Papua New Guinea’s oil and gas industry is celebrating a government decision to convert the under-performing upstream regulator into a statutory authority.
It is understood the main differences between the current regime and the statutory authority are that industry players will pay a levy to fund the authority, and an independent board and managing director will oversee and provide expertise, without compromising regulatory authority.
Under the new system, the authority will also be able to pay higher salaries than current regulator, the Department of Petroleum & Energy (DPE).
The DPE has under-performed for years, and industry body — the Chamber of Mines & Petroleum — has lobbied at length for it to be replaced by a statutory authority, similar to the Mineral Resources Authority, serving PNG’s mining industry.
PNG Minister for Petroleum & Energy William Duma said the government had “observed the performance” of the Mineral Resources Authority, and would adopt a similar model — although it will be “tailored to meet the requirements of both government and industry”.
Duma said a Cabinet submission was awaiting final clearance to establish the Petroleum & Energy Authority “early next year”.
“I believe the authority, when established, will deal with genuine concerns and issues affecting the industry, while conserving the government’s inherent role as a guardian of conserving the future energy needs of PNG,” he added.
The Chamber of Mines & Petroleum praised the initiative, adding that it had been a long time coming. “The Chamber has, for a long time, been expressing concern over the DPE which, despite its growing importance, has continued to deteriorate.
“The Chamber acknowledges the... dedicated staff who have tried to keep the department going.”
PNG’s oil and gas business is booming. The $19 billion ExxonMobil-led PNG LNG project is about 70% through construction. There are several other projects in the engineering phase, and a record number of exploration licences.
The DPE has failed to keep up with the pace of investment, due partly to its inability to retain experienced staff. Duma himself has complained about the industry “poaching” DPE staff.
The PNG LNG project received tremendous government support, said Duma, despite “poaching” of the DPE’s “best employees… forcing us to recruit and train more with insufficient budgetary support, putting us under great pressure” to deliver results. Under statutory authority, it will be easier to retain and train staff, plus attract new talent, given the superior funding compared to the DPE, said sources.
The coalition government, led by Prime Minister Peter O’Neill, was elected in August, and says it aims to give PNG a stable environment, politically and fiscally.