OUTSIDE SECTION 165 AND STILL WRITING SUBMISSIONS

by PAUL L. KEBAIJA

On 6 August, the Papua LNG Development Forum reconvened in Port Moresby after nearly two weeks adjourned. Petroleum Minister Jimmy Maladina asked landowners from Gulf and Central to submit position papers setting out their priorities, including equity sharing in the US$14.5 billion project. He asked everyone to respect the Forum and keep working with the National Petroleum Authority, noting the legal disputes still running between landowners and the State.

Three weeks later, on 27 August, the revised Papua LNG agreement was signed at Government House. It contains an option for a State nominee to acquire an additional 2.5 per cent interest, and that interest is, in the Minister's own words, separate from the State's existing entitlement under Section 165 of the Oil and Gas Act.

Section 165 is the provision through which the State's participating interest flows, and it is the vehicle for the promise the Prime Minister made in July: the full 22.5 per cent exercised, with 40 per cent of it returned to affected provinces and landowners. By placing the extra 2.5 per cent outside section 165, the government has structured the one piece of new equity in this deal so that the 40 per cent policy cannot reach it. The nominee has not been named.

So while Gulf and Central landowners were drafting submissions on equity sharing, the equity was being settled on a different instrument, in a different room.

This is the 2009 sequence with dates attached. Then, the State issued petroleum development licences before social mapping and landowner identification were complete, and spent the following decade trying to work out retrospectively who to pay. Landowners of PDL 7 at Hides 4 waited fourteen years for roughly K49 million, about K31 million in royalties accrued since 2014 and K18.5 million in equity, of which 40 per cent, K19.6 million, reached clans as cash. 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 ran.

Credit where it is owed. Buried in the Minister's statement is the most consequential line for landowners in the entire package: an improved wellhead-value basis for calculating royalty and development levy payments, extending to the existing PNG LNG arrangements. Royalty is two per cent of wellhead value, and gas is not sold at the wellhead, the figure is derived by deducting pipeline, conditioning, liquefaction and shipping costs from the delivered price. The larger those deductions, the smaller the base, and the smaller every landowner cheque. Changing that basis is real money.

But no one has published what changed. Is the new basis retrospective, applying to royalty already accrued in trust on the old calculation? What deductions remain allowable? Who audits the operator's figures? Landowners are being asked to accept an improvement they cannot measure, from a State that held their money for eleven years.

Set against that, the other benefit offered to communities is free gas for up to one megawatt of discounted electricity around Caution Bay, the plant site, in Central, whose landowners have actually been paid. The upstream Gulf communities whose gas this is are named nowhere in the benefits list.

The Minister calls 15 December a drop-dead deadline. Until then the State needs something from everyone. After final investment decision, it needs nothing, and landowners go back to writing letters.

So the demands are due now, in writing. Publish the amended agreement in full. Complete social mapping and landowner identification and make the section 169 determination before FID, not after. Gazette the benefit split, the failure to gazette in 2009 caused the court cases. Name the State nominee. Publish the wellhead recalculation and say whether it is retrospective. Legislate a deadline for release from trust, with interest payable for every month held.

The project should proceed. That has never been the argument. The argument is who is in the room when the equity is decided.