PERTH (miningweekly.com) – The Papua New Guinea liquefied natural gas (PNG LNG) project owners have been cleared to continue with the project after the PNG government endorsed the gas agreement signed with the previous government.

The PNG government at the end of August created some uncertainty after Minister for Petroleum Kerenga Kua sent a delegation to Singapore seeking to renegotiate the terms of the PNG LNG agreement, which was signed in April this year.

Kua said that the review of the LNG agreement has now been completed, with additional gains negotiated for PNG.

Project operator Total has delivered a letter to the PNG government, promising a national content plan, which was expected to provide positive opportunities for local suppliers.

In its letter, Total also addresses third party access to the PNG LNG petroleum pipeline, saying that if requested by third parties, the PNG LNG partners would engage in negotiations to enable access by the third party, on "mutually acceptable terms".

Furthermore, Total has agreed that once all the PNG LNG loans have been repaid, and past costs have been reimbursed, the state government would be given the option to engage in negotiations for ownership of the petroleum pipeline, noting however, that the state would be required to recognize the "fair value" of the investment in considering an acquisition of the pipeline.

Additionally, the letter also addressed future shipping ownership by the state government.

While Kua was buoyed by his dealings with the PNG LNG partners, the Minister noted that the review had demonstrated that the current concession-based licensing system had failed PNG in both the mining and petroleum industries.

The Ministers for Mining and Petroleum have now been instructed to rewrite laws to move into a system based on production arrangements, which is expected to relieve the state of expensive loans and create early free cash flows in all future mining and petroleum projects.