Talisman Seeks PNG Partner

  Talisman Seeks PNG Partner

David Winning, The Wall Street Journal, 28 December 2011

Papua New Guinea may look a one-trick pony in global gas markets, with only the ExxonMobil-led PNG LNG project under construction. But Talisman Energy’s move to bring in a partner on its acreage in the country is a reminder that there are other games in town.

Talisman has appointed Sydney-based advisory firm RFC Corporate Finance to find an investor for four licenses in the forelands of western Papua New Guinea, which contain a mix of gas discoveries and exploration targets. The company reckons it can aggregate between 2 trillion and 4 trillion cubic feet of gas in Papua New Guinea–enough to underpin a single unit producing liquefied natural gas, or LNG, for export.

“Our intent was always to seek a strategic partner in what is a very large license interest position, once sufficient resources have been aggregated,” said Dave Mann, a spokesman for Calgary-based Talisman. “RFC represents a formal process to execute on this.”

Once a frontier region for exploration, Papua New Guinea has been transformed into a playground for the energy industry’s big beasts seeking gas reserves that can be developed and shipped to Asia’s booming economies. Talisman drove that process in the forelands area in 2009 and 2010, completing deals such as the US$177 million acquisition of Rift Oil and taking stakes in gas discoveries owned by ASX-listed Horizon Oil.

According to a BP study, Papua New Guinea had 15.6 trillion cubic feet of proven reserves of natural gas at the end of 2010. That figure likely underestimates the true resource as Papua New Guinea has been lightly explored up to now.

Talisman is offering to sell a 50% interest in the PPL 235 and PPL 261 licenses, which it wholly owns, and 10% stakes in the PRL 4 and PRL 21 blocks. RFC is calling for binding bids to be submitted by the end of January.

PPL 235 contains the Puk Puk, Douglas and Langia discoveries that contain a combined 2.4 trillion cubic feet of gas in place. Three exploration wells have been drilled so far in PPL 235, which it acquired through the Rift Oil takeover, and all have discovered natural gas.

“The exploration activity in these blocks has matured a series of drillable prospects with exciting prospective resource potential, and we are looking for a partner with a similar vision to Talisman for aggregation of gas resources in the PNG Foreland,” Mann says.

PRL 4 and PRL 21 also contain discovered resources, but the near-term focus is on developing reserves of condensate there with a view to bringing the gas to market later.

For now, Talisman is keeping its options open on a route to market for the gas. It could pipe gas to the US$15.7 billion PNG LNG project to support an expansion there. In its first phase, PNG LNG will have a annual production capacity of 6.6 million tons of LNG, with shipments to customers in Japan, Taiwan and China due to begin in 2014.

Piping the gas to PNG LNG is attractive because it would likely be cheaper than building and operating an onshore plant, or locating a floating LNG vessel in the Gulf of Papua.

But to strengthen its hand in any negotiations with Exxon and joint venture partners like Santos and Oil Search, Talisman likely needs an alternative route to market. If it succeeds in attracting a strategic partner with deep pockets, such as from China or Japan, then it opens doors for potential financing of a standalone LNG development.

Yep this is sustainable! Global Energy Demand 1990-2040.

Occupiers slow down operations at PNG LNG site

Radio New Zealand, 23 December, 2011

The operator of the multi-billion dollar liquified natural gas project in Papua New Guinea says it is hoping for a quick resolution after a group of landowners stormed one of its key project sites in the Hela province.

The chairperson of the Gobe landowners group, Jerome Kairi, estimates about 12-hundred now occupy the Gobe Field Engineers camp site.

Mr Kairi says they have given the government and operator of the LNG project ESSO Highlands Ltd, 48 hours to meet commitments made to landowners, such as infrastructure improvements and development grants.

But the ESSO Highlands Ltd spokesperson Rebecca Arnold says the grievances do not relate to the natural gas project.

“The primary issues really relate to government commitments around oil project memorandum’s of agreement. The PNG LNG project is obviously very hopeful of a quick resolution to the issue.”

Rebecca Arnold says operations have slowed down at the site in Gobe as a result of the occupation.

Landowners Threaten to Close the LNG Project

PNG Landowners Issue Ultimatum Over LNG Developments

Radio New Zealand, 23 December, 2011

http://www.rnzi.com/pages/news.php?op=read&id=65242

The head of a landowners’ group in Papua New Guinea’s Hela province claims they will shut down the huge liquified natural gas project if their demand is not met.

Aggrieved landowners stormed a key LNG project site on December the 8th, and the chairperson of the Gobe landowners group, Jerome Kairi, estimates 12-hundred now occupy the Gobe Field Engineers camp site.

