10% windfall

By PATRICK TALU
MORE than 100,000 contributors of Nambawan Super Limited (NSL) go into the Easter holiday with a timely gift from their fund.They will have credited into their accounts a 10% interest on their savings, their reward from a handsome profit the fund made last year.This was announced in Port Moresby yesterday.Managing director Leon Buskens told reporters in a media conference yesterday: “As I am speaking, staff members are working on crediting members’ accounts and, by next Monday, all accounts should be credited and completed.”The bonanza for NSL contributors continues a super performance by super funds in the country.A month ago, Nasfund announced a 15% interest for its members from its profits last year.Announcing the good news yesterday, NSL chairman Sir Nagora Bogan said the 10% dividend was approved by the board for crediting to 113,546 members after the superfund declared an after-tax profit of K191 million for last year.Sir Nagora said the 10% interest would also include the retirement saving accounts (RSA) while the board had also approved an interim interest rate for members leaving the fund this year. He said the income of K249 million was derived from the fund’s investment, largely attributed to good performances in the interest earnings, property revaluations, international share and exchange rate benefits arising from the drop value in the kina.Sir Nagora told reporters that offset against a headline inflation rate of 5.7%, the declared interest rates represents a real return of 4.3%.He said for the seventh year in a row since the reforms, the fund has delivered double-digit interest and, most importantly, real returns to members.He stressed that determining the annual interest rate was a very serious decision for the board of directors.“The board makes sure proper accounting standards are met.“It also factors in economic forecasts for the next few years to make sure it sets aside sufficient reserves to meet the prudential requirement set by the Bank of Papua New Guinea,” Sir Nagora said.He added that while double-digit interest crediting had been approved for the year, reserves had increased to K74.7 million from the 2008 levels of K66.6 million.”Horim Piamai, a policeman in Mt Hagen who has been contributing for 20 years, told The National 10% interest was good news.“I have K60,000 in my saving and when I retire, that would sustain me in the long run though RSA.”Another contributing member, Dr Oko Pengi, from Wabag General Hospital in Enga province, said the news was good for him.Meanwhile, directors of the board representing public sector unions – Martin Kenehe (PNGTA), Clement Komu (police), Peter Lungo (CS), and Gabriel Panke and Tau Vali (PEA) applauded NSL for declaring a double-digit interest seven years in a row.Mr Buskens also revealed that the fund’s total assets increased to K2.83 billion, an increase of K120 million over the 2008 total of K2.62 billion.

Bad roads delay work on LNG

Source:
By ANDREW ALPHONSE
EARLY works on the multi-billion-kina PNG liquefied natural gas (LNG) project is running behind schedule, the delay caused in part by the deteriorating state of the Highlands Highway.An official with Esso Highlands (PNG) Ltd, the subsidiary of ExxonMobil, said equipment and machines for early works for Australian company Glough Curtain Joint Venture (CCJV) were still sitting idle at the wharf in Lae waiting for affected sections of the highway to be repaired and freed up before the equipment and machines could be transported to the project site.One of the worst affected parts is at Kalguwi village, near Kagul River, on the border of Western Highlands and Southern Highlands provinces.Yesterday, a policeman attached with the Kaupena-based police highway patrol unit 17 reported that more than 100 trucks and cars were stranded at either side of the highway at Kalguwi.He said that section of the highway had fallen into a state of complete disrepair and while light four-wheel-drive vehicles were being pushed and pulled to negotiate the landslip and the huge crater-like potholes up the slopes, heavy vehicles were unable to cross.Police highway patrol units have been working around the clock to control traffic and ensure locals do not take advantage of the situation to harass commuters.Imbonggu community leader Pius Alopea said the National Government should immediately look into repairing this section of the highway as it was becoming a national disgrace.Mr Alopea said many vehicles had developed mechanical problems on this section of the road while the flow of goods and services into Southern Highlands had been greatly affected.Mr Alopea said with the current wet season in the region, the road condition would only worsen unless the authorities do something.

