Thursday, January 28, 2010

Gas project won’t fulfill PNG’s needs

Source:
By OSEAH PHILEMON
PAPUA New Guinea’s energy demand will increase by 300% over the next five to 10 years – but none of it will be met by the upcoming gas project.The gas is slated for export to Japan to generate electricity.This shocking news was revealed to the Lae business community yesterday by PNG Power Limited (PPL) acting chief executive officer, Tony Koiri.Mr Koiri said the energy demand for PNG was forecast to increase by 50% in two years due to extensive development of commercial, residential, hospitality and industrial infrastructure in major centres.“This demand is forecast to increase by 67% between five and 10 years as a result of the LNG project and PPL is looking at developing its hydro-power systems to meet the demand.“We are now working on improving the efficiency of hydro-power plants by implementing a number of measures to meet the growing demand for electricity,” he said.Diesel generators which PPL is increasingly relying on to provide electricity to power-starved consumers is costing the organisation far too much.Mr Koiri pointed out that the energy demand forecast on the Ramu system, based on the non-mining sector demand, was expected to increase by 30% in the next five years.“If mining loads of Ramu nickel, Yanderra, Wafi Golpu were taken into account, then the energy demand based on preliminary load figures would increase by about 300% from current figures,” he said.PPL has plans to cater for this huge increase in electricity demand with the development of the 240 megawatt Ramu two hydro-electricity project, which it is estimated to cost K1.3 billion.Mr Koiri said PPL was looking for private sector partners to develop the new system.“PPL needs to immediately make significant investments in (power) generation, sub-stations and network infrastructure to not only meet the increasing demand, but also improve the reliability and quality of supply,” Mr Koiri said in his presentation.He said PPL was engaged in major capital investment programmes costing K1.017 billion to upgrade the nation’s electricity supply system from last year until 2013.It plans to spend K322 million on hydro-generation including Yonki Toe of Dam, Rouna 1 replacement, refurbishment and upgrades to Ramu 1, Paunda and Warangoi and a new hydro-power station at Ramazon in Bougainville.Another K248 million will be spent on developing the thermal power stations, including new generation for Port Moresby and new power stations for Wewak and Kimbe.Mr Koiri said K258 million would be spent on transmission, including new sub-stations in Port Moresby and the Hidden Valley gold project transmission line.Funding for these projects will come from internally generated funds and existing borrowings.Mr Koiri admitted that PPL had been unable to provide a reliable power service, resulting in it paying rebates to customers since 2005.The reliability of supply has declined over recent years in most centres and is currently below the benchmarks set by the Independent Consumer and Competition Commission (ICCC).

Ela Motors expects big business from LNG project

NATIONAL car dealer Ela Motors Toyota Tsusho (PNG) Ltd is venturing into the PNG liquefied natural gas (LNG) project through its staff. “In terms of investment in the LNG project, Ela Motors is investing in people … our own people. We are not investing directly in the project because that is not our core business,” David Purcell, chief executive officer of Ela Motors, said.But with the large size of the project, Ela Motors will need to expand in terms of providing service and parts backup to the vehicles that will service the project.But this did not mean Ela Motors would be immediately establishing new dealerships especially in the Highlands area but would continue to analyse and review the needs on a month to month basis.Mr Purcell said Ela Motors did not have service or parts facilities located in Hides, Mendi or Tari in the Southern Highlands province – the home of the US$15 billion(K40.6 billion) 6.3 metric tonne ExxonMobil-led LNG project.“We have been analysing this opportunity for some time now and we will take the appropriate steps to meet our customer's needs when the time is right and the business requires it,” Mr Purcell said, adding if a need arose for Ela Motors to do something different to provide the level of service that its customers needed they would find a way to do that.“We see the LNG project as being a very important part of our business. We have two main objectives. These objectives are to look after the people who have looked after and supported Ela Motors for the last 46 years which is our core traditional business as well as looking after the LNG style of the business which is so important to us that we have created a separate division to manage the LNG projects and the contractors,” he said.The Ela Motors LNG team is being led by a project manager and a coordinator as well as champions in the departments of sales, parts and service. “In that way we can give both parts of our business the attention they need. One part being our traditional core business and secondly the additional business which requires specific attention which is the LNG Project demands,” Mr Purcell said.

Tuesday, January 26, 2010

Property prices may rise 5% to 10%

KUALA LUMPUR: Property prices in Malaysia are forecast to increase by 5% to 10% this year against last year in line with the recovering economy.
Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector Malaysia president James Wong said the market did not expect a big jump in property prices this year as the economy was not fully recovered yet.
The economic recovery will largely influence the property market performance and Malaysia’s gross domestic product (GDP) growth rate this year is forecast at 2% to 3% from the estimated contraction of 3% last year.
“Condominiums and apartments are currently selling well and landed property prices, which had held through the economic crisis last year, are expected to grow this year,” Wong said after the opening of the Malaysian Property Summit 2010 yesterday.

Citing examples, Wong said the St Mary’s serviced apartments were 80% taken up within five days of their launch, Sky Residences recorded a 70% take-up rate and the 50-unit Verticas Residensi in Bukit Ceylon achieved a 60% take-up rate during soft launch.
“This shows that condos and apartments are not short of buyers. And developers that postponed property launches last year are not expected to do so this year,” he said, adding that property prices last year were estimated to have dropped by 5%.
However, Wong raised some concerns about tenancy of condominiums and apartments.
“A lot of new developments are facing a hard time in getting tenants,” he said.
Another area of concern would be the office market that saw the supply of four billion sq ft of space last year, according to Wong.
“Thus, there is a slight concern on the take-up rate, especially for tenants that will occupy huge space of 20,000 sq ft and above as well as the effect of the new supply on rental rates,” he said.
Valuation and Property Services Department director-general Datuk Abdullah Thalith Md Thani said this would be a good year for the property sector as key economic indicators that related to the growth of the industry were expected to perform better than last year.
The expected recovery in the GDP of Malaysia’s main trading partners – the United States, Japan and Singapore – and improved prices for crude oil, crude palm oil and rubber would augur well for the country, he said.
In fact, the property market, which had slumped in the first half of last year, had improved since the second half-year, he added.

Pacific LNG eyes floating terminal to chill extracted gas

PACIFIC Liquid Niugini Gas (LNG) Operations Ltd may use a floating terminal to exploit reserves faster than a conventional plant, to help it attract equity partners.Pacific LNG and InterOil Corp are exploring floaters to chill the fuel before an onshore production unit starts operation by 2015, according to Henry Aldorf, Pacific LNG’s newly-appointed president.LNGL is the developer of the second LNG project.“The partners are offering about 30% in gas areas in PNG, in the proposed LNG plant and a share of the cleaner-burning fuel. “We must be the only project in the world offering a stake in upstream, midstream and downstream in a super low-cost project with a huge amount of gas and associated liquids,” Aldorf said in an interview in Singapore. “We are in the process of looking for industrial and strategic investors.”Exxon Mobil Corp, InterOil and Talisman Energy Inc may boost PNG to the second-largest LNG producer in the Asia-Pacific region after Australia by 2015 by producing as much as 15 million metric tonnes of the fuel, almost enough to supply Taiwan and India based on 2008 demand, Tony Regan, a Singapore-based consultant at Tri-Zen International Ltd, said.Pacific LNG, an affiliate of Clarion Finanz AG, owns 47.5% of Liquid Niugini Gas Ltd, which is building the LNG project.It also holds about 20% of Elk and Antelope gas areas along with InterOil and the PNG government.