Mr Kairi says they have given the government and operator of the LNG project Esso Highlands, until Saturday to meet commitments made to landowners, such as infrastructure improvements and development grants.

“I haven’t got any undertaking from both Esso Highlands and the government as to what understanding we are to reach. If that fails then the whole oil operation and the whole LNG operation would have to come to a stop and we are going to demand the company to evacuate and have the project closed forever.”

Jerome Kairi.

The Esso Highlands spokesperson Rebecca Arnold says the main issue is around government commitments to historic oil project memoranda of agreement, which do not relate to the LNG gas project.

2000 Landowners Storm LNG Project Site

Key LNG Prject Site in Gobe Under Threat

John Pangkatana,

Post Courier, December 22, 2011, pg.1

The political stalemate in Port Moresby is over but a turmoil of another sort is brewing.

This time it is in the new Hela Province, where a key project site is under siege by aggrieved landowners and threatening stability in the billion kina oil and gas developments there.

Landowners in Gobe have put the Government on notice to settle their outstanding committments at PDL 4 Project site within the next 48 hours.

After storming the project site on December 8, landowners from the Samberigi area have been keeping a vigil with their numbers now swelling up to 2000 people at the Gobe Field Engineers (GFE) camp site.

Landowner representative Mr Max Apua reiterated his earlier call that they are not budging until the National Government solves their issue.

Speaking by phone from the project site yesterday, Mr Apua said his people want the Government to solve their grievances on-site. Mr Apua, who is also a councillor for Samberigi in the Erave Local Level Government said the Government and developer Esso Highlands are requested to come for round-table talks to solve their plight.

The developer, Esso Highlands in a statement yesterday confirmed that a camp operated by pipeline EPC contractor, Spiecapag, had its perimeter breached at around 9pm by a group of people from the local area.

Esso Highlands media and communications adviser Rebecca Arnold said: "A number of vehicles were vandalised and equipment was stolen. An adjacent camp operated by landowner company GFE was also breached and remains occupied by members of the group".

"There have been no reports of injuries. The police and other appropriate authorities remain on site," she stated. DPE official travelled to Gobe last week and interfaced with the group in an attempt to resolve the situation. They (DPE) returned yesterday, she confirmed.

Ms Arnold said the primary issue regarding the occupation appears to be Government commitments related to oil project Memorandums of Understanding (MoU's).

"Safety and security is a core value of Esso Highlands Limited  and we are committed to providing a safe workplace," she added.

Oil Search Limited general manager Mr Andrew Warrington said: "We fully support their continued provision of services to us despite the progressively and rapidly declining oil production at Gobe Main and South East Gobe.

Up until end September 2011 Oil Search had provided contract work during the year as follows: Gobe Field Engineering, civil work, camp maintenance and security work to the value of PNGK4.96MM Gobe Freight Services road transport and in-field cartage work to the value of PNGK8.31MM Gobe Catering - catering and camp management services to the value of PNGK2.87MM.

This data is published regularly by Oil Search in their bi-monthly Komuniti Nius. "These figures are revenue, not profit," he clarified.

Comments from DPE were not available to clarify the Government position, despite numerous calls yesterday afternoon.

However, Prime Minister Mr Peter O'Neill publically announced on Tuesday this week that all matters relating to outstanding commitments in Hela would be properly addressed shortly after all appropriate landowner groups were identified adequately.

A Touching Post from Tingtingblokantri Blog

The Bone Dagger

http://www.tingtingblokantri.blogspot.com/2011/12/bone-dagger.html 

Simon, a leader of his clan,  is an elderly man who has no use for shoes and the clothes that the white man brought in more than 50 years ago.  This proud Hela elder is one of hundreds whose world revolved around traditional symbols of wealth and status.But all that is being torn to shreds as the whiteman's cash takes precedence over headresses, bird plumes and pigs.  The whiteman's law has also rendered centuries old  traditional commandments  unapplicable in the 21st century.

These days Simon refuses to leave the confines of his village and venture into the Tari township -the capital of the new Hela province. His whole world - the world of the Hela man - is slowly crumbling around him.

For laws enforced to the letter by armed police dictate that he abandon his cassowary bone dagger that a Hela  man always  carries after initiation. The whitemen from gas project are fearful of the Hela with their strange headresses and their "offensive weapons," -the cassowary bone daggers. Police tell him that he can wear everything else but the bone dagger. Some of his tribesman have chosen. To wear shorts and trousers to avoid hassles with the police but not Simon. He doesn't care much about Exxon Mobil's multibillion dollar gas project but what worries him are ancient prophecies of strife and turmoil that will befall his people if the land is disturbed and the "fire" given to the outsider.