KAML posts ’09 profit

KINA Asset Management Ltd (KAML) has reported a net profit after tax of K4.26 million for last year.This is despite the challenges of the past year from managing the ongoing effects of the global financial crisis.KAML’s end of year report also shows its investment portfolio increased by K3.84 million, or 9.38%, from K40.89 million at the end of December 2008 to K44.72 million at the end of December 2009.KAML chairman Sir Rabbie Namaliu described 2009 as a landmark year for the investment management company and a significant turnaround after recording a net loss of K4.14 million in the launch year, 2008 with all the adversities of the global financial crisis.“KAML’s performance figures for 2009 were very positive for our shareholders and they continue to reflect the increased opportunities for investment and business development that now exist within Papua New Guinea,” Sir Rabbie said.During 2009, KAML’s investments increased by K1.51 million exclusive of exchange rate and K5.39 million inclusive, representing returns of 3.67% and 12.59% respectively.Sir Rabbie said KAML was continuing its expansion strategy and looking at increasing its exposure to international markets including the US and Asia.Last year, the performance results of the International Equities, Asia Fund and the global (Ex Australia) Index Fund all met or exceeded their respective benchmarks.With regards to the global economy, Sir Rabbie said there continued to be strong indicators flowing down from the global markets which suggested that an economic recovery was imminent.He said the International Monetary Fund (IMF) recently forecast the global economy would achieve growth of 3.1% this year, and PNG’s gross domestic produce was also anticipated to rise in the coming 12 months.Moving forward, Sir Rabbie said KAML would continue to adopt a proactive, yet measured, investment strategy designed to build upon its current portfolio and maximise growth opportunities in the current economic climate.“The board of KAML will continue to pursue a range of strategic investment opportunities with the aim of maximising long-term benefits for our shareholders,” he said.“Whilst the key financial indicators are promising moving forward, it is important to note that the global economy is still fragile after the worst recession in more than half a Century.“There will no doubt be opportunities for growth and development in the subsequent economic recovery process, however the challenge remains to ensure that KAML is both financially and strategically well placed to take advantage of these opportunities when they arise,” Sir Rabbie said.

New home sales fell in Feb: Report

SYDNEY: New home sales fell last month, raising concerns about the sustainability of the housing recovery, amid the prospect of further interest rate rises.The Housing Industry Association (HIA) new home sales report showed a 5.2% dip in sales to around 7,000 dwellings last month.The fall follows a 9.5% rise to 8,444 new home sales in January.The HIA said the February fall raised fresh concerns regarding the sustainability of a recovery in residential construction and that deterrents to building new homes such as land shortages would push potential buyers towards existing homes.HIA chief economist Harley Dale said residential construction was still relatively strong, reflecting the monetary and fiscal policy stimulus of last year.“This stimulus has been highly successful in driving the first stage new home building recovery but that stimulus will soon start to fade,” Dr Dale said in a statement yesterday.“Land and labour shortages, frustrating planning delays and the inequitable level of taxation and regulation on new housing are all deterrents to households entering the new home market as opposed to existing property.“All these supply-side obstacles require urgent attention or Australia’s chronic housing shortage will worsen and we will, perversely, see more upward pressure on interest rates than would otherwise be the case.Dale said there was an unjustifiably low level of finance being extended to small residential developers and this needed to be addressed. –AAP

Chapman Freeborn to move LNG cargo

By YEHIURA HRIEHWAZI in Brisbane
ONE of the world’s largest air chartering companies, Chapman Freeborn, has entered into partnership with the national flag carrier, Air Niugini, to move construction cargo for the PNG liquefied natural gas (LNG) project.Chapman Freeborn has 32 offices in 22 countries and last year alone, it co-ordinated 5,000 charters, according to a statement on its website.One of the aircraft being offered for use in the project is a large L-100 Hercules aircraft – one similar to the two from South America that were in joint-venture with Nationair in the mid-1980s to move cargo from Nadzab to Moro for the construction of the Kutubu oil fields and oil pipeline to the Kumul Marine Terminal in the Gulf province.The cargo handling facilities are already available at Nadzab and it has anticipated that most of the PNG LNG construction cargo for the Southern Highlands will be airlifted out of Nadzab to Tari, Komo and Moro. The arrangement will provide Air Niugini with access to the international cargo charter market, allowing the airline to offer its clients freighter aircraft from third party operators managed by Chapman Freeborn.Through the new venture, shippers and forwarders will be offered a one-stop shop for project cargo with main deck charter solutions to Port Moresby International Airport and onward connections to smaller airfields and unpaved strips across PNG.Clients will also be able to utilise Air Niugini’s cargo capacity on their current scheduled passenger aircraft which offer the greatest frequency into the country.The aircraft offer to the market included the highly capable L-100 Hercules which will be utilised to service specialised high altitude airstrips, to assist with the logistics relating to the development of a major LNG project and to supplement domestic cargo operations by Air Niugini’s Dash 8 freighter aircraft.The L-100 Hercules is unequalled in its ability to lift up to 20 tonnes of cargo from unprepared and short airstrips.Chapman Freeborn and Air Niugini are also studying a niche regional freighter for some of the smaller loads required in the country.Shahe Ouzounian, Chapman Freeborn’s chief operating officer, said:“We’re delighted that Air Niugini has chosen Chapman Freeborn as their partner in this venture.“I’m confident that with their regional capabilities and unparalleled local knowledge, combined with our global expertise, together we will help to further unlock Papua New Guinea’s potential for shippers and forwarders worldwide.“We are very pleased that this partnership allows the national carrier of Papua New Guinea to be an integral part of the air logistics involved in the LNG project in the country and we are proud of our association with Air Niugini.”Air Niugini will, in turn, benefit from working in partnership with the world’s leading aircraft charter company.Chapman Freeborn has a reputation for innovation, expertise and professionalism built up over 36 years.