Ausenco acquires 50% of Kramer

Source:
By SHEILA LASIBORI
GLOBALLY-listed Australian company Ausenco Ltd has acquired 50% of national company Kramer Group to form a joint venture targeting substantial projects to be generated by the liquefied natural gas (LNG) development activities.The new company will be known as Kramer Ausenco Ltd.Kramer Ausenco (PNG) Ltd chief executive officer, Frank Kramer, said: “We decided we needed a stronger global partner to take on the bigger projects that are coming to PNG.“To get more involvement with the resource projects, not just on the edges but on the central part … that is why we formed this alliance.“We invited Ausenco to buy 50% of Kramer Group. “What we want them (Ausenco Ltd) to do now is to build a PNG capability so that more Papua New Guineans get involved with central parts of major resource development projects,” Mr Kramer said.He said he has a vision and that vision is “to involve every Papua New Guinean in the development of the nation in project, managing not just in the periphery of the resource project but in every sense the central aspect of front end engineering and design (FEED) work, procurement and construction”.Mr Kramer said the company was involved at the initial stages of the PNG LNG project at the start of the FEED.“We had key staff members working in the team … now that it is moving to end of the FEED and beginning of the EPC (engineering, procurement and construction) phase, that is the type of work where I want more involvement from Papua New Guineans,” he said.Zimi Meka, chief executive officer of Ausenco Ltd, said the partnership meant clients in PNG and the region could access a global engineering company employing about 2,500 people around the world.He said the five core business lines for Ausenco Ltd are: minerals; energy; processing and structuring (including ports and marine); environment sustainability; and programme management.“The Kramer Group is now able to access those skills and is capable to deliver quality services to clients here in PNG,” Mr Meka said.Mr Kramer said this year would be special for PNG because of greater expectations, opportunities and challenges that would stretch across key developments of industries and companies.“I think, we are in a unique position that is why we entered into this JV with Ausenco”.Apart from Brisbane and Port Moresby, Kramer Ausenco Ltd has offices in Solomon Islands, Fiji, Vanuatu, Samoa, and Tonga.Before the joint venture, Kramer Group and Ausenco had projects at Ok Tedi Mine, Tolukuma gold mine, Misima, Porgera, Hidden Valley and Harmony Gold.They also had engineering and civil works, procurement and construction jobs around the country.

Monday, January 25, 2010

Sime Property, Sunrise in JV for RM1b property project

KUALA LUMPUR: Sime Darby Property Bhd and Sunrise Bhd have formed a partnership through a 50:50 joint-venture (JV) company named Sime Darby Sunrise Development Sdn Bhd. The JV company will develop three lots of freehold commercial land measuring 20.95 acres in the 180-acre Bukit Jelutong. Its gross development value is estimated to be RM1 billion. Work is expected to begin in 2011, according to the companies on Tuesday, Jan 26.

Borneo Resources in RM40mil swiflet eco-park JV

By JACK WONG
jackwong@thestar.com.my
KUCHING: Sarawak State Economic Development Corp (SSEDC) and Peninsular Malaysia-based Borneo Resources Synergy Sdn Bhd (BRS) have agreed to jointly develop a RM40mil swiftlet eco-park in Balingian, Mukah Division within the Sarawak Corridor for Renewable Energy.
BRS, a wholly-owned subsidiary of property development and investment firm Masmeyer Holdings Sdn Bhd, has a 80% stake in the joint venture. SSEDC holds the balance 20%.
Sited in a rural setting along the Mukah-Balingian coastal highway, the project will involve the development of 40 three-storey units and 15 three-storey bungalow units.
“The project is targeted to be completed not later than 2012. Ideally, it is to be ready this year,” BRS director Choo Beng Kai said after the joint venture agreement signing ceremony. Golden Swift Resources Sdn Bhd, a swiftlet farming expert, has been engaged to provide technical expertise to the project.
SSEDC was tasked by the state government to spearhead the development of swiftlet farming on a well-planned, sustainable and eco-friendly manner.
The state authorities recently took action against hundreds of unlicensed swiftlet operators who used shophouses in town for swiftlet farming. The proposed park will provide an alternative venue for swiftlet farmers asked by the state government to shift their operations to approved sites.
Newly appointed Sarawak Assistant Tourism Minister Datuk Talib Zulpilip, who witnessed the ceremony, said the development of the proposed park was to ensure an orderly development of the lucrative swiftlet farming industry.
Talib, who was former SSEDC chairman, said SSEDC planned to develop similar swiftlet eco-parks in other parts of the state.
“We (SSEDC) are looking to bring in more joint venture partners in similar projects.” He said SSEDC-BRS would process and market the bird’s nests the joint-venture company produced. A kg of unprocessed bird’s nest now fetches about RM4,250.
Talib said Sarawak was well-known for its high quality bird’s nest, adding that this was evident as the early traders from China had come to Sarawak to buy bird’s nests.

EON Cap says HLB offer too low

By YVONNE TAN
Advisers indicate other parties interested in EON Cap
yvonne@thestar.com.my
PETALING JAYA: The EON Capital Bhd (EON Cap) board of directors yesterday said the RM4.92bil cash offer from Hong Leong Bank Bhd (HLB) significantly undervalues EON Cap and its financial advisers have indicated that there are other parties interested in acquiring EON Cap.
In a statement last night, the board said it had sought clarification from HLB on a range of details in its acquisition proposal, with particular focus on valuation.
“The board is evaluating this approach but on the face of it, the offer price significantly undervalues EON Cap,” chairman Tan Sri Syed Anwar Jamalullail said in the statement.
The statement said the banking group launched a three-year transformation programme in October 2007 which sharply improved the performance of the bank despite difficult economic conditions in 2009, delivering 8% growth in residential mortgage loans, 15% growth in credit card and personal loans and 14% growth in hire purchase loans in the first three quarters of 2009.
Earnings improved in terms of net income, return on assets and return on equity, it said.
“In evaluating the HLB offer, we will consider all alternatives open to us to fulfil our responsibility to shareholders,” Syed Anwar said.
Meanwhile, EON Bank group chief executive officer Michael Lor said EON Cap’s financial advisers had indicated that apart from HLB, there were other parties interested in acquiring it.
“I am not sure if they (these parties) are seeking Bank Negara’s approval at the moment to start talks with us but our financial advisers have introduced some potential parties to us.
“If there are better opportunities, the board is bound to make sure it pursues all of them,” Lor said after the underwriting ceremony for ECS ICT Bhd.
EON Bank is a subsidiary of EON Cap. Goldman Sachs and Ethos & Co are respectively EON Cap’s international and local financial advisers for its strategic review.
There is speculation RHB Capital and Alliance Financial Group Bhd may be interested parties but sources close to the companies indicate that this is unlikely at this point.
“RHB has expressed that it is not interested in EON Cap. It is more interested in building value from its current structure,” a source said yesterday.
A source at Alliance said he had no knowledge of Alliance submitting a competing bid for EON Cap at this point.
Meanwhile, saying that he “was in no position” to reveal who the parties were nor elaborate further, Lor said the board would “within the next few days” make an announcement as to what it planned to do and what decision would be taken.
In its RM4.92bil cash offer for the assets and liabilities of EON Cap last Thursday, HLB had given the EON Cap board seven days to confirm the tabling of the offer for consideration and approval by the shareholders.
Lor said the board was looking at the “best options and the best alternatives. That’s why they are taking a little bit more time in their deliberations.”
On Jan 6, Bank Negara gave the green light for HLB to start negotiations on the acquisition of EON Cap’s assets and liabilities, including equity interests.
EON Cap had also said it was seeking Bank Negara approval to start negotiations with multiple parties, with regards to this.
Research outfit AmResearch Sdn Bhd does not expect a competing bidder for EON Cap to emerge in the short term.
‘’We believe EON Cap’s shareholders will be better off taking the current all-cash offer from HLB and considering alternative investments elsewhere,’’ the house told its clients last week.
Still, other houses like TA Securities and RHB Research believe that EON Cap’s major shareholders (in particular Primus Pacific Partners (HK) Ltd) may offer some resistance due to pricing issues. Primus, which holds a fifth of EON Cap, is said to be uninterested in the all-cash offer which would crystallise its losses.
Primus had in early 2008 bought the shares at RM9.55 a share, which is more than a third above HLB’s offer price which works out to RM7.10 a share.
Analysts feel the other four non-strategic shareholders of EON Cap – Tan Sri Tiong Hiew King, Rin Kei Mei, Khazanah Nasional Bhd and the Employees Provident Fund – would eventually agree to HLB’s offer.
On the entirely cash deal, an analyst said it was easier than a share-swap deal as “a cash deal would be completely clean; not to mention more cost-effective.”
“Some of the shareholders may want to make a clean exit and a cash deal is seen as the best option,” she said.
Meanwhile, Lor said that from a management perspective, what was more important for the bank was that it continued to drive its business “as aggressively” as possible.
“Within the first two weeks or so of the year, we’ve already been involved in two initial public offerings, I think that’s a good thing,” he said, referring to Homeritz Corp Bhd and ECS.
EON Cap’s subsidiary MIMB Investment Bank is the advisor, sole underwriter and co-placement agent for the ECS IPO.

