Papua New Guinea’s energy minister Kerenga Kua has introduced to parliament his proposed amendments to the country’s Oil and Gas Act in the form of a 2020 Amending Law.
Kua said that the purpose of the new Law is to alter outdated sections of the 1998 Act that inhibit or frustrate the state’s ability to secure the best deal from PNG’s participation in oil and gas projects.
He said the state is hamstrung by flaws in parts of the Act that weaken any push under Section 25 of the National Constitution for ‘national interest’ against ‘commercial interest’.
The minister outlined two sets of changes that he said must be brought to bear. The first relates to gaps in the Act concerning applications for and grants of petroleum development licenses.
These, he said, are gaps that weaken the state’s bargaining position when negotiating petroleum and gas agreements. Currently, these sections require that if the Petroleum Advisory Board recommends to the minister to refuse to grant a petroleum development license, the applicant can take the minister’s decision to arbitration, which can involve arbitrators and lawyers in foreign countries, Kua said. PNG’s courts, judges, and lawyers are ruled out by force of the country’s own legislation.
Kua said the definition of justice that can result—foreign or PNG—exposes a risk, and when the result involves billions of kina, it is a risk PNG cannot continue to take.
The second set of changes relate to sections of the 1998 Act involving agreements to which the state is a party. Currently those agreements are given the status of law and given supremacy over the Act. Where there is conflict, there is a risk of the state being forced to agree to a position that is not in the national interest and which would not have the force of law if not for those sections of the Act.
The position is unacceptable, the minister said, and agreements under these sections of the Act must have the status of agreements and nothing more.
The intention of the proposed 2020 Amending Law is to bring these sections of the Act into a modern setting to provide the best possible deal for PNG in any new oil and gas projects.
Minister Kua also said the government intends to introduce a new bill to change the current concession-based licensing system in PNG to a production sharing regime for both the mining and petroleum industries.