A historic perspective on the Pynyang Gas Agreement worth noting by Governor Southern Highlands Hon William POWI
By Gary Juffa

Preamble: I was part of the original technical team assembled by then Chief Secretary Isaac Lupari to review proposed terms and of the first agreement and provide advise to the Government.

We met and discussed plans on how we would work on developing a strategy to negotiate a best possible outcome. We were all committed and excited. It was the first of its kind, a giant project of enormous potential. It was not to be.

The Technical Team were literally all shut out in a clever maneuver that ensured PNG was not able to put up any sort of a fight and we essentially signed an agreement that was grossly and unfairly skewed in favor of Exxon WITHOUT any negotiation of any sort.

We essentially sold our prize pig for K10 in that arrangement. I warned the then Government in my capacity as Commissioner Customs that Exxon would attempt to replicate this and lock up all of PNGs known gas holdings of 70 plus tcf (at that time) in similar arrangements totally skewed in their favor.

They did not heed my call. However a junior Minister at that time by the name of James Marape had front row seat to witness how his family, clan, tribe, Province and country would not get what they had anticipated. These lessons would come into play in the future for all of us.

You see, the fact is we MUST negotiate for an outcome FOR PNG in any resource negotiation be it gas, gold, fish, forests etc. This has nothing to do with anything against Exxon or any other investor for that matter.

This has everything to do with PNG. We should encourage investments and investors into PNG..but on our terms…on fair terms…where there is mutual respect and mutual benefits.

To do this we need a negotiating team of experts, of people who have the wherewithal and experience and coupled with the philosophy of protecting PNG interests current and long term.

In any negotiation, the parties involved will fight tooth and nail for a best possible position. That is what Exxon does. And it is very good at it. We need to step up and do the same for PNG and this time we have done that.

I am proposing that the Government seriously consider a Secretariat under the Prime Minister for a State Negotiating Team that will coordinate all such negotiations with experts armed with expert experience and knowledge so that we negotiate a best possible outcome for PNG for ALL our resources.

We must sell our prize pig for what we know it is worth…be it K2000 or K20,000, NOT accept K5 and dance about with jubiliation as if we did well for PNG.

Here is an account by Governor Southern Highlands who gives some perspective to the recent negotiations.

Some key observations on P’nyang Gas Negotiations.

1. PMJM freely allowed Minister Kua and SNT to negotiate with Exxon and partners without any pre-conceived arrangements with project proponents. That’s commendable and different from PMPO who in most instances determined the outcome and directs SNT to reach that desired outcome.

2. For PMJM to respect the Interest of the independent state of PNG by upholding the advise and position of SNT and having no fear or favour of international giants like Exxon is highly commendable. we shall not be moved for demanding a fair share of our resources Given by God to us.

3. There is often wider view that We need P’nyang Gas now than latter because we have huge budget deficit to finance and with expectations of big ticket items like school fees, conovara virus and its related effects will impact our cash flow, low foreign reserves and our economy may not recover etc etc places our Government vulnerable and giants like Exxon knew very well PNG would accept the offer. PMJM stood tall with his SNT and that is commendable.

Exxon sees our weak economy and our vulnerability, sees we as a nation need one or two impact projects for some immediate capital inflows into our economy and they see our weakness and desire to take advantage. Yes that maybe the case through God’s inspiration and guidance PMJM and his SNT remained steadfast. Isn’t that commendable? Tell me if this is not?

I was Provincial Administrator under Late Agiru and I saw how the PNGLNG project was negotiated. Amongst the many promises-Exxon advised leaders of PNG then that PNG would be flooded with cash so they advised our leaders and government to establish a Sovereign Wealth Fund- to date no money is in this fund.

They promised all our seaports, airports and major highways would be widen and sealed, local businesses would flourish, etc etc not much as happened as you and I know.

For P’nyang Exxon wanted to front load all State revenues under the PNG LNG project in exchange for Pynang because according to Exxon the cost to constructing Pynang project would be too big thereby making Pynang an uneconomical project.

These were the similar position Exxon expressed even in the first LNG project however thank God for Pynang KPHL under leadership of MD Wapu authorities in the world were engaged some months before Pynang negotiations and have established the cost of construction and true economic value of Pynang Gad.

That information alone weakens Exxon Mobil’s bargaining powers as we now know cost of the project and true economic value of developing Pynang.

PNGeans need to understand the full content and rationale of PMJM and SNT and off course the government before we talk down our leaders and our country.

In my humblest view we as a country have stand tall now and should rally support to Min Kua, SNT and off course our PM


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