A GIVE-AND-TAKE THAT ONLY GOES ONE WAY

by MICHAEL JOSEPH PASSINGAN

In May, the Prime Minister's own department told the country that the State had rejected requests for free incentives or concessions on Papua LNG, holding a strict give-and-take line to protect the national share. On Thursday, James Marape signed a revised agreement carrying investment incentives of around US$1.95 billion, about K8.3 billion, and described it as a genuine win-win. Three months separate the refusal from the signature. Nothing has been published to explain what changed.

What did the country get for it? An option. Kumul Petroleum keeps the 22.5 per cent it already held a back-in right to, and the State may buy a further 2.5 per cent if any becomes available. "The State has not compromised its ownership position," Marape said, while confirming PNG will carry its share of the project's costs.
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Set that against July, when the same Prime Minister said the State would fully exercise the 22.5 per cent and return 40 per cent of that equity to affected provinces and landowners. That is nine per cent of Papua LNG, promised to Gulf and Central. The August formulation is that the State has expressed interest in acquiring additional equity that may become available. A promise became a preference, and only the incentives were reduced to writing.

The incentives are conditional on a final investment decision by 15 December. PNG has therefore priced its concession against a clock the joint venture set, in a negotiation where the State's stated fallback, walking away from a 6.6 trillion cubic feet field its partners rank behind Mozambique, was never credible and everyone at the table knew it.

Now the record this arrangement is supposed to improve on.

Landowners of PDL 7 at Hides 4 waited fourteen years. The eventual payout totalled roughly K49 million, about K31 million in royalties accrued since 2014, K18.5 million in equity, of which 40 per cent, K19.6 million, reached clans as cash. Plant-site landowners in Central received K74.1 million in November 2025, covering royalties from 2022 and equity from 2018, divided among 83 clans across four villages. More than K800 million sat in a Bank of Papua New Guinea trust account from the first cargo in May 2014 until October 2025, while some thirty landowner court cases ground on.

This is not bad luck. It is the design. Two per cent royalty on wellhead value. Forty per cent of a landowner's entitlement paid as cash, the balance routed into future generations funds and community infrastructure trusts administered by MRDC. Payment gated behind a clan vetting process that appears nowhere in the Oil and Gas Act, that the National Court once found had no statutory foundation, and that has still not been completed for the upstream licence areas after eleven years of exports.

Then the returns clock. PNG LNG's project debt, about US$16 billion including interest, was only fully retired in late 2025. For eleven years the cargoes serviced lenders first; equity holders, including the State's 19.4 per cent through Kumul, took what was left. Papua LNG's US$14.5 billion will run the same sequence, now with US$1.95 billion of incentives ahead of it. Anyone promising near-term revenue from a 2.5 per cent option is describing money that arrives, at best, in the 2030s.

We have seen the promise cycle before. ACIL-Tasman's 2008 modelling for ExxonMobil projected PNG LNG would double GDP, lift household incomes 84 per cent and employment 42 per cent. Paul Flanagan and Luke Fletcher's 2018 assessment found the economy roughly ten per cent larger, with all of that gain inside the resource sector and the non-resource economy going backwards. The forecasts were never audited against outcomes. No one lost a job over them.

And the pens came out this week with landowner disputes over parent landowner company selection and equity-sharing still unresolved, the identical sequence to 2009, when licences were issued before social mapping was done, which is precisely why K800 million sat in a Port Moresby trust account for a decade.

The give-or-take mechanism may well be the innovation the Prime Minister says it is. But the State has published no modelling of what it recovers, at what price, over what period. Until it does, the country has been asked to accept, on the word of a government that reversed its own negotiating position in ninety days, that K8.3 billion in concessions bought something worth more than the option nobody is obliged to sell it.