Small investors can buy into billionaire Buffett's empire at lower cost

OMAHA, Nebraska: Peter Eischeid has long had his nose pressed to the glass of billionaire Warren Buffett's investment empire, yearning to be among those with the means to buy their way in.
No more.
Thanks to a stock split approved last Wednesday, Eischeid and other small investors plan to snatch up lower-tier Berkshire Hathaway Inc. shares that will sell for just $69 and change.
That's down from about $3,500 that each Class B share commanded before.
"I avoided that conglomerate mainly because of the entry prices of the shares," said Eischeid, 34, of Salt Lake City.
"I know there are a lot of people that will definitely be intrigued by that lower share price."
There will indeed, said Andy Kilpatrick, a stockbroker and author of a two-volume tome on Buffett's life and business.
"It now makes it available to a child who cuts grass for spending money," Kilpatrick said.
"There's nobody who can't find $66. The last time Berkshire stock was at $66 was in 1971."
Buffett has built his reputation as a savvy investor who spots quality businesses selling cheaply and either buys the stock or the whole company.
Omaha-based Berkshire has investments in such companies as Coca-Cola Co. and Wells Fargo & Co., and owns more than 60 subsidiaries, including clothing, furniture and jewelry companies.
Its insurance and utility businesses typically account for more than half of its revenue.
The company's prized Class A shares, which carry more voting rights and are not being split, are America's most expensive stock at around $100,000 each.
The Class B shares, dubbed "Baby Berkshires," are splitting 50-for-1 as a way to facilitate the company's plan to buy Burlington Northern Santa Fe Corp.
Among investors drawn by the lower price is Adam Bray-Ali, a self-described small investor from Los Angeles, who bought two shares of the Class B stock for just under $3,300 each two days before the split, and planned to buy another 50 or so afterward.
But there's more at play than the stock's new affordability.
"I can go to the shareholder meeting this year," the 35-year-old Bray-Ali said.
Berkshire's annual meeting is the mecca of shareholder events, routinely drawing more than 30,000 to Omaha for the three-day affair that has an almost carnival-like atmosphere.
The event includes a shareholder reception on the eve of the meeting, various parties and a six-hour question-and-answer session with Buffett, who tosses out financial observances in terms even the most uninitiated investor can follow.
"I would say that for some young investor ... if you want to learn about investments, then the annual meeting is the place to go," Kilpatrick said.
That's a draw for University of Tennessee senior Nick Vantrease. The 21-year-old, who is president of the school's Financial Management Association, said he will consider buying Berkshire stock once he graduates in May and starts working.
He expects the split to be a key topic at Buffett's scheduled meeting with college business students next month.
"It'll be interesting to hear what he has to say about it," said Vantrease.
"It definitely makes the stock more affordable."
Terry Porter of Kansas City, Missouri, who has held Class B shares for years, believes it's not just young investors who can take advantage of the lower entry price.
"I have a lot of older people ask me what they should invest in. They don't want to be ripped off," said the 60-year-old retiree.
"I'd be the first to recommend Buffett."
Opinion is split on the effect the move will have on the stock's direction.
Plenty believe it will help the Class B price rise, especially if Berkshire's increased liquidity lands the stock in the S&P 500.
Buffett, long opposed to stock splits, said he enjoys using stock for the railroad deal "about as much as preparing for a colonoscopy."
While the man known as the Oracle of Omaha has nonetheless supported the move, some professionals don't see it as a buying opportunity.
"I'm a follower and fan of Warren Buffett, but no, I am not going to buy into Berkshire Hathaway for myself or my clients," said Mark Pearson, president and CEO of Anchor Capital Management in Minneapolis.
"I firmly believe there is greater value in other companies in the market." - AP