What also worries him is that his land is being invaded and trampled on  by foreigners and he is unable to defend it

Population Growth and Conflict in PNG: A Warning

See below, an interesting report on PNG’s population growth and the problems it creates. This dilemma is particularly important in areas facing natural resource developments. Indeed, one of the primary causes of the Bougainville conflict was a population bottleneck. A large generation of young people, who gained maturity in the 1980s, found core economic opportunities had been monopolized by previous generations. As a result they searched for new ways of organising their local political economy, one that would see a fairer redistribution of resources.

As we know this led to a bloody civil war, as neither local businessman or BCL would consent to the demands of the young people. We wonder then with all the new gas and mineral projects, whether 10 to 20 years from now we will see another Bougainville bottleneck. Of course by then Exxon will have pocketed the profits and the tax revenues will have lined the coffers of the corrupt elite, thus it will be left to the grassroots people, the PNGDF, the RPNGC and civil society to somehow resolve.

PAPUA NEW GUINEA: Population growth fuels conflict

IRIN – A Service of UN Office for the Coordination of Humanitarian Affairs

GOROKA, 21 December 2011  - Unchecked population growth is fast proving an additional source of conflict in Papua New Guinea (PNG), a country with a history of clan violence and clashes over land, experts say. 

“Without doubt, rapid population growth is adding to the risk of conflict,” Max Kep, director of the PNG’s national Office of Urbanization, told IRIN, noting that various types of conflict are fuelled by limited resources, including a shortage of land. 

As PNG’s population nears seven million, comprised of nearly 700 ethnic groups speaking some 800 languages, communities are increasingly fighting over smaller plots of land, while city dwellers in swelling urban areas are clashing with nearby owners of traditional land, Kep said. 

Over the past 30 years, the country’s population has more than tripled, from 2.1 million to 6.7 million, government figures reveal. 

At the same time, the average total fertility rate of 4.4 births per woman remains one of the highest in the Pacific region, says the UN. 

According to a recent government task force report on maternal health, PNG’s population will probably double in the next 25 years. 

Pressure on towns 

Adding to this challenge is PNG’s increasing youth population, with more than half of the country’s population now under the age of 20, according to World Bank figures.  

“It’s like having wild grass lying around waiting to be struck by lightning for a brushfire,” Helen Ware, a professor at the University of New England in Australia who has studied and practised peace-building in PNG, explained, noting the risk of so many idle, underemployed men. 

Migrants - drawn to towns and cities for jobs and services - are fuelling population growth in urban areas, Kep said, adding that urban areas are now growing at an average of 4.5-5 percent a year. 

Some 97 percent of the country’s land is under customary tenure law, meaning it is reserved for traditional land owners and the state has no jurisdiction over it. Land owners often are unwilling to release land for urban growth, so PNG’s cities have nowhere to expand, according to the UN Human Settlements Programme (UN-HABITAT). 

The Eastern Highlands city of Goroka, for example, is facing critical land shortages which have caused rapid and informal urbanization, according to a UN-HABITAT report. 

Kep, with the Office of Urbanization, said a government initiative to encourage landowners to lease their land to municipalities is aimed at empowering them, with increased income and access to government services. 

Many of those flocking to urban areas today are the young. But with few job opportunities when they arrive, the country has also witnessed an increase in urban youth gangs, known as `raskol’ gangs, who often turn to crime, according to residents. 

Violent clashes have erupted between local landowners and `raskols’, Albert Sams, a 24-year-old health worker from Ifiufa, a village 20km from Goroka, explained. 

Family, community feuds 

Significantly, land disputes between family members and communities are also now more common under the strain of population growth, residents and international agencies say. 

“Villages which once were separated are now bordering one another, and conflicts are definitely arising through competition for resources,” said Chris Turner, from Marie Stopes International, an NGO providing family planning and reproductive services in PNG. 

In fact, in and around Goroka, fighting between families is also turning violent. 

“There are a lot of land disputes between families - some verbal abuse, and sometimes they fight with knives, sticks, stones or guns,” Sams said. 

Jeffery Korowa’s story is typical of large families struggling to live off the land. Hailing from a family of five siblings, the 49-year-old says all his brothers and sisters have had several children, leading to more than 15 offspring arguing over smaller and smaller pieces of property. 

“I’m already fighting with my brothers over land,” said Korowa, a nurse who owns land outside Mount Hagen, the provincial capital of West Highlands Province. “I can take my brothers to court. But I’m pretty sure if it comes to push and shove, it will become violent.”