The PNG LNG Agreement: A Comprehensive Guide
The Papua New Guinea Liquefied Natural Gas (PNG LNG) project is one of the largest investments in the country`s history. The project is a joint venture between the government of Papua New Guinea, ExxonMobil, Oil Search Limited, Santos, JX Nippon, and Mineral Resources Development Company. The PNG LNG Agreement is the legal document that governs the project, and this article will provide you with a comprehensive guide to the agreement.
What is the PNG LNG Agreement?
The PNG LNG Agreement is a legally binding agreement signed between the government of Papua New Guinea and the PNG LNG joint venture partners. It outlines the terms and conditions of the project, including the sharing of profits, taxes, and royalties. The agreement is also designed to protect the interests of all parties involved.
The agreement was signed in April 2008 and came into effect in December 2009. The project is expected to produce 9 trillion cubic feet of gas over its lifetime.
Key Provisions of the PNG LNG Agreement
1. Revenue Sharing
The PNG LNG Agreement outlines the sharing of revenue between the government of Papua New Guinea and the joint venture partners. The government receives a 2% royalty on the value of gas produced, and the joint venture partners pay a corporate tax rate of 30%. The remaining profits are shared between the government and the joint venture partners in accordance with their respective equity interests.
2. Employment and Training
The agreement includes provisions for the employment and training of Papua New Guineans. The joint venture partners are required to provide training and employment opportunities for Papua New Guineans, with a target of 95% of the workforce being Papua New Guinean by 2020.
3. Environmental and Social Responsibility
The PNG LNG Agreement includes provisions for environmental and social responsibility. The joint venture partners are required to implement environmental and social management plans, and to mitigate any negative impacts of the project on the environment and local communities.
4. Domestic Gas
The agreement includes provisions for the supply of domestic gas. The joint venture partners are required to supply the government of Papua New Guinea with up to 5% of the gas produced for domestic use, at a reasonable market price.
5. Fiscal Stability
The PNG LNG Agreement provides for fiscal stability. It guarantees that the fiscal and economic terms of the agreement will remain unchanged for the lifetime of the project, unless changes are mutually agreed upon by the parties involved.
Conclusion
The PNG LNG Agreement is a comprehensive legal document that governs the PNG LNG project. It outlines the terms and conditions of the project, including the sharing of profits, taxes, and royalties. The agreement also includes provisions for environmental and social responsibility, employment and training of Papua New Guineans, and the supply of domestic gas. The PNG LNG project is a significant investment in the country`s future, and the agreement ensures that all parties involved benefit from the project in a fair and sustainable manner.