Google negotiating ways to keep presence in China

BEIJING: Even if its stand against censorship leads it to close its search engine in China, Google Inc. still hopes to maintain other key operations in the world's most populous Internet market.
Google is negotiating to keep its research center in China, an advertising sales team that generates most of the company's revenue in the country and a fledgling mobile phone business as the company navigates the delicate negotiations with the government.
Both sides are torn by conflicting objectives.
Google says it's no longer willing to acquiesce to the Chinese government's demands for censored search results, yet it still wants access to the country's engineering talent and steadily growing online advertising and mobile phone markets.
Chinese leaders are determined to control the flow of information, but realize they need rich and innovative companies such as Google to achieve their goal of establishing the country as a technology leader.
Even some Chinese media that rarely deviate from the party line have warned that Google's departure could slow technology development and hurt China's economy.
Analysts are split on how the current impasse will be resolved, with some resigned to Google having to pull completely out of China for the foreseeable future while others envision a face-saving compromise that preserves a toehold in the country for the company.
Robert Broadfoot, managing director of Political and Economic Risk Consultancy in Hong Kong, is among the camp that expects Communist leaders to bend their rules to keep Google in the country.
"They're hardly going to close the door on the innovator. They are very interested in what (Google is) innovating, because they may want it for themselves," said Broadfoot, who has advised companies on China since the 1970s.
Google said Jan. 12 it might close its China-based search engine, Google.cn, because it no longer intends to censor the results as it has for the past four years.
And, the company, warned, the decision could lead the company to pull out of the country completely.
The threat stemmed from computer hacking attacks on Google's computer code and efforts to break into the e-mail accounts of human rights activists.
Google said the intrusions originated from within China, but stopped short of linking them directly to the country's government.
Google Chief Executive Eric Schmidt told analysts last week that the company planned to make changes in China in "a reasonably short time" while raising hope for a compromise.
"We made a strong decision that we wish to remain in China," Schmidt said.
"We like the business opportunities there. We'd like to do that on somewhat different terms than we have."
The dispute with China prompted Google to postpone the planned release last week of its latest mobile phones for the country, a market with more than 700 million accounts.
But the company says it still hopes to sell the phones in China.
Even if Google.cn is shut down, Google wants to keep its Beijing development center and sales offices in Beijing, Shanghai and Guangzhou, according to a person familiar with its thinking.
But that won't happen if management believes its decision to stop censoring search results will jeopardize employees in China, according to this person, who asked not to be identified because of the sensitivity of the negotiations.
Google will not say how many employees it has in China, but industry analysts estimate its work force at 700.
The company, based in Mountain View, California, employs about 20,000 people worldwide.
The Chinese sales force is important to Google because most of the company's revenue in China comes from online ads sold on Google's U.S. Web site, Google.com.
The company also runs an ad network that places marketing messages on other China-based Web sites besides its own.
Analysts say keeping Chinese advertisers happy would be more difficult if Google closes its sales office in the country and tries to connect with the customers from abroad.
Alienated advertisers would be more likely to defect to alternatives still based in China, such as Baidu Inc. and Alibaba Group, which is part owned by Yahoo Inc. Google trails Baidu with about 35 percent of China's search market to its local rival's 60 percent.
If Google does close Google.cn, it could go back to trying to reach Chinese Internet users with the Chinese-language portion of Google.com.
That was Google's strategy before 2006, when it opened its censored search engine to better reach the Chinese population.
Google opted for a China-based search engine because the Chinese government used its Internet filters to restrict access to the U.S. site.
Beijing encourages Internet use for education and business but tries to block material it deems subversive or pornographic and was filtering access to Google's U.S. site.
In a sign of hardening Chinese attitudes, the Ministry of Industry and Information Technology on Monday denied government involvement in Internet attacks and defended its online surveillance as lawful.
The Communist Party newspaper People's Daily accused the U.S. government of controlling the Internet at home while urging other countries to build an "Internet freedom utopia," which it called "only an illusion of freedom."
There's still a chance that Chinese leaders may be more conciliatory behind closed doors.
Google has been more circumspect publicly since confronting China in a blunt posting on the company's Web site.
In recent years, companies have learned better how to deal with Beijing and to channel complaints about market barriers and regulations through trade groups.
That helps to conceal their identity and shield them from retaliation.
Last year, manufacturers that opposed Beijing's order to include its "Green Dam" Web-filtering software with personal computers worked through trade groups and refused to talk about it publicly.
The government withdrew its order in June in a rare last-minute reversal, though schools are required to use the filter. Wal-Mart Stores Inc., which resists efforts to form labor unions in its stores elsewhere, faced an organizing campaign by China's state-sanctioned labor group in 2006.
The company ultimately agreed to cooperate in forming unions at its dozens of China outlets.
The Google dispute could heighten disputes within the Communist Party over how to balance security and economic development, Broadfoot said.
He said the search giant's future in China might be decided by the outcome of that struggle.
"Those two factions have to conduct a very difficult dance that they really don't want the outsiders to watch," he said.
"The most important lesson out of this is it helps us understand the kind of economic player China wants to be." - AP

PNG on verge of a boom

PAPUA New Guinea has a healthy economy, and with the two liquefied natural gas (LNG) projects the country, is heading for an unprecedented boom, according to an executive of ANZ Bank.Alex Thursby, ANZ’s chief executive officer for Asia Pacific, Europe and America said that last year alone, PNG contributed 19% to the bank’s regional results.Mr Thursby was part of a high-profile ANZ delegation that travelled the region last week on their ANZ Pacific roadshow, which included a visited to Madang province.He said the group’s visit to Madang showed ANZ’s commitment to its customers’ growth.Managing director for ANZ PNG and chief executive for North West Pacific Vishnu Mohan welcomed the delegation at the Madang Resort Hotel.The group included Michael Rowland, chief executive officer (CEO) Pacific; Nancy Wong, general manager strategy and marketing APE&A; Neil Lambert, head of strategy and marketing; Wendy Lim, managing director consumer banking Asia Pacific; Alison Larson, chief of staff Asia Pacific; Jon Farquharson, head of risk; Kerrie Harris, head of human resource Pacific and Louise de Gannes, executive assistant to CEO Pacific.Mr Thursby has assured customers that Mr Mohan would visit Madang and other branches more regularly to continue this commitment to foster relations for mutual growth.He described Madang as one of PNG’s gems with shorelines that would no doubt attract foreign investment, particularly from Asia, in the tourism industry.Madang is one of PNG’s most tourism-oriented provinces.With a population of close to 400,000, the province is said to be a miniature PNG with coastal people, islanders, mountain people and river dwellers. It has many of the country’s highest peaks and active volcanoes, with a land mass totalling 29,000sqm and has four large and many smaller islands.The province is PNG’s third largest producer of cocoa and copra and the second producer of cattle.It also holds the largest Sino-Australian nickel and cobalt project worth US$1.7 billion (K4.6 billion). Madang also has Ramu Sugar and Jant/Gogol woodchip mill which are amongst PNG’s largest employers.The ANZ Bank team was also met by up to 30 guests including Madang Governor Sir Arnold Amet.

Pacific LNG seeking JV for new gas project

PACIFIC Liquid Niugini Gas Operations Ltd (PLNGOL) is seeking funds and partners to build the proposed eight million metric tonne-a-year LNG project, with the first onshore production line likely to be about 3.7 million tonnes in capacity. Front-end engineering and design (FEED) may start in the second half of this year and a final investment decision (FID) could be as early as 2011, according to Henry Aldorf, Pacific LNG’s newly-appointed president.Construction costs may have come down by as much as 40% from peak levels, and projects in PNG do not face labour problems as experienced in Australia, he said.“In terms of the outlook for the project, in our opinion, first LNG in 2015 currently looks optimistic,” Frank Harris, global head of LNG at the Edinburgh-based Wood Mackenzie Consultants Ltd, said.“We expect that additional clarity on the size of the resource and the entry of an established LNG player into the project will be required in order for it to reach final investment decision,” he said.The Liquid Niugini project has a free-on-board break-even price of about US$2.25 (K6.08) per million British thermal units, by far one of the lowest for a proposed venture, Aldorf said.That compares with US$7.49 (K20.24) per million Btu for a rival PNG LNG project by ExxonMobil, including upstream, pipelines and the plant, according to Wood Mackenzie.The consultant doesn’t have an estimate for the Liquid Niugini project. Equatorial Guinea LNG comes in at US$1.71 (K4.62).Condensates, a light oil found in gas, and crude oil, will further boost profitability of Liquid Niugini, Aldorf said.InterOil may have discovered as much as 228 million barrels of a light oil to kick start a LNG plant in PNG in the Elk and Antelope field, Phil Mulacek, chief executive officer of the Whitehorse, Yukon Territory-based explorer, said.Plans to extract condensates prior to the construction of LNG trains may also prompt development of a floating facility, which is faster to deploy, Aldorf said. Australia and PNG are building a slew of LNG plants to tap the demand in Asia-Pacific for the cleaner-burning fuel to reduce carbon emissions. – Bloomberg

Sunday, January 24, 2010

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.