Indian group eyes LNG slot

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By YEHIURA HRIEHWAZI in Brisbane
INDIA’s state-owned oil and gas company Gail India Ltd is considering to join InterOil Corp to develop the second LNG plant in PNG.InterOil office in Port Moresby yesterday confirmed that the company is in discussions with Gail.“Yes, InterOil is in talks with Gail, but we do not comment on discussions until any transaction is complete,” spokesman on behalf of CEO and chairman Phil Mulacek said.Gail’s chairman and managing director BC Tripathi made the announcement during a sideline press conference where a regional gas conference is in progress this week.It received wide coverage by local media including the Calcutta Daily Telegraph and major financial websites like Bloomberg and Dow Jones.He said Gail was planning to invest in gas infrastructure globally and is looking at projects in Papua New Guinea, Nigeria, Ghana and Egypt.“We are examining the possibility of having a stake in the Papua New Guinea LNG terminal,” Tripathi told reporters.The state-owned firm is talking to Canadian firm InterOil Corp to buy a stake in its proposed liquefied natural gas project (LNG) in Papua New Guinea.“In Nigeria, we, along with partners Total and Shell, have been shortlisted as one of the companies to develop the Nigeria gas master plan worth about US$7 billion (K`19.4 billion),” he said.Nigeria is estimated to hold 184 trillion cubic feet of gas reserves, most of which remain unexplored.The short-listed companies would be invited to build three major gas gathering plants and pipelines that would supply fuel to power firms.Tripathi said: “In Ghana, we are talking. Once gas production starts, we will process the gas and transport it to the desired location.”The firm has a presence in city gas distribution projects in Egypt and China.“We are also exploring the possibility of expanding our city gas operations in Egypt,” Tripathi said.

Flying high in Asia-Pacific

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By PATRICK TALU

PORT Moresby’s Jackson International Airport will be expanded and upgraded into an international-class aviation facility in the Asia-Pacific region.The development is estimated to cost K1.4 billion.The airport expansion follows pressures from the liquefied natural gas (LNG) project, which will increase passenger and aircraft traffic volume into and out of Port Moresby tremendously.National Airport Corporation (NAC) managing director Joseph Kintau yesterday accepted the Port Moresby International Airport (PMIA) master plan from Jacobs Consultancy.Mr Kintau said the current demand for aviation services had put a strain on the existing facilities. “The LNG project, expansions by airlines and booming economic activities are factors that forced us to come up with the plan to raise the airport’s standards to meet the expectations of the air industry,” Mr Kintau said.“The airport is also strategically located in the region where LNG project developers and consumers from the United States, Europe and Asia can have a convenient transit and exit from Port Moresby to other destinations.”He said the current airport, constructed in 1989, was designed to serve an annual capacity of 300,000 passengers.“After 20 years, we are now serving 1.4 million passengers a year.“That’s a significant strain on the airport’s facilities and infrastructure.”Highlighting one of the key objectives of the organisation’s reforms, Mr Kintau said the 2010 project was to ensure infrastructure development was based on a comprehensive master plan which PMIA was giving priority.The plan covers the development of infrastructure and facilities over the next 20 years – from 2010 to 2030.“It is based on passenger and aircraft movements’ forecast and growth in the aviation industry,” he added.Mr Kintau said the new airport would feature dual domestic and international terminals, extension of runways, redevelopment of apron and taxiways and also the commercial development of the aerodrome land.Asked how it would be implemented, he said: “The most probable implementation method NAC will be pursuing is a possible public-private partnership arrangement.“We are looking at a possible concession agreement to implement the capital programme to deliver the infrastructures, management capacity building and improved financial viability for regional airports through PMIA.”He said the plan also covered the scope of work and, after deliberation by the NAC board, it would be submitted to NEC for approval.

PNG LNG news fails to boost OSL shares

ALL the news about the financial close clearing the final hurdle for the PNG LNG project to go ahead might have excited the market, but it did little for the falling stocks of Oil Search Ltd on the local bourse.Oil Search lost 19toea to end at K13.80 despite the announcement in New York last Friday.On the local market this week, the Kina Securities Index (KSi) recovered slightly after declining for the past three weeks, Kina Securities said in its bulletin on Tuesday.It increased by 37.29 points or 0.60% to close at 6,231.60.The Kina Securities Home Index (KSHi) also gained strongly, gaining 217.88 points or 2.80% to close the week at 8,033.91.Bank South Pacific gained 1 toea, to end higher at K0.72.The company has released its annual financial report of 2009 which showed it has earned a net profit of K255.5 million for the year ending 31 Dec 31, 2009, up 11% from K228.3 million recorded in 2008.New Britain Oil surged 99t to close higher at 19.50, and Lihir Gold Limited closed 10t higher at K7.10. Another mining stock, HIG, was able to gain 10t to consolidate at 90t level.CCP was the remaining stock that fell, down 2t to close at K1.62. Other stocks remained unchanged.

