IEEJ: April 2010

ENERGY DEVELOPMENT AND POLICY ISSUES IN PAPUA NEW GUINEA

A Presentation to JICA on Energy Development and Policy Issues inPapua New Guinea

Jointly Presented byMr. Gedisa Kone
Senior Policy Officer
Petroleum Division
Deopartment of Petroleum And Energy

Mr.Nelson.K. Tai
Acting Energy Planner
Energy Division
Department of Petroleum and Energy

1

IEEJ: April 2010

CONTENTS Location of PNG
 Energy Development in PNG
 Petroleum Sector (Non-Renewable)
 Energy Sector(Non Renewable)

2

IEEJ: April 2010

INTRODUCTION
WHERE IS PAPUA NEW GUINEA ?

3IEEJ: April 2010

Energy Development in PNG
DEPARTMENT OF PETROLEUM AND ENERGY(A REGULATORY BODY)PETROLEUM DIVISIONNON-RENEWABLE

ENERGY DIVISIONRENEWABLE

UPSTREAM ACTIVITIESExploration
Prodution
Processing andExport

4

IEEJ: April 2010

ROLE OF THE PETROLEUM DIVISION
Exploration

License and RegistryEngineering

Community Affairs

Policy•Legal•Economics•Policy

5

IEEJ: April 2010

PETROLEUM STATISTICS

5 Sedimentary Basins
Only 1 Basin(Papuan Basin) very
Prospective
Pioneer Explorations in 1950’
1950’s,firstcommercial decovery and productionin 1991
More than 200 wells drilled, only 5
producing fields
Oil production steady ily declining in2001
New fiscal incentives introduced in2003 to rejuvenate activites
PNG has more natural gas
reserves(15TCF) undeveloped
First oil refinery(32500bopd)
commissioned in 2004. Meet 60%
percent of local demand
PNG’
PNG’s first LNG Project(6.3MTA)
costing US 14 billion to sell first gas
to markets in Asia, by 2014

6IEEJ: April 2010

Impact of 2003
Fiscal incentive
Reduction of APT from40% to 30%.

7

IEEJ: April 2010Oil Reserves

8

IEEJ: April 2010

GAS AND CONDENSATESRESERVES

9IEEJ: April 2010

Total Oil and Gas Productions

10

IEEJ: April 2010

Distribution Petroleum Activities

11

IEEJ: April 2010

Policies and Measures
MAIN LEGISLATIONSThe Oil and Gas Act 1998
Spells out regulatory instruments for oil and gas development activities such as:
licensing, exploration,development,processing,storage,transportation,sale of products,
direct monetary benefits to State, Oil companies and resource area landowners and nonmonetary benefits such as infrastructure development,training,employment,businessdevelopment and community participation. Also sets out compliance mechanisms
relating to Health, Safety, Security and Environmental Protection and, project monitoringand reporting.

The Oil and Gas Regulation 2002
Provides the specifics or details of compliance approaches required to comply withrequiremnts of individual instruments stipulated in the Act. Its is a collection of Health,Safety, Security ,Environmental, Engineering, Mechanical, Geological and Electricalguidelines purposely for project operators to follow to ensures safe projects operations.
It is a major complimentary legislation to the Act.

12IEEJ: April 2010

Policies and Measures.cont…
 Supporting National Legislations main) The Environmental Act 2000
Provides specific regulatory instruments for environmental protection within the oil and gasindustry. This includes Environmental Management Plans outlining impacts and measures frompetroleum development activities such as exploration, petroleum facility construction,hydrocabon
wastes discharges and disposals and general environmental disturbances. Also sets outs
requirements for environmental permits, environmental policies, environmental monitoring andreporting and non-compliance orders.

 The Environmental Regulation 2000
Provides the specifics or details of compliance approaches required to comply withrequiremnts of individual instruments stipulated in the Act. .

13

IEEJ: April 2010

Policies and Measures.cont..
 Other Supporting National Legislations







Industrial Health, Safety and Welfare Act 1975
Marine Pollution (Bill) Act
Physical Planning 1989
Lands Act 1996
Land Disputes Settlement Act (chapter 45)
Companies Act 1997
Income Tax Act 1959
Organic Law on Provincial and Local Level Government
Public Finance Management Act 1995
Arbitration Act

14

IEEJ: April 2010

Policies and Measures.cont…
 MAIN POLICY INTRUMENTSThe Oil and Gas Regulation 2002
The Environmental Regulation 2000
Petroleum Policy Handbook
Pipelines Policy
Gas Commercialization Policy
Landowners Management Policy15

IEEJ: April 2010

POLICY ISSUESWHAT POLICIES ARE LACKING (Policy Gaps)GAS FLARING POLICYOFFSHORE OPERATIONS POLICYFIELD ABANDONMENT POLICYCOMMUNITY EXPECTATIONS POLICYLOCAL CONTENT POLICYMARGINAL FIELDS POLICY16

IEEJ: April 2010

Policy Issues: Challenges
1.

Major Challenges and Difficulties
Lack of Capacity
Lack of Capacity interms of human and physical resources to formulate andimplement relevant policies

2.

Management Support and Commitment
Management gives little attention and support towards formulation andimplementation of key policies

3.
4.
5.

Training and Capacity Building
Policy Analysis
Changes in Industry
17

IEEJ: April 2010

Policy Issues-Challenges
 From Participant Develop a Marginal Field Policy
Assigned to complete a draft marginal field policy this month. Access to information isa difficulty, no experience in marginal fields/new area, short timeframe to accomplisha policy, need resources(eg internet and reading references on marginal fields),
getting appropriate consultation and getting the correct format and writing standard Assist with formulation of Gas Flaring

Policy and National Content Policy
Similar difficulties and challenges outlined above

18

IEEJ: April 2010

Expectations
 What help do I hope to get from thisTraining?

Experinces from JICA and Participants
References useful materials,websites,books etc)
Policy formulation and implementation guidelines/skills
Policy evaluation and needs assesment skills

19

IEEJ: April 2010

THANKYOU

20
Contact:report@tky.ieej.or.jp