Thursday, January 21, 2010

Oil price tumbles as stock market stumbles

NEW YORK: Oil prices dropped Thursday to the lowest level in a month after a government report showed the United States continues to use less energy than last year, raising doubts about the strength of the fragile economic recovery.
A proposal by President Barack Obama for tougher bank regulations also pulled the stock market sharply lower and left traders wondering how it would affect commodities markets.
Goldman Sachs and other major banks have helped funnel billions of dollars of speculative money into oil and natural gas contracts during the past several years.
Obama's call to limit speculation by commercial banks could make it more expensive for them to buy oil contracts, hedge fund manager Mike Masters said.
Masters, who called for tighter scrutiny of energy markets last year, cheered Obama's announcement.
"If you can reduce the impact of banks in commodities, you're going to have much less volatility in food and energy prices," Masters said.
Benchmark crude for March delivery fell $1.66 to settle at $76.08 a barrel on the New York Mercantile Exchange.
The contract dropped as low as $75.66 earlier in the day, the lowest price since Dec. 23.
Energy prices dropped in morning trading after the Energy Information Administration reported that demand for gasoline and jet fuel both weakened during the past few weeks.
America is consuming less petroleum than the same time last year, and refineries, which have struggled to pass higher crude costs along to consumers, are now operating at the lowest levels since September 2008.
Natural gas supplies dropped more than expected to 2.6 trillion cubic feet and are now slightly lower than the five-year average.
The Labor Department also said Thursday that initial claims for unemployment insurance rose last week by 36,000 to a seasonally adjusted 482,000.
In other Nymex trading in February contracts, heating oil lost 3.55 cents to settle at $1.9856 a gallon, while gasoline dropped 6.36 cents to settle at $1.9829 a gallon.
Natural gas futures gained 11.9 cents to settle at $5.615 per 1,000 cubic feet. In London, Brent crude for March delivery lost $1.74 to settle at $74.58 a barrel on the ICE Futures exchange. - AP

LNG project to transform Santos’ image

THE PNG liquefied natural gas (LNG) project alone will transform the earnings quality of Santos Ltd when the project comes online in 2014, chief executive David Knox said.The final investment decision (FID) reached last Dec 8 by project partners marked the next step in Santos’ transformation in LNG growth strategy, he said in a statement when the company released yesterday its last year’s fourth quarter activities report ending Dec 31.Santos has 13.5% interest in the PNG LNG project.“By 2015, Santos’ goal is to have production from Darwin LNG (Australia), PNG LNG, Gladstone LNG (GLNG) and would be constructing Bonaparte LNG,” Mr Knox said.“This will represent a transformation of the company into a leading Australian and Asian energy company,” he said.Santos estimates that capital expenditure guidance for this year included A$1 billion (K2 billion) for GLNG; A$500 million (K1.234 billion) for PNG LNG; A$500 million (K1.234 billion) sanctioned projects (Kipper, Reindeer, Henry and Chim Sao); and A$150 million (K370 million) for conventional exploration.The royalty-related taxation expense guidance assumed an average oil price of A$90 (K222) per barrel this year.Santos claimed its production of 54.4 million barrels of oil equivalent (mmboe) last year was in line with its guidance range (53-56mmboe) and December quarter production of 13.9mmboe was 2% higher than the same period in 2008 (13.6mmboe) and in line with last September quarter.“The base business delivered a solid production performance with new production from Oyong in Indonesia and strong production from John Brookes.”But its sales revenue of A$2.181 billion (K5.384 billion) was 21% lower than 2008 sales revenue of A$2.762 billion (K6.818 billion) due to lower international oil prices.The December quarter average oil price of A$85.37 (K211) per barrel was 5% lower than a year earlier.December quarter average gas price of A$3.99 (K10) per gigajoule was 16% lower than the A$4.74 (K11.70) posted during the same period in 2008 due to lower oil prices.

Wednesday, January 20, 2010

Cue to sell gas asset to PNG LNG project

NEGOTIATIONS are in progress for Cue Energy Ltd to sell its Southeast Gobe field (petroleum development licence 3) to the PNG liquefied natural gas (LNG) project.And Cue Energy has completed the acquisition of 60km 2D seismic survey over the Barrikewa gas field in the Papua basin.The energy company revealed this yesterday when it released its fourth quarter report ending Dec 31.It posted a fourth quarter revenue of A$12.1 million (K30 million) on sales of 153,281 barrels of oil and 160 million cubic feet of gas.Revenue in line with last quarter and attained quarter end was A$18.1 million (K44.8 million).“At the end of the quarter, the SE Gobe field was producing an average of 4,500 barrels a day for the calendar year 2009,” Cue said.The company said it had shared about 150 barrels of oil per day.“Cue’s oil production revenue received during the quarter from the field was A$0.92 million (K2.3 million) equivalent to 11,179 barrels.“Cue did not have any hedging arrangements in place during the quarter,” it said in a statement.Cue’s oil production revenue realised during the quarter from its Sampang PSC field in Indonesia was A$3.4 million (K2.5 million) equivalent to 42,485 barrels of oil.The average production rate for the quarter was 3,800 barrels a day.

Tuesday, January 19, 2010

New oil prospect in Gulf’s Antilope licence: Kalinoe

OIL was found in the lower part of the Antelope Reef reservoir within the Antelope-2 appraisal well in the Gulf province, Petromin PNG Holdings managing director Joshua Kalinoe announced.He said on Dec 1, Antelope-2 recorded the highest rate of high quality natural gas at 705 million cubic feet of gas per day (mmcfd), and condensate at rate of 11,200 barrels day (bcpd), within the upper part of the Antelope Reef reservoir.Antelope-2 is a joint-venture appraisal well among Petromin PNG Holdings, Clarion Finance Pte and InterOil Corp.Mr Kalinoe said the indications of oil, if successfully tested to be a significant oil column and commercially viable, would completely change the economics of the second liquefied natural gas (LNG) project for PNG which was being driven by InterOil and Petromin.“While cleaning the wellbore to conduct drill stem test No. 3, oil shows were circulated to surface at the depth of 2,325m.”

Henry Aldorf named PLNGO president

PACIFIC Liquid Niugini Gas Operations Ltd has announced the appointment of Henry Aldorf as its president.Mr Aldorf is a director on the board of Liquid Niugini Gas Ltd (LNGL), the company in which InterOil Corp has 52% interest and which is developing the second LNG project.Pacific LNG Operations is an affiliate of Switzerland-based Clarion Finanz AG, a substantial indirect interest holder in the Elk and Antelope discoveries and 47.5% LNG partner in Liquid Niugini in which InterOil Corp has 52% interest.“The gas resource in Elk and Antelope is onshore and a great liquids rich gas asset. “We are anxious to move forward with solid LNG partners and complete this project on time and on budget,” Mr Aldorf said.He was most recently president of Marathon International and vice-president Global Upstream of Marathon Oil.He has 37 years of experience in the petroleum and chemicals industry, the last nine of which was with Marathon Oil.

Monday, January 18, 2010

LNG projects in region face delays

HALF the liquefied natural gas (LNG) plants proposed in the Australia-Pacific region may be delayed as increased competition and a skills shortage threaten profitability, Bank of America Corp’s Merrill Lynch said.A growing number of supply options for Asian LNG customers could hurt the prices producers receive and give buyers the advantage in contract negotiations, Mark Hume, a Merrill Lynch analyst based in Sydney, wrote in a report to clients.“Project attrition, delay and even outright cancellation are inevitable,” Hume said.Woodside Petroleum Ltd, Chevron Corp and Royal Dutch Shell Plc are among energy companies in Australia competing for LNG customers and seeking to tap demand for cleaner-burning fuels.About half of the 30 proposed processing plants in Australia and PNG may stay on schedule, he said.“We think it’s time to get selective,” he wrote in the report dated Jan 15. BG Group Plc, Inpex Corp, Oil Search Ltd, a partner in Exxon Mobil Corp’s PNG venture, and Origin Energy Ltd are Bank of America Merrill Lynch’s “preferred global LNG supply-side picks,” Hume said.Most of the companies in the state of Queensland planning to convert gas extracted from coal seams into LNG, a grouping that includes Origin and BG, use the same technology to liquefy the gas and could collaborate to boost profits, he said.Hume didn’t specify how the rivals could work together.A shortage of engineers and other specialists could push labour costs higher, and the emergence of floating LNG plants with “clear cost advantages” over land-based facilities could add to the pressure facing ventures using conventional technology, he said.While annual LNG demand is forecast to grow to 384 million metric tonnes by 2020, exceeding supply, “it is a far cry from the heady days of 2007 when expectations were for demand to grow to circa 500 million tonnes a year,” Hume wrote.Rising domestic gas production in China may reduce demand for imports, Adrian Wood, a Sydney-based analyst at Macquarie Group Ltd. wrote in a Jan 12 report.Supplies from Qatar and increased use of nuclear power generation in Asia are among other risks for Australian LNG ventures, he said.LNG processing units proposed now may generate lower returns than similar developments approved in recent years, Wood said.About half of the growing list of proposed LNG projects may be approved, the Macquarie analyst said in the report.“While we continue to see huge value in the large portfolio of undeveloped LNG projects held by Australian companies, we nevertheless believe investors should brace themselves for project delays, higher construction costs and the potential for a more competitive pricing environment going forward,” Wood said. – Bloomberg