Gas plan clears last hurdle

MELBOURNE: First production from the A$16 billion (K40.65 billion) Papua New Guinea liquefied natural gas project is on track to flow in 2014 after the development cleared its last financial hurdle with the signing of its final long-term sales agreement.The final deal converts an earlier agreement to a binding sales and purchase contract.Energy giant ExxonMobil, which has a 33.2% stake in the project and operates it via its subsidiary Esso Highlands Ltd, announced financial closure last Friday.“Finalising all sales and purchase agreements with LNG buyers and completing the financing arrangements with lenders are major milestones for the project,” Oil Search managing director Peter Botten said.Oil Search has a 29% stake in the project.“A total of US$14 billion (K38.89 billion) of debt funding has been secured for the project, with commitments from key export credit agencies, commercial banks and lending from co-venturers,” he said.“Securing this financing during one of the most difficult financial markets seen in modern history was a major achievement.”The project will supply four major LNG customers in Asia through long-term sales, including Taiwan’s CPC Corp, Osaka Gas Co Ltd and The Tokyo Electric Power Co, in Japan, and Unipec Asia Co Ltd, a subsidiary of China Petroleum and Chemical Corp (Sinopec).Partners in the PNG LNG project in December announced the US$15 billion (K41.67 billion) project would go ahead, conditional on sales and purchasing agreements being signed-off and finance being secured.Other partners include the PNG Government with 16.6%, Santos Ltd with 13.5%, Nippon Oil Exploration with 4.7%, PNG landowners, who hold 2.8%, and Petromin PNG Holdings Ltd, with 0.2%.The PNG LNG development includes gas production and processing facilities in the Southern Highlands and Western provinces of PNG, liquefaction and storage facilities north-west of Port Moresby on the Gulf of Papua, and over 700km of pipelines.Santos chief David Knox also praised the project’s financial completion.“PNG LNG will provide Santos with long-term production and cash flows,” Knox said in a statement.“Our share of project production is expected to be approximately nine million barrels of oil equivalent per annum at plateau including LNG and associated liquids,” he said.The existing sales and purchase agreements now account for all of PNG LNG’s production capacity of 6.6 million tonnes per year for 20 years from the start of production expected in 2014.Deutsche Bank analyst Damian Pearson said most investors had been expecting the final agreements to be signed-off.“It is all done and dusted, so that is good news,” Pearson said. – AAP

LNG project lures public servants

Source:
By ZACHERY PER
AN exodus of highly-skilled public servants to the LNG project is being experienced as workers are quitting their jobs in search of greener pastures.Several public servants in Simbu province have attended interviews with developers of the project, according to president of the Public Employees Association Simbu branch Peter Nulai.He told The National in Kundiawa yesterday that there would be an acute shortage in public service workforce after an exit of several highly-skilled and experienced public servants.“The onus is on the Government to re-negotiate their remuneration packages to keep them serving the people at their current respective levels,” Mr Nulai said.He said public servants not only in Simbu province but also other provinces and in the National Government were opting to join the LNG work force.“Most of those who expressed interests to work in the project are likely to leave public service as so much money is involved.“The Government will make millions of kina because of the LNG projects, so they should increase the salaries and improve working and living conditions of its workers to keep them in the public service,” Mr Nulai said.It has been revealed that PNG lacked the manpower capacity for the LNG project to start and developers were looking at recruiting skilled manpower overseas to meet the requirement of the project.

Gas project gets financiers’ nod

BANKS and financial institutions have given the thumbs up for the PNG liquefied natural gas (LNG) project to get rolling.The financing arrangement was concluded in New York last Friday, clearing the final hurdle for this massive project.In financing terms, this is the biggest oil or gas project ExxonMobil has undertaken on its own.ExxonMobil and its partners were successful in negotiating this huge financing at a time when the financial crisis has weakened the global economy, and this represents a big plus for PNG.Prime Minister Sir Michael Somare congratulated project operator Esso Highlands Limited for successfully concluding the financial arrangements that enabled the US$15 billion (K40 billion) project to proceed.The conclusion of the sale and purchase agreements with four Asian LNG customers recently and the completion of financing arrangements represent a major milestone in the Government’s ongoing efforts to build a vibrant economy, he said in a statement.He said projections suggested that company tax proceeds from this project would average between K5 billion and K7 billion annually during the 30-year life of the project.Sir Michael said ExxonMobil had advised the Government that the LNG project financing agreement represented the biggest loan funding ever provided for any oil or gas project worldwide.“This is indeed a big honour for our nation. I call on all stakeholders to join hands in ensuring smooth progress during project construction to enable the LNG export operation to be commissioned by the end of 2013.”Esso Highlands Ltd managing director Peter Graham and ExxonMobil Development Company president Neil Duffin said: “The project will be developed in compliance with the highest standards for health, safety, environmental and social safeguards and will support the PNG Government’s objective to strengthen its economy and infrastructure base for the benefit of its people.“The comprehensive national content plan focuses on development of the local workforce, expansion of supplier capability, and strategic community investment.“Funding for the PNG LNG project will come from the co-partners and through market-rate loans arranged with export credit agencies and commercial sources. The project team successfully negotiated this complex transaction for the project in a very difficult financial market.”The concluded financing arrangements comes just 10 days after project partners led by operator Esso Highlands Ltd signed off the last final 20-year sale and purchase agreement (SPA) with China Petroleum Company (CPC) Taiwan for about 1.2 million tonnes per annum (mta) of LNG.

