Hard times bring en­ergy ma­jors to­gether

Volatil­ity in oil prices is forc­ing re­sources com­pa­nies in Pa­pua New Guinea to find ways to re­duce costs.

Business Advantage Papua New Guinea - - Mining & Petroleum - By David James

Ma­jor re­sources com­pa­nies are look­ing at work­ing to­gether more, says Gerea Aopi, Pres­i­dent of the PNG Cham­ber of Mines and Petroleum.

‘If you look at the PNG LNG pro­ject, and the Pa­pua LNG pro­ject, you have two world-class op­er­a­tors. It is im­por­tant for PNG that they can share syn­er­gies and pur­sue in­te­gra­tion to re­duce costs. So, you could have To­tal op­er­at­ing the up­stream and Exxonmo­bil the down­stream. This is good for all stake­hold­ers and, in par­tic­u­lar, the state.’

The chal­lenge, Aopi adds, is to build re­la­tion­ships be­tween dif­fer­ent op­er­a­tors, which he be­lieves is hap­pen­ing. ‘They are look­ing at the best way of do­ing things in an ef­fi­cient way.’

Aopi de­scribes the last two years as a ‘roller-coaster ride’ for the re­source in­dus­try. He be­lieves the sit­u­a­tion ‘re­mains chal­leng­ing’ but is op­ti­mistic about the fu­ture.

‘You have to look at the best way of dis­tribut­ing the costs. We are all af­fected by the low oil price.’

He says re­sources com­pa­nies are talk­ing to the ser­vice providers. ‘In bad times, you have to share the pain. They are also look­ing at bet­ter and more in­no­va­tive ways of do­ing things.’

Landown­ers

Aopi says the dis­tri­bu­tion of ben­e­fits to landown­ers has been ‘agreed at the macro level’. The next steps are more prob­lem­atic.

‘It is re­ally get­ting down to the next level as to how the ben­e­fits are dis­trib­uted, within the li­cence ar­eas, be­tween the dif­fer­ent clan groups and be­tween fam­i­lies.

‘The pro­ject is go­ing to be there for a long time and you have to have that re­la­tion­ship on a good foot­ing from day one.

‘It is quite com­plex and I think at the mo­ment, be­cause some of the landown­ers may feel that they might not be part of that process, they take out re­strain­ing or­ders against the gov­ern­ment for the dis­tri­bu­tion of ben­e­fits. But the funds are ob­vi­ously there in the Cen­tral Bank.’

Long term

Aopi notes that gas projects are longterm in na­ture. ‘If you look at the gas projects around the world, they are not 10, 15 years; you are look­ing at 30-plus years. So, you need to build that re­la­tion­ship with all stake­hold­ers, whether they be the com­mu­nity or the gov­ern­ment. It is like a mar­riage.

‘It is chal­leng­ing but you have to man­age the ex­pec­ta­tions. The in­dus­try is go­ing to be there for a long time. It is re­ally about sit­ting down with the peo­ple and ex­plain­ing to them that this is not some­thing that is go­ing to hap­pen in the next five years.

‘That ed­u­ca­tion process is re­ally about get­ting the whole com­mu­nity in­volved, in­clud­ing the young peo­ple, and get­ting ev­ery­body ap­pro­pri­ately briefed on the pro­ject, its implications, the ben­e­fits it is go­ing to bring and how long it is go­ing to be there.’ 

WE ARE ALL AF­FECTED BY THE LOW OIL PRICE. Gerea Aopi

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