PNG’s highland provinces agree on PNG LNG benefits split

The provincial governments of Papua New Guinea’s Southern Highlands and Hela provinces signed an agreement for the distribution of benefits emanating from the ExxonMobil-operated PNG LNG project.

The division of benefits has been unsettled for 13 years since the project was sanctioned by the Umbrella Benefit Sharing Agreement (UBSA) in 2009 as there had been no distribution framework.

The UBSA saw all benefits signed off to the Southern Highlands Province with the proviso that, as and when Hela region gained provincial status, the benefits from PNG LNG would be divided on equable terms. At that time the Hela region was part of the Southern Highlands jurisdiction and did not become a separate province until 2012.

This week’s memorandum of agreement follows a formula worked out by the PNG Government-owned Mineral Resource Development Co. (MRDC) and stipulates that benefits from oil and gas fields in the Southern Highlands will be split 60% to the Southern Highlands government and 40% to Hela government. Likewise, benefits for oil and gas fields in Hela province will be split 60% to Hela and 40% to Southern Highlands.

Benefits include royalties and development levies from various development licenses.