Extra profit tax on LNG project

THE additional profit tax has been reintroduced in the PNG liquefied natural gas (LNG) project, according to Prime Minister Sir Michael Somare.The tax scheme was abandoned in early 2003.During negotiations between the National Government and project developer ExxonMobil Corp on the PNG Gas agreement, the Government did not provide any tax concessions, Sir Michael said.He said this in a statement as he expressed congratulatory sentiments to ExxonMobil Corp and project development partners led by operator Esso Highlands Ltd, a subsidiary of ExxonMobil Corp.“We have had positive economic growth every year since then and I am especially thankful that the PNG LNG project will push this nation’s economic performance to an even higher level.“The challenge for my Government is to convert the benefits of this project to meaningful development that would improve the lives and living conditions of every Papua New Guinean.“The co-venturers in this project will spend US$15 billion (K40 billion) during construction.“This has to be managed in an effective and efficient manner to avoid cost blow outs that would negatively impact on profitable operations and potential returns to the National Government,” he said.The Independent Public Business Corp (IPBC) through its subsidiary company Kroton No. 2, is State’s nominee to venture into the project on behalf of the GovernmentIn total, the Government has 19.6% equity stake in the project, where 16.6% is held by IPBC (Kroton No. 2); an additional 2.8% is held on behalf of landowners by the Mineral Resources Development Co (MRDC); and 0.2% by Petromin PNG Holdings Ltd through its subsidiary Eda Oil Ltd.The overall US$15 billion (K40 billion) cost of developing the PNG LNG project, which excludes shipping costs, will enable PNG to export 6.6 million tonnes of LNG annually to customers in China, Japan and Taiwan.This would involve the processing of more than nine billion cubic feet of natural gas from gas fields in Southern Highlands and Western province over the 30-year project life.

BSP records net profit of K255.5 million

BANK South Pacific (BSP) has recorded a net profit of K255.5 million for the period ending Dec 31, 2009, up 11% from K228.3 recorded in 2008.Its consolidated operating profit (before tax) was K378.1 million for Dec 31, up 15% from K328.8 million in 2008.BSP chairman Noreo Beangke, in the announcement to Port Moresby Stock Exchange, said last year’s results reflected moderate but reasonably stable and resilient business conditions during the year, as some effects of the global financial crisis became more directly apparent in the economy.The group’s total assets last year was K9,398.7 million, a hefty 38% increase of K2,590.8 million from K6,807.9 million in 2008.While this growth reflected continuing organic business growth in the bank of just over K1,160 million in PNG and its Pacific Island branches, Mr Beangke made special mention of the achievement.He noted that during a time of general tentativeness in the global business environment, BSP added a further K1,430 million of assets (along with 18 bank branches) through the acquisition of the National Bank of Fiji and Colonial Fiji Life Ltd last November, clearly underlining the bank’s expansion strategy in the Pacific region.He said BSP maintained its strong performance last year.

Oro oil palm growers to hike output

Source:
By SHEILA LASIBORI
OIL Palm growers in Oro province aim to produce 180,000 tonnes of fruit this year, following last year’s low output, according to the Popondetta Oil Palm Industries Corp (Opic).Last year, the growers harvested only 130,000 tonnes out of the targeted 170,000 tonnes, mainly due to the devastation caused by Cyclone Guba in 2007 where about 98ha of oil palm land was lost, Graydon Hanguru, field manager for Opic, said.He said another reason for the low harvest was the non-distribution of fertilisers to growers since 2007.That year, about a third of the growers were supplied fertilisers, then there was nothing for both 2008 and last year.This year, they have restarted distributing fertilisers where three divisions (Sorovi, Igora, and Ilimo) have been covered with the remaining two divisions to be supplied soon.The price per tonne of the harvest this year has been: January, K191.90/t; February, K194.58/t; and this month, K211.33/t.Mr Hanguru said the way in which growers were paid their cheques had been changed to avoid long queues at the only bank (Bank South Pacific).There was an inflow of people into Popondetta who emptied shelves in shops, he said.“This was a big change we did to reschedule the harvest time and the day for issing cheques to the growers,” he said yesterday.The growers were grouped into two zones: Zone one consisted of Sorovi, Saiho, and Ilimo which started the first harvest on Jan 4 and got their cheques the following Friday.Zone Two (Igora and Aeka) followed suit which harvested on Jan 11 and received their cheques the following Friday.“So what is happening now is that we are trying to get them to harvest according to their schedules … we are paying them every Friday,” Mr Hanguru said.He also said the Asian Development Bank -funded smallholder agriculture development project (SADP), or the in-filling project, was two years behind schedule.“It is an in-filling project and not a new development,” he said, adding they were preparing for SADP.So far, it had recruited lands and environment officers who were currently undergoing basic training at Hoskins in West New Britain province.

