PNG Stands to Lose $5B from LNG Tax Concessions
by Asia Pulse Pte Ltd
May 28, 2007
The Papua New Guinea (PNG) Government stands to lose more than K15.6 billion (USS$5 billion)over a 20-year period if it agrees to tax concessions demanded by InterOil for its proposed liquid natural gas (LNG) plant, industry sources said Thursday, The National reports.
"What they are suggesting is morally reprehensive, one
industry source commented," adding that InterOil executives had
been disingenuous in denying they had pursued exclusive 50-year
rights to export LNG.
This was clearly included in early drafts InterOil submitted
to the Government, and first raised by Opposition leader Peter
The exclusive rights for LNG have since been withdrawn after
it was clear there would be strong Government opposition to the
establishment of an LNG monopoly.
The original demand was for exclusivity for LNG exports for
50 years along with a requirement that all gas had to be sold
to them, one source with close Government connections, said.
If the Government went ahead and accepted the tax holidays
and other concessions, it would represent one of the worst
examples of corporate rape with the State losing massive
amounts of potential tax, the source said.
He added that there was no reason why an LNG project should
be accorded tax holidays with current world crude oil prices at
US$60 a barrel and LNG receiving an equivalent price.
What they are after is rape and pillage of the country's tax
and resource base, the source said.
Noting that the latest LNG agreement forwarded to the PNG
Government had taken out the exclusivity clauses, the source
noted that the company was still demanding a Government
guarantee that it could access gas from other PNG operations to
ensure that its proposed LNG plant could always operate at
(C) 2007 Asia Pulse Pte Ltd.
PNG LNG Project
ExxonMobil; Oil Search Limited; Santos; Nippon Oil Exploration; AGL; MRDC); Eda Oil
Port Moresby Papua New Guinea