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New PNG cabinet puts Oil Search and UBS Australia on notice
5:18 pm GMT+12, 09/06/2019, Papua New Guinea

Papua New Guinea’s new Prime Minister, James Marape, has appointed one of the most outspoken critics of a recently signed gas deal as the responsible minister and taken a swipe at Australia’s Oil Search in announcing a cabinet full of surprises on Friday.
 
In swearing in Kerenga Kua as the Minister for Petroleum, Marape noted he was a lawyer who “shared his vision” for reforming the sector and maximising gains for PNG.
 
Kua has previously said the US$14 billion Papua LNG project, agreed in April, should be reviewed for its legality, potentially opening the way for the deal to be renegotiated.
 
The new Prime Minister has said he would not seek to unwind existing contracts. However, looking into the legality of this and other deals could be a way to reopen negotiations.
 
“We will come to a position that everyone is comfortable with without disrupting business," Mr Kua said when asked about the Papua LNG project after being sworn in.
 
"But [we will] ensure there is an equitable distribution of benefits which come out of these resource projects.”
 
Marape used the occasion to take aim at Oil Search chief executive Peter Botten, following a speech Botten made in Sydney last Thursday.
 
“Peter Botten knows me. I’m investor friendly but I also have to win for the 8 million shareholders of this country,” he said.
 
Prior to this the Prime Minister said he would not apologise for his comments on getting a better deal for the country out of resource projects.
 
“If you don’t like the way I’m speaking … pack up and leave,” he said.
 
This skirmish follows Botten saying that any delay in the Papua LNG project would have it leapfrogged by other projects around the world.
 
"We can't wait too long before our place in the queue slips," Botten said. "The government is aware of this, as is the new Prime Minister."
 
ExxonMobil and Total are spearheading the PNG LNG and Papua LNG projects, in partnership with Australian resources players Santos and Oil Search.
 
The other surprise move on Friday was the appointment of Bryan Kramer, a popular but outspoken opposition figure, as Police Minister.
 
Kramer, who has over 117,000 followers on his Facebook page, has said former prime minister Peter O'Neill should face criminal prosecution and has written scathing articles about the UBS loan affair.
 
He said the deal, which had PNG borrow US$1.2 billion from UBS to buy into Oil Search, would "go down as one of the dumbest investments in PNG's history".
 
His appointment should ensure ministerial-level support to further investigate the loan affair, which cost PNG US$400 million.
 
On Friday, Kramer said his main priority was keeping the people of PNG safe but he would also be looking at high-level corruption.
 
Shane McLeod from the Lowy Institute said Marape had delivered a pointed and substantial shake-up of the ministry.
 
“Bringing across prominent opposition voices Kerenga Kua and Bryan Kramer – and placing them in key portfolios of Petroleum and Police – shows that Marape is serious about distancing himself from his predecessor, and shining a light on resource deals and allegations of corruption,” he said.

SOURCE: FINANCIAL REVIEW/PACNEWS


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