Twinza: PNG not honoring July Pasca A gas agreement
Twinza Oil Ltd., Perth, has accused the Government of Papua New Guinea of not honoring terms of the Pasca A gas agreement finalized July 6 and is seeking clarity from Minister for Petroleum, the Hon. Kerenga Kua, about the fate of the deal.
Twinza said final terms were agreed by both parties who committed to initial the agreement on July 19, leading to a July 29 signing. Neither date was met.
Twinza said that after a month of silence on the State side, the State Negotiating Team (SNT) chairman returned an extensive markup of the agreement to Twinza on Aug. 6 that bears no resemblance to the July 6 terms (OGJ Online, July 16, 2021). With more than 2,400 changes in 76 pages, “it is essentially a new agreement which was provided (to us) with the endorsement of SNT, the State Solicitor, and the Minister (for Petroleum Kerenga) Kua,” the company said.
“This agreement would be unacceptable to any investor and introduces new fiscal terms and inexplicable new conditions, several associated with Kumul Petroleum, that would make the Pasca A Project, or indeed any project in PNG, non-commercial and unfinanceable,” Twinza continued.
“For reasons unknown to Twinza, it would appear that the Prime Minister’s strong support for the Pasca A Project, expressed most recently at the media conference of July 13, 2021, is not being actioned by the State Solicitor and is being openly undermined by elements within the SNT. This is both disappointing and surprising given that negotiations have concluded, and what should be a routine close-out process is being stewarded by the Minister for Petroleum, the Hon. Kerenga Kua.”
The July 6 deal agreed to a State-proposed 5% production levy and an overall arrangement that would see PNG gain 55% of gross project income while Twinza would take 45%.
A signed gas agreement will pave the way for Twinza to begin the front-end engineering and design (FEED) stage with the aim of reaching a final investment decision in 2022 and production in 2025.
Ian Munro, Twinza chairman and chief executive officer, said this is the third time since negotiations began that the SNT has changed agreed terms originally announced by the Prime Minister on Sept. 24, 2020.
Development
Pasca is a carbonate pinnacle reef reservoir in 93 m of water in permit PPL328 about 95 km from the PNG coast. Recoverable reserves are estimated at 70 million bbl of condensate and LPG and 327 bcf of gas.
A two-phase development is planned. The first involves two production wells and one gas re-injection well connected to a small wellhead platform adjoining a self-installing platform for processing infrastructure. Condensate and LPG will be stored in a floating storage and offtake vessel moored alongside. Dry gas will be re-injected into the reservoir. Phase 2 will involve a floating liquefaction storage and offtake vessel based on continuing residual gas production plus gas from the re-injection well converted into a producer by reversing the flow.
In a related statement the week of Aug. 2, Twinza noted a November 2018 application through the PNG gazettal process for the petroleum retention lease that surrounds offshore Pandora A and B gas fields. Since then, the company said it has worked with the PNG Department of Petroleum on how best to commercialize Pandora, which has remained undeveloped for 30 years as it is uneconomic as a stand-alone project.
Twinza would like to align Pandora ownership with Pasca A for joint development. Pandora would need to be included at the FEED stage of Pasca A and would require at least one appraisal well to confirm the resource size, the company said.
Twinza is awaiting notification of Minister Kua’s decision.