Gas project ‘enormous challenge’

BEING a massive project in a small economy, the PNG liquefied natural gas concern has become an enormous challenge.And the usual trouble with a big resource project for a small economy is that if the revenue is not carefully managed, the project could end up giving very little to boost the domestic economy’s growth, Roger Donnelly, chief economist of EFIC said on Wednesday.The International Monetary Fund (IMF) has estimated that the project would increase gross domestic product (GDP) by 15% to 20% and the national income by 6%.Mr Donnelly was speaking in Port Moresby during the economic outlook seminar.The event is part of a series of activities marking the Australia week 2010.Also present was Bank of PNG Governor Loi Bakani and Australian High Commissioner to PNG Ian Kemish.Mr Donnelly, who claimed to have been watching the changes in the PNG economy over a decade, said PNG’s record showed it did not have a good track record for growth despite having some of the biggest resource projects.“Now, there is no reason in principle why resource wealth should keep you poor,” he said this as he acknowledged that the PNG Government was aware of those issues and responded with the medium-term fiscal strategy.

InterOil profit US$6.1m

INTEROIL Corp recorded net profit of US$6.1 million (K17 million) as against a net loss of US$11.8 million (K32 million) for the same period in 2008.The company said it was its first posting of annual profit.Profits from InterOil’s refining and distribution businesses more than offset losses incurred in its developing upstream and liquefaction businesses.This profit figure for the period ending Dec 31 included a significant expense item amounting to US$31.7 million (K87 million) for a “loss on extinguishment of indirect participation interest liability”.This relates to an exchange transaction entered into with certain indirect participation interest (IPI) holders when their interests were exchanged for a certain number of InterOil’s common shares.InterOil petroleum products sold in PNG totalled 6.5 million barrels for fiscal year last year compared with 6.6 million barrels in 2008, a steady result in light of the global economic backdrop.Total revenue last year was US$693.1 million (K1.904 billion), compared with US$919.7 million (K2.527 billion) for 2008.“The difference is primarily explained by lower crude oil prices, giving rise to commensurately lower product pricing in the current year,” InterOil said in a statement.InterOil’s earnings before interest taxes, depreciation and amortisation (Ebitda) for the year was US$19.3 million (K53 million), down US$3.1 million (K9 million) from US$22.4 million (K62 million) in 2008.This Ebitda figure would be US$51 million (K140 million) if the US$31.7 million (K87 million) ‘loss on extinguishment’ of the IPI liability was excluded.

TWL offering 35% of equity in company

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By SHEILA LASIBORI
SOUTHERN Highlands-based transport company Trans Wonderland Ltd (TWL) is offering an un-acquired 35% equity to landowner companies (lancos), according to managing director Larry Andagali.So far, 65% have being taken up by existing lancos, the latest being Moran Ina Naga Ltd, which paid K240,000 for its 10% equity share covering areas in petroleum development licence (PDL) 5 and 6 (each have 5% interest in the purchase).Witnessed by some company directors, Moran chairman Tony Kila made the cheque payment to Mr Andagali on Tuesday night in Port Moresby during the deal signing between Hides Gas Development Corp (HGDC) and Business for Millennium Development (B4MD).TWL, which started operating last June but formally launched only in July, has 21 earth-moving equipment to date from the initial 17 and employees over 120 staff.According to Mr Andagali, the Moro-based company with offices in Lae for LNG cargo coordination will go into shipping and aviation.“TWL will also move into aviation and shipping … we are having discussions and are still working on it,” he said, adding with the support of Moran and other lancos, they would reach their investment goals. “So everyone in Hides, Kutubu and Moran we still have 35% that is available,” he said as he called on landowners in areas along the LNG pipeline, Angore, Juha, Komo airfield, PDL 1 and 5 to form their companies and buy shares in TWL.Mr Andagali said starting from Moran at the border of PDL 6 into Juha, Angore and Hides would take up 50% in TWL while Kutubu, Upper Foe and Lower Foe including Poroma access road landowners would own the other 50%.He said TWL was also working with Gobe and Kikori landowners who owned a transport company.“We are in discussions for a joint venture tie-up to provide transportation services from Kopi all the way to Hides so there is no interruption.“TWL is to be one-stop-shop transport and logistics company we are working towards that aim to build up to 100-300 truck-fleet but working towards 100 trucks,” he said.TWL’s six-monthly meeting for shareholders is due this month end.

