Good business ahead: Botten

OIL Search managing director Peter Botten believes sense will “prevail” in Papua New Guinea despite a government proposal to completely alter resource ownership laws. Meanwhile, Oil Search is talking to Shell about a possible PNG joint venture.
Good business ahead: Botten Good business ahead: Botten Good business ahead: Botten Good business ahead: Botten Good business ahead: Botten

Ex-Treasurer Peter O'Neill won an overwhelming Parliament vote to succeed Sir Michael Somare as prime minister in early August.

Since Somare has remained on medical leave since April, there are doubts over whether the leadership position was actually vacant in accordance with the Constitution and a Supreme Court challenge is underway.

But this uncertainty has not prevented a wave of populist announcements from the fledgling coalition government ahead of the election due in mid-2012.

The plan to sell the passenger plane used by Somare to fund health and education services received some fanfare, but the announcement last week to shift government ownership of resources to landowner groups has shocked industry circles.

Mining Minister Byron Chan believes these changes can work if they do not affect committed projects and existing mining and petroleum operations, and only apply to less advanced projects.

However, landowner groups in the highlands gas areas of the PNG LNG project, or associated with existing mines, might not be impressed if other landowners in PNG will receive significantly better arrangements.

Despite this new injection of sovereign risk, Botten downplayed the possible impacts during a conference call.

"There really has been a good history of constructive dialogue between industry and government to manage the development issues and the expectations of the landowners," he said.

Botten anticipates this will continue under the O'Neill government.

"I think that there will be a good constructive dialogue as there always has been but at the end of the day, sense will prevail and we will continue to do the business which is good for us and good for the country," he said.

Meanwhile, Oil Search is concluding a major 3D seismic survey of offshore and onshore targets around the Gulf of Papua.

Once the data is fully integrated and assessed, Oil Search will select project partners ahead of a drilling campaign in 2012.

However, in the conference call Botten revealed that discussions had been held with oil major Shell in this regard and they were continuing amid "substantial interest from a number of players".

Shell recently struck an exploration agreement with PNG government-owned Petromin, which owns a variety of petroleum and mineral licences throughout the country.

Petromin owns the Tolukuma gold mine, a 0.2% stake of the PNG LNG project, and struck a deal to earn 20.5% of InterOil's Elk and Antelope fields in gulf province back in 2008.

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