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 ONeill.

The exclusive rights for LNG have since been withdrawn after it was clear there would be strong Government opposition to the establishment of an LNG monopoly.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 capacity.

(C) 2007 Asia Pulse Pte Ltd.

Related Project
PNG LNG Project
Facility Type: LNG Owner: ExxonMobil; Oil Search Limited; Santos; Nippon Oil Exploration; AGL; MRDC); Eda Oil
Scope: New Construction Location: Port Moresby Papua New Guinea