Opposition Leader Patrick Pruaitch has welcomed the decision by Oil Search to discuss future sale of domestic crude oil to the Napa Napa refinery in Kina rather than US dollars.

Mr. Pruaitch said he stood by his earlier statement that it is in the national interest for locally produced resources such as crude oil, copper, gold, fishery and forest products to be sold to local purchasers in PNG’s national currency, the Kina.

He said: “It is an infringement of our sovereignty for lenders or any other entity to insist that domestic resources have to be paid for in US dollars or other foreign currencies even when sold to PNG buyers. Such arrangements add to the cost of doing business, and hamper efforts to encourage domestic processing.

“If it is true that lenders to Oil Search or the PNG LNG Project made this a requirement of their loan, the government of the day should disallow this practice in future.”

Mr. Pruaitch said he was not convinced by the Oil Search assertion that LNG project lenders had a loan condition that gas and condensate sold by the project must be priced in US dollars.

“I am fairly sure PNG Power is not paying in US dollars for gas used by ExxonMobil to generate electricity for Port Moresby. This should also not be the case for gas-fired power from Hides that Oil Search sells to the Porgera gold mine.”

Mr.  Pruaitch said he hoped the payments issue is resolved in a straight forward fashion rather than requiring Oil Search to repurchase cargoes offshore in its own name to on sell to Puma Energy in Kina, as reported in The Post Courier on September 7.

Under the 100-Day Plan announced by PNG Treasurer Charles Abel, it was disclosed that discussions are underway for Puma Energy, operator of the Napa Napa oil refinery, to pay for 50% of crude oil and condensate purchased from Oil Search in Kina.

The practice until now has been for Puma to pay for these cargoes in US dollars.

The Independent Consumer and Competition Commission has confirmed that motorists in PNG have been penalized to the tune of 13.5 toea per litre of fuel because of the foreign exchange losses Puma Energy faces in covering its US dollar import costs.

 

HON. PATRICK PRUAITCH, CMG MP

Leader of the Opposition

20th September, 2017