LGL output at record high as Hood quits

LIHIR Gold Ltd (LGL) produced another record gold production at 1.13 million ounces last year in line with guidance for the year of 1m oz to 1.2m oz.This was disclosed in last year’s fourth quarter financial report which LGL acting chief executive officer and chief financial officer Phil Baker will present on Friday.The report will also include this year’s production goals.Mr Baker said total cash costs for the year were also in line with guidance provided to the market (below US$400/oz (K1.081 million) excluding Ballarat).“The company’s operational performance has been excellent … I look forward to providing full details on Jan 22,” Mr Baker said.LGL chief executive Arthur Hood, who saw LGL transform from a single mine operation to a multi-mine company producing more than one million ounces of gold per year, has resigned.Mr Hood stepped down just months before his four-year term expires this year end.LGL chairman Dr Ross Garnaut announced the board’s acceptance of Mr Hood’s resignation with Mr Baker being appointed the interim chief executive until the position is filled.“The board had also been considering the future of the company for some months now and concluded that it was time to find a successor to take LGL forward and build on the great foundation established under Arthur’s leadership,” LGL said.“LGL is now one of the world’s leading gold producers and is consistently performing very well, with excellent growth options for the future.“It is, therefore, the right time for me to step aside to enable an orderly transition to a new CEO,” Mr Hood said.Dr Garnaut paid tribute to Mr Hood for his contribution to the company.“Arthur has successfully led LGL through a major growth phase which has seen production increase from around 600,000 ounces per year in 2005 to more than 1.1 million ounces in 2009, with diversified operations in PNG, Australia and West Africa.

Sunday, January 17, 2010

a super-energy-efficient building using only 286 kWh/day


Malaysia Energy Center is designed to be a super-energy-efficient building using only 286 kWh/day

Green Designs


Get the maximum ROI from green buildings

Willy Wilson
Investing in green properties might just be the way to go in 2010.
While it may be too early to predict the trend, a panel of the industry’s movers and shakers is certain that with the Malaysian government’s GBI incentives and proposed Feed-in Tariff (FIT) stimulus, sustainable properties are the blue-chip investments this year.
Star Property sits down with a panel of industry experts at Desa Sri Hartamas to discuss the issue. The panel includes: • BK Sinha, project manager director of C2C • Y.K. Wong, director of Rehda Institute • Dev Kumar Nair, director of Khong & Jaafar (property valuers) • Yang Sean Fook, principal of GE Consultant • Kenny Chong, business development manager of Kumpulan Ikram and • Lincoln Lee, executive director of Lucas Works
Why is going green a good investment?“When we take into account the ROI in the long run, we know green properties are much more economical,” says Lincoln Lee.
Malaysia Energy Center is designed to be a super-energy-efficient building using only 286 kWh/day.
“As an industry that allegedly consumes more than two-thirds of the world’s energy, we should look into the best possible solution for our industry,” adds Lee, whose Smart & Cool home technology is GBI-qualified.
The Smart & Cool technology is able to reduce the temperature inside a house. Although it is revolutionary, Lee acknowledges that its high cost is a big turnoff to both developers and consumers. However, he is quick to point out that the real issue is not the cost; instead, it is the lack of awareness.
Lee is currently in talks with Kumpulan Ikram Sdn Bhd to launch a real estate project that uses Smart & Cool tech. He explains that a green project of 50 houses or more will cost 2% to 3% more than a conventional housing project.
“The good news is, the Government has our backs. GBI incentives and the proposed FIT mechanism will generate the maximum ROI for green properties,” says Dev Kumar, who also suggests that property owners invest in the Solar Photovoltaic (PV) system (cells that convert solar radiation into direct current electricity).
Kenny Chong of Kumpulan Ikram nods in approval and states that a green building will have higher market value in 2011.
“Malaysia seems to be well on its way to becoming one of the few Asian countries that practices the FIT system,” says BK Sinha.
The FIT proposal will be introduced in Parliament in 2010 and is set to become a part of Malaysia's 10th energy plan for 2011 to 2015. If the Parliament passes the proposal, the tariffs will take effect early 2011.
Get FITThe FIT mechanism is an incentive structure plan. Owners of the Solar Photovoltaic (PV) system are connected to the grid and are allowed to receive monthly revenue from utility companies at above-market rates set by the Government.
FIT is seen as the most effective mechanism to aggressively drive renewable energy development. This principle has been adopted in more than 40 countries worldwide, and Malaysia is set to join the bandwagon.
The Malaysian government has set medium- and long-term objectives for renewable energy growth under the proposed Renewable Energy Policy and Action Plan (REAP). Datuk Dr. Halim Man, the Secretary-General of the Ministry of Energy, Green Technology and Water wrote in The Star last December, that PV is estimated to have a cumulative capacity of 55MW in 2015.
It is predicted that solar energy will surpass all other forms of renewable energies in Malaysia after 2020.
The Government has played an instrumental role in promoting the use of renewable energy over the past decade. It is reported that the Government has successfully attracted more than US$3 billion in Foreign Direct Investment in the solar PV manufacturing industry, and is working towards becoming a solar PV manufacturing hub.
“This trend should further encourage the use of sustainable energy in the country,” says Lee.
ROI details of a conventional house (left) and a green house (right).Source: Smart & Cool Homes Sdn Bhd

