office in Kurdistan 7, Yemen. announcement said Oil Search has been closed. had relinquished its interest in Oil Search drilled its discov- the Taza production sharing Sale of the company’s Yemen ery well in Taza in 2013 and contract in the Kurdistan re- entity, which holds a 34 per cent followed up with two appraisal gion of Iran and was progress- interest in Block 7, to a subsid- wells in a block covering 511 ing the sale of the company’s iary of Petsec Energy Ltd is ex- square kilometres. interests in Yemen.

www.pngchamberminpet.com.pg 11 Higher gas reserves underpin LNG production About Us:

A recertification and upgrading discovery at Muruk, which is lo- The PNG Chamber of Mines and of natural gas reserves in the cated along trend from the Hides Petroleum is a non-profit, peak in- PNG LNG Project area has field, has the potential to further dustry association that represents provided flexibility to the consor- increase the resources available the interests of the mining and pe- tium to sustain higher rates of for expansion and has upgraded troleum industry and associated production beyond the 8 million several exploration prospects industries in Papua New Guinea. tonnes a year currently being nearby. achieved by the project, accord- The Chamber has a membership of ing to Oil Search Limited (OSL). “Given Muruk’s proximity to in- over 230 companies. This includes frastructure, unit technical costs most of the mining and petroleum The company’s 2016 Financial are likely to be low, which, with companies active in PNG who Report said the recertification of appropriate field phasing, could comprise the Full Members. Asso- resources in all PNG LNG fields potentially improve expansion ciate and Service Members make by Netherland, Sewell and Asso- economics.” up the balance of the membership ciates Inc (NSAI) had increased and these are support companies OSL reserves in the proved cat- Oil Search said it believed new with business connections to the egory (1P) by 50% to 2.14 trillion LNG trains in PNG were ex- mining and petroleum sectors in cubic feet at the end of last pected to be among the most PNG. year. Proven oil and condensate competitive new LNG develop- reserves were increased to 62.3 ments globally adding that “LNG About the publication: million barrels from 57.5 million expansion in PNG is a compel- The Mining and Petroleum Review barrels in 2015. ling proposition”. is a bi-monthly e-newsletter that aims to inform Chamber members, Oil Search said that besides “Oil Search remains committed the private and public sectors in- providing flexibility for production to driving forward its high value, cluding the Government, interest- of more than 8 million tonnes cost competitive LNG develop- ed groups and the general public annually, the increased reserves ments in a timeframe to capi- about developments happening “also allows for the optimal talise on the expected opening within the PNG resources industry. placement of production above in LNG markets in the early existing long term contracts into 2020s,” the company said. General enquiries: additional mid or long term con- tracts or within the spot market”. Although crude oil prices have The Chamber commissions and strengthened considerably in publishes a wide range of reports The company said there was the past year and currently sits on the mining and petroleum in- approximately 10 trillion cubic at around US$50 a barrel, Oil dustry in the country. A number of feet (tcf) of discovered undevel- Search said it expects spot LNG these reports can be downloaded oped proven and probable gas prices to soften from current for free from the Chamber website in the Elk-Antelope and P’nyang levels this year. Nevertheless, it while others can be purchased by fields which could support two said the long term LNG market completing an order form which additional trains of four million fundamentals remain strong, is available on the website. Forms tonnes each annually. with major Asian buyers expect- can be returned to info@pngc- ed to have substantial new LNG hamberminpet.com.pg or can be It said: “The recent exciting gas requirements early next decade. dropped off at Level 1, The Lodge, Brampton Street, Port Moresby.

Media enquiries and contributions:

For enquiries regarding articles in this newsletter or contributions, please contact Mackhenly Kaiok on email MKaiok@pngchamber- minpet.com.pg or you can call +675 321 2988.

Websites:

PNGCHAMBERMINPET.COM.PG The Hides Gas Conditioning Plant PNG.ORESOMERESOURCES.COM

12 Mining and Petroleum Review