Mitsui wins gas plan deals

THE PNG liquefied natural gas (LNG) project has awarded Japanese transport company Mitsui OSK Lines Ltd (MOL) two long-term charters.The charters are for MOL’s two existing 177,000 cubic meter capacity LNG carriers with the state-of-the-art tri-fuel-diesel electric propulsion systems built in Korea at Hyundai yards this year and co-owned by Itochu Corp (Itochu) (MOL 70% and Itochu 30%).The vessels are to be operated by MOL.Simultaneously, MOL has entered into two heads of agreement, one with the PNG LNG project and one with an ExxonMobil affiliated company in the Gorgon project. Here, MOL will construct and long-term charter a total of four LNG vessels to the projects, all of which are planned to be built in China.Deliveries will start in 2014-16 timeframe.According to the statement, MOL has a proven track record of providing first class transportation for large scale LNG projects in the Asia Pacific and Middle East regions for over 30 years.MOL also acknowledged ExxonMobil for their long association and their affiliates and joint ventures and was looking forward to working with them and their partners in the years ahead.

Steamships: Final dividend K0.86

THE board of Steamships Trading Co Ltd (STCL) has declared a final dividend of K0.86 per share and will be paid following approval at the company’s annual general meeting scheduled for May 25 this year.This brings the total dividend for the year to K1.46 per share which was the same as 2008.STCL board said the current strategic investment plans for the next three years would need a reduction in annual dividends to an estimated K1 (100 toea) per annum – interim K0.40 and final K0.60.“This will be reviewed throughout the year in response to the company’s operating performance and capital growth needs”, STCL board advised in its report to the stock exchange last Monday.STCL recorded profit (after tax and minority interests) of K96.6 million for the period ending December 2009, up 7% from K90.2 million in 2008, on the back of healthy performance by businesses within the Steamships group, especially hotels and the property division.

€22m for mgt of resources in the region

THE management of fisheries and mineral resources in the Pacific region will benefit from €22 million (K82.92 million) that will be injected by the European Union (EU).This will go into three projects under the 10th European Development Fund (EDF).This follows the signing yesterday in Suva, Fiji, of the first three financing agreements under the regional indicative programme for the Pacific, financed through the 10th EDF.The agreements were signed by Wiepke van der Goot, head of delegation of the European Union for the Pacific in Fiji and Tuiloma Neroni Slade, secretary general of the Pacific Islands Forum Secretariat (PIFS) and the regional authorising officer.The three projects include:* Scientific support for the management of coastal and oceanic fisheries in the Pacific Islands region (SCICOFish);* Deep sea minerals in the Pacific Islands region: legal framework and resource management; and* Development of sustainable tuna fisheries in Pacific ACP countries phase two (DevFish )A total of €95 million (K358 million) has been committed by the European Commission (EC) for 2008-13 to develop new approach to strengthening regional economic integration and sustainable management of natural resources and the environment.Speaking at the signing ceremony, Slade thanked the EU for funding the three projects and its continued support to the Pacific region in implementing the Pacific Plan and the Forum Leaders determination of the regional development priorities.

Nasfund’s investment ‘a success’

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By SHEILA LASIBORI
THE growth in membership, asset value, and equity portfolio of National Superannuation Fund Ltd (Nasfund) reflects the health of the local economy.Since Nasfund has mostly invested locally, it is least affected by the global financial crisis (GFC), according to joint chief executive Ian Tarutia.These were Mr Tarutia’s observations in an address before human resource officers and managers of Nasfund member-employer companies and organisations at a conference yesterday at Crowne Plaza in Port Moresby.While revealing the fund’s successes despite the GFC and the performance compared with similar funds in Australia, Mr Tarutia again cautioned that employee members’ credit interest figure may not be a double digit this year, but all the rates except for 2008 (11%) had been above the inflation rates.The average for the last five years in interest credited to members was 19.8%.‘The growth here, as you can see the fund, has been growing with new members coming through.“When we grow, it is the reflection of what is happening in our economy,” he said.He said the active membership base had grown especially when new workers were being introduced into the workforce and hence, that captured in the superannuation where Nasfund captured some of them especially in the private sector.In equity portfolio, Mr Tarutia said Nasfund had good partnership with reputable organisations such as Curtain Brothers for developments at Harbour City in Port Moresby, Honibooks for construction of Investment Promotion Authority (IPA) House and the Factory at Konedobu, and Lamana Development for Heritage Hotel in Solomon Islands.“So we are using good reputable builders and contractors that are also owned by the fund, so investment money is circulated within the group,” he said.Meanwhile, Anna Mawason, the team leader for employer services, told the employer member- representatives to continue the employer contributions and on time especially after the 14th day of each month for the previous month’s contributions.