Zehn and now

By Johnni Wong
As soon as the keys were handed over to the condominium owners of the Zehn Bukit Pantai development in Kuala Lumpur recently, property agents have been busy advertising certain units for sale at the average price of RM700 per square foot. The asking price for one particular penthouse unit was a whopping RM7mil or at RM1,000 per square foot!
When launched in Oct 2006, the price per square foot was only RM500 for units on the lower levels but within a couple of months the price shot up. The luxury condominium development is a joint-venture project between CapitaLand and Juta Asia Properties Sdn Bhd together with Pantai Holdings Bhd. Comprising two tower blocks of 25 storeys each, the development is sited on 0.78 hectare (1.9 acres) of land.
According to Juta Asia project manager Lee Sooi Leong, the hand-over was in November and many owner-occupiers have moved in.
"So far, about 20% of the units have been occupied. Another 20% are under renovation. We expect 50% occupancy before Chinese New Year," said Lee, during a tour of the development.
Regarded as one of the more prestigious property developments in the Bangsar-Bukit Pantai enclave, the condominium project has a total of 185 units. Typical units range in size from 177sq m to 326sq m (1,905sq ft to 3,509sq ft).
"There are a total of seven penthouse units with three in Block A and four in Block B with an approximate built-up space from 5,000 square feet to 8,000 square feet (465sq m to 743sq m). Only one penthouse unit was built as a duplex while the others were designed as triple-level units," pointed out Lee.
Overall, 21% of the units have views of the Kuala Lumpur City Centre (KLCC). The architecture is by BEP Arkitek Sdn Bhd led by its principal, Kam Pak Cheong.
Said Lee: "Being on a high vantage point, the units are designed to maximise the potential views all around. In fact, every living room and bedroom enjoys an uninterrupted panorama of the surrounding landscape. At the same time, movable screens have been fitted for every west-facing side of the building to shield the rooms from the harsh tropical sunlight streaming through the full-height windows. Deep ledge overhangs on the other faces ensure that all units are well-protected from the heat of the sun."
The typical units come in eight layout designs.
According to Lee, the asking price for a unit quoted by property agents range from RM700 per square foot to RM900 per square foot, depending on the layout type and floor level.
"There are still three units at the lower levels available from the developers. The built-up space is from 3,046 square feet to 3,509 square feet (283sq m to 326sq m) and the price is from RM690-RM740 per square foot."
FacilitiesIn terms of facilities and amenities, the development offers one of the tightest security features in a condo project. And this has attracted many high-profile owners, especially captains of industry and businessmen, who value good security measures.
The entrance has a sentry and manned posts are placed at various points such as the lift entrance from the car park areas and the condo lift lobbies.
"The basement car park lobbies for both Block A and B are secured and accessible only with security passes. There is a lift for visitors between the Block A and Block B lobbies connecting the basement level with the ground floor.
"We employ 15 to 20 guards depending on the time of day, plus guard dog patrol at night. Of course, visitors need to register with the security guards at the guard house," said Lee.
"Each unit comes with a minimum of two to four parking lots, depending on the unit type."
Although security is tight, the developers also wanted a residential development that welcomes visitors of the condo owners, such as friends and relatives. There are 37 designated parking bays for visitors.
The spacious lift lobbies span 180sq m for Block A and 150sq m for Block B and the walls have been extensively cladded with "Royal Beige" travertine from Iran.
The colour scheme for the two lobbies is in beige and brown. Thus, Merbau - a local hardwood - has been utilised as flooring material for certain parts of the lobbies. Even the over-sized flower pots are premium-quality Serralunga pots.
The two lobbies are also equipped with custom-made leather furniture for the comfort of residents should they need to wait for their transport. The seven-seater lounge furniture for Block A and five-seater for Block B come complete with screens which act as both a decorative device and for some measure of privacy in the public areas.

Maybank posts K11.67m profit

MAYBANK (PNG) Ltd posted a net profit of K11.67 million for the first six months of last year, up 41% from K6.84 million earned for the same period in 2008.This was 6.8% of the average total assets.The bank published its half-year report last Friday as required by the Central Bank.Its report said Maybank was “pleased to provide a summary” of its financial results and condition for the financial year ended 30, June 2009 as required by the Bank of Papua New Guinea (Central Bank).Total capital was K73.57 million, up 15% from the previous June figure of K62.40 million, while total liabilities amounted to K114.15 million, up 19% from K92.94 million posted in June 2008.Assets during the first six months of last year were valued at K187.72 million, up 17% from K155.33 million during the same period the previous year.Total deposits (interest bearing and non-interest bearing) amounted to K98.33 million, up 20%, from K78.89 million the previous year.During the period in review, Maybank realised a net interest income of K10.5 million, up 27% from K7.68 million posted the previous year.Net income from investments and lending rose 28% to K9.8 million from K7.1 million (2008).Operating income before tax was K16.68 million in 2009, up 41% from K9.77 million of the previous year.A total of K5 million was due for tax for the period in review last year, up 41% from 2008’s K2.94 million.

Thursday, January 14, 2010

Talisman eyes Papuan basin devt drilling soon

Source:
By YEHIURA HRIEHWAZI
THERE is more good news from the petroleum sector: Talisman Energy Inc is expected to go into production soon in Papua New Guinea.The company announced yesterday it will start development drilling in one of its fields and also drill four on-shore exploration wells in the Papuan basin.Development drilling is done to recover oil, gas or condensate that has been discovered and ascertained through exploration and appraisal wells.“The company expects to start development drilling in PNG, with early condensate recovery scheme in one of the blocks acquired last year,” Talisman president and chief executive John A Manzoni said in a statement released to the stock markets yesterday.The PNG activities form part of Talisman’s global capital expenditure plan of C$5.2 billion (K13.5 billion) for this year announced by Mr Manzoni.Apart from PNG, Talisman also step up its exploration and production work in Indonesia, Malaysia, Vietnam, Australia, Europe and North America and sell off some non-core assets to assist with financing of its programmes. It is already cashed up with C$4 billion (K10.4 billion). He said the company’s main priority for this year is to ramp up its shale plays. “We will also be examining for sale additional non-core conventional assets in North America and continue to enhance our international exploration portfolio and capabilities as we build on last year’s success.“The second priority will be to continue the focus on returns and profitability.He said they expect the returns to increase as they successfully cycle capital into higher value investments, which should also lead to continued improvement in our finding and development costs.“We have put processes in place to manage our capital programmes more efficiently … we are reviewing costs across the organisation, and implementing performance management tools throughout the business.”Mr Manzoni said they will continue to build their organisational capability, adding the company’s executive team was strengthened last year with the addition of Paul Smith, Richard Herbert and Nick Walker at the executive level, and significant new talent across the organisation, including new country managers for Malaysia and PNG.He also said the company will continue to upgrade its capabilities and processes, and develop its talent across the organisation this year.“We will maintain balance sheet strength and flexibility.The C$4.9 billion (K5.81 billion) in cash spending will be funded from operating cash flow, non-core asset sales and balance sheet strength.He said they have designed the programme to be robust at US$60/bbl oil prices and US$3.50/mmbtu natural gas prices, with considerable flexibility to adjust the capital programme up or down in light of conditions throughout the year.“We will also remain vigilant for strategic acquisition opportunities,” he said.

PNG Power, Telikom ink optic fibre deal

PNG Power Ltd (PPL) and Telikom PNG Ltd have signed a deal to develop optic fibre network in the country.Signed last Monday, the deal calls for the PPL to carry the optic fibre network as part of its transmission and distribution network.Telikom chief executive officer Peter Loko and PPL acting chief executive officer Lawrence Solomon inked the documents at Telikom’s boardroom in Waigani, Port Moresby.Mr Loko and Mr Solomon said they were happy with the signing after years of negotiations and they looked forward to working together to complete the project.The signing marked the start of preparations for PPL to construct, test and commission the optical ground wire (OPGW), ADSS and APPROACH cables on PPL’s power network that would link Madang and Lae through Walium, Gusap, Yonki, Mutzing and Erap.Once installed, the optic fibre cables on PPL’s transmission and distribution infrastructure would allow Telikom to use the technology for telecommunication purposes.This meant that Telikom would be able to use optic fibre cables that carry a capacity of 10 Gigabytes (GB), establishing a data superhighway guaranteed to take telecommunications technology to a whole new level.

Tuesday, January 12, 2010

Kina appreciates 0.3%

THE kina appreciated 0.3% in the interbank market, thanks to some support from the Central Bank on New Year’s Eve.The local currency remained firm against US dollar last week but depreciated against other major currencies, except against Japanese yen and the British pound, which gained.ANZ, in its weekly report, said the weak kina crosses reflected a strong US dollar against a basket of six major currencies.The greenback gained grounds against the basket of currencies on a stronger-than-expected weekly US initial jobless claims report and on views that the Federal Reserve may start raising interest rates this year.The kina-Aussie dollar cross further declined from late December falls last Thursday after strong Australian sales figures stirred up talk of another Australian cash rate hike next month.In interest rates, 28 days bill rate declined by 17 basis points to 4.98% last week on surplus liquidity, still a level seen 12 months ago.Bill rates for other tenures also declined.Central bank offered additional bills in last week’s auction on top of the maturity.Investors compete to ensure that surplus liquidity held in their books earn some interest. Auction was over-subscribed.

