Shell enters PNG

AFTER failing to make inroads into Papua New Guinea for years, oil giant Shell has struck an exploration agreement with state-owned Petromin. PNG Petroleum and Energy Minister William Duma reportedly said he would do “whatever it takes” for this alliance.
Shell enters PNG Shell enters PNG Shell enters PNG Shell enters PNG Shell enters PNG

Back in 2008, several sources told that Shell was interested in funding the PNG government's stake of the ExxonMobil-operated PNG LNG project.

Petromin actively campaigned in PNG's media that year in a bid to secure a large stake of the project from the government.

But the government ended up awarding the bulk of its project stake to rival state-owned enterprise the Independent Public Business Corporation, which secured about $A1.68 billion of funding from Abu Dhabi-based International Petroleum Investment Corporation in 2009.

On Thursday, a Shell subsidiary signed a strategic alliance with Petromin to pursue upstream hydrocarbon opportunities, according to the Post-Courier.

A Shell-funded joint technical study over Petromin's prospective acreage will reportedly be completed in 2012, which will also cover minerals exploration.

Recently-appointed Mining Minister Byron Chan was snapped shaking hands with Shell executive vice-president of commercial and new business Guy Outen by the ABC after the agreement was signed, with Duma also in the photo.

"We have been interested in pursuing upstream projects in PNG for some time," Outen said, according to the ABC.

Duma was very supportive of the oil major.

"As long as I am minister I will do whatever it takes as a politician to make both Shell and Petromin realise their dreams," Duma reportedly said.

Petromin's oil subsidiaries own stakes of three licences in the Central Moran field mainly owned by Oil Search, while it owns a 0.2% stake of the PNG LNG project.

Back in 2008 Petromin struck a deal to earn 20.5% of InterOil's Elk and Antelope fields in the country and by late 2010 had contributed $US15.4 million of development costs.

Petromin also owns the Tolukuma gold mine in the country and eleven tenements associated with it.

The alliance with Shell is the first deal with an international company struck by ministers of the new O'Neill government.

This government is subject to PNG Supreme Court action over whether its formation earlier this month was constitutional.

Other partners in PNG LNG include ExxonMobil (33.2%), Oil Search (29%), IPBC (16.6%), Santos (13.5%), Merlin Petroleum (4.7%), and state-owned Minerals Resource Development Company (2.8%).

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