LNG plan offers farmers new deal

Source:
By SHEILA LASIBORI
THE new roads and airstrips being constructed for the PNG liquefied natural gas (LNG) project will give market access to primary agriculture produce.But a lot of the hard work will be done by local Papua New Guineans, according to Mark Ingram, chief executive of Business for Millennium Development (B4MD).Last night in Port Moresby, B4MD signed a deal with Hides Gas Development Corp (HGDC), a landowner company.“What the LNG project provides is a way to finally get market access … so with market accesses ,you can now create an economy for the people.“The benefit of profits will go directly to the farmers.”HGDC chairman Libe Parindali and Mr Ingram signed the deal targeting women and children in resource-rich Southern Highlands.It paves way for the creation of Southern Highlands Produce Ltd, a joint venture between B4MD and landowners.Mr Ingram also said: “Southern Highlands Produce brings together a group of Australian international companies working in partnership with the communities of Southern Highlands to create a community based fresh produce company”.Oil Search managing director Peter Botten acknowledged B4MD for its efforts and others who wanted to help and contribute to dealing with millennium development goals (MDGs).Oil Search is a member of B4MD and it will help seek seed capital for SHP-based produces.Under the arrangement B4MD would provide necessary expertise, tools and support for SHP from various members to assist with the running of the company.

PNG, Taiwan ink LNG deal

THE PNG liquefied natural gas (LNG) project has signed off its last 1.2 million tonnes per annum (mta) of LNG to China Petroleum Co PNG-Taiwan LNG deal Esso Highlands Ltd, operator of the US$15 billion (K40 billion) LNG project, signed the 20-year sales deal with the Asia-Pacific LNG customer, last of the four LNG customers for the total 6.6mta to be produced when the project exports its first cargo in late 2014 or early 2015. Esso Highlands Ltd is a subsidiary of ExxonMobil Corp.“This important agreement with CPC will deliver a reliable supply of cleaner-burning natural gas to meet Taiwan’s growing energy demand and begin a new and lasting relationship between Taiwan’s largest energy importer and PNG’s first LNG project,” Ron Billings, vice president, LNG, ExxonMobil gas and power marketing, said.Second major partner Oil Search Ltd’s managing director Peter Botten said: “The PNG LNG project is now fully contracted for the entire plant capacity, and the way is clear to move forward to financial close.”Mr Billings said: “It also marks a significant step forward for the PNG LNG project. With this SPA, all of the project’s production capacity has been committed on a long-term basis.

Steamships posts K96m profit for 2009

STEAMSHIPS Trading Co Ltd (STCL) posted a profit (after tax and minority interests) of K96.6 million for the period ending December 2009.The directors in their report to the stock exchange revealed the profit, up 7% from K90.2 million in 2008, on the back of healthy performance by businesses within the Steamships group especially the hotels and property division.This figure includes Steamships’ equity-accounted share of associates’ results.Revenues were K496.0 million, up 7.1% compared to 2008 result of K463.0 million.Depreciation in 2009 was K47.9 million compared to K39.3 million in the previous year, and interest on borrowings was K12.2 million against K4.7 million in 2008.Capital expenditure for the year was K195.4 million against K133.7 million in 2008.“The result reflects the continuing improvement in trading performance from businesses within the Group.Notably, the hotels and property divisions recorded healthy results against budget expectations.“This is largely driven by increased demand for short-term stays and conferencing. “Room and facility expansion at the Gateway and Ela Beach Hotels together with the construction of the new 166-room Grand Papua Hotel, in Port Moresby, ensures the divisions’ position as a leading hospitality service provider.”The board said demand for high quality commercial, industrial and residential accommodation drove favourable results for the property division and reinforced investment decisions to commence property development programmes.

Govt backs Petromin on LNG plan

PRIME Minister Sir Michael Somare has said the Government and its agencies will work with Petromin PNG Holdings Ltd in the Elk/Antelope liquefied natural gas (LNG) project.This will be to help Petromin, the Government’s nominee, fund the State’s equity in the project being spearheaded by InterOil Corp.Sir Michael disclosed these during the Petromin Board meeting in Wewak last where he addressed the meeting as trustee shareholder.He said he was looking forward to receiving Petromin’s advice on how the State could best fund its equity in the project.The Prime Minister expressed satisfaction that Petromin had secured the financing of its equity, through its subsidiary Eda Oil Ltd in the Exxon Mobil-led PNG LNG project.“This indeed gives me more confidence that I have in the board and management in taking on more challenges of similar nature in the future, on the company’s own strength.”Sir Michael said Petromin has shown positive growth since its inception and he commended the board and management for putting in place an investment strategy which provided the pathway for a planned process of investment.“It is my hope that one day, Petromin would live up to its expectations of becoming an exploration and development company in the whole value chain of the mineral and petroleum sector.“It was this main vision that led us to create Petromin,” Sir Michael said.