Sunday, January 10, 2010

Construction at LNG training facility stalled

THE March-scheduled completion of the PNG liquefied natural gas (LNG) project trade training facility in Port Moresby will depend on timely Customs clearance of building materials. It is now three months since Sept 28 when initial construction work began on the facility at Port Moresby Technical College (POMTech) at Idubada on the outskirts of nation’s capital.It is part of an estimated US$50 million to US$60 million (about (K134-K161 million) trade training facility to be built at Juni near the Hides gas field in Southern Highlands province.Yesterday, The National toured the construction site at POMTech with ExxonMobil representatives.An officer who wished anonymity, said most initial works and foundations for the buildings (classrooms, dormitories, etc,) had been placed and that they were waiting for, among other things, the prefabricated building parts from Dubai in the Middle East.“It is now about seven to eight weeks since we begun waiting for the prefabricated buildings from Dubai, but we believe Customs will release the materials this week,” he said.Customs Commissioner Gary Juffa said materials meant for the LNG project construction were among other materials and items for other clients that Customs needed to thoroughly check before clearing.He said the delay should also be blamed on ExxonMobil for the late release of shipment schedules for their goods.“The delay is not entirely Customs’ fault,” Mr Juffa said.The ExxonMobil officer also said many of the materials needed for construction were in PNG like underground utilities, concrete, timber for foundation and steel. “There is a large content of material here,” he said.The civil work at POMTECH is being carried out by EOS joint venture for the engineering, procurement and construction (EPC); KG Contruction and its subcontractors; Red Sea contractor; Digara Construction, including local contractors which are providing food and water, plus other necessary services to the construction site and its staff.As of yesterday, the officer said there were 103 workers on site including security guards.He also said two staff houses were relocated to pave way for two new units.

Juffa: LNG items released

Source:
By SHEILA LASIBORI
CUSTOMS records have indicated that all PNG liquefied natural gas (LNG) project materials and equipment have been cleared and released.The reported delay on the materials’ release could have taken place somewhere, Customs Commissioner Gary Juffa said.He said yesterday his officers had advised him that their records showed all equipment for the LNG project had been cleared, including those for the trade training facility being built at the Port Moresby Technical College (POMTech) at Idubada.“POMTech (LNG) imports were cleared by Customs on Dec 24 after the Government and Exxon reached an agreement with regards to goods deemed exempt and those that were not legally exempt from the payment of duties to the State.“As for the delays, Customs is not the only agent along the supply chain and there are other stakeholders.“In this instance, it is the understanding of Customs that the delays were caused by cartage arrangements which are not the responsibility of Customs.“Customs during this period of time is very busy processing cargo for other members of industry and has a responsibility to ensure that community and State interests are protected as it discharges its duties to secure the borders, protect the community and facilitate trade while collecting revenue,” Mr Juffa said. “We cleared this cargo already … we also have responsibility to check and clear all other goods (belonging to other clients).“Customs’ role is also to serve the country … we are here to support the Government to see that the project gets off the ground,” Mr Juffa said of the PNG LNG project.Meanwhile, construction work at the POMTech trade training facility is continuing and ExxonMobil representatives on site are confident it would be completed in February, a month ahead of scheduled March.ExxonMobil staff on anonymity said since work started there last Sept 28, a lot of repairs of existing facility such as water pipes had been done, apart from the construction of two new staff houses after the two existing units were relocated.As for the training facility, contractors were working to get the foundation levels right before the buildings for classrooms, dormitories, the new mass and other trade training buildings could be constructed. “We expect the buildings to go up much faster than the other facilities,” he said.The source told The National the contractors and staff were now approaching 100 days of no injuries as workers observed ExxonMobil safety records.The POMTech facility is part of an estimated US$50 million to US$60 million (about (K134 million to K161 million) Juni (Southern Highlands) facility meant to train PNG locals for jobs in the LNG project.The civil work at POMTech is being carried out by EOS Joint Venture for the engineering, procurement and construction (EPC); KG Construction and its subcontractors; Red Sea contractor, Digara Construction and local contractors which are providing food and water plus other necessary services to the construction site and its staff.

InterOil eyes 2nd offshore gas plant in Gulf

Source:
SHEILA LASIBORI
INTEROIL Corp, developer of the Elk/Antelope liquefied natural gas (LNG) project, has proposed an offshore processing plant in Gulf province on eve of project agreement signing of the oil company’s first LNG project in PNG.But Government lawyers did not have enough time to look into this proposal, owing to the signing of the project agreement the very next day.Likewise, this proposal was not in the initial project agreement discussed between InterOil and the Government.State Solicitor George Minjihau confirmed this “last- minute” negotiations.“We had some last minute issues … there were some big issues that InterOil was concerned about but we had to reach an agreement. “One of the issues was that the company wanted to look at the possibility of building an offshore plant but it was not in the initial proposal.“We said you (InterOil) cannot bring this thing late to us … and eventually we reached an agreement,” Mr Minjihau said, adding the front end engineering and design (FEED) would determine the location of the plant.InterOil chief executive officer and Chairman Phil Mulacek said they were looking to have the project agreement “flexible”.This, he said, was because InterOil, has enough gas reserves from its Elk/Antelope oil wells in Gulf to support two plants at the same time.“We have found additional gas so we wanted to make sure there was flexibility and the Gulf province wanted to see if there was additional development there,” Mr Mulacek said.Petroleum and Energy Minister William Duma was satisfied that InterOil has sufficient gas reserves for the US$6.0 billion (K17 billion) two-train LNG facility.“We said (and promised landowners) we would look at alternatives as well … we have enough gas for Napa Napa (oil refinery) and we now have surplus, so we are now looking at a location in the Gulf as well, and we will run them both in parallel.“We made that commitment to see if we can foster economic development more diverse for the nation.“And we are the first ones to do that … and when we say we are not afraid to do that, it’s a tougher job,” Mr Mulacek said recently when asked why negotiations pertaining to the project agreement ended on the eve of the signing ceremony at the Government House. “We are designing a plant with proven technology that will last for decades, so that means we are going to have a lot of cost efficiencies versus other applications,” he said.Mr Mulacek said they (project partners) had to be more innovative and if they worked with Gulf governor Havila Kavo and the landowners, there would be important social services delivered.He said they would also look at land-based facilities – a mix of offshore marine facilities making sure that all in line with the timeline and cost efficiencies.“While we were negotiating, Australia has already taken 70% of the Japan’s market. Look at the lost opportunity for this country … while people have been negotiating with the rest of the world, Australia grabbed market share.“So when Prime Minister (Sir Michael Somare) said we expect to be innovative, and go forward, we are going to have it done … we will get it done,” he said.Meanwhile, preliminary FEED work started three months ago, almost two years behind schedule.The US$450 million (K1.22 billion) pre-FEED had started and the US$50 million (K136 million) FEED for the LNG itself will start later during the course of the project.

InterOil, Mitsui Group ink deal

INTEROIL Corp has signed a deal with Japan’s Mitsui Group for a condensate stripping plant to be built and located in Gulf province.Prime Minister Sir Michael Somare announced this yesterday in a statement following the signing.Sir Michael, as trustee shareholder of Petromin PNG Holdings Ltd performed his last official duty for last year by witnessing the key terms agreement (KTA) between the two companies for a US$450 million (K1.216 billion) lending facility anticipated to cover 100% of