Papua New Guinea's government is pursuing petroleum fiscal reform with admirable fervour, but it runs the risk of shooting itself in the foot.
Petroleum Minister Kerenga Kua has in the past fortnight argued that the reforms are necessary as the current concession-based fiscal system has “flaws”, “mischiefs” and “anomalies”.
Some industry voices argue that Kua is misguided, even suggesting he may be manipulating the facts around what the government take actually is.
Both Kua and Prime Minister James Marape appear, however, impervious to the criticism.
In June, they passed new legislation to boost the state's negotiating power in the granting of petroleum development licences and field development agreements — better known as Gas Agreements.
They want a larger slice of the pie from ExxonMobil’s P’nyang gas project and from any other operators willing to engage with them. But meantime, they are changing the concession-based system to a production sharing contract regime.
The petroleum industry is trying to keep up and is pleading with Kua and Marape to postpone their plans to allow for further discussions.
This week, a new Organic Law was tabled in parliament that, once passed, will introduce the PSC regime for petroleum and mining.
All existing petroleum agreements will be unaffected, and it is understood the PNG LNG expansion projects will be under the current royalty system.
It remains to be seen, however, what the industry's appetite to invest in PNG will be like if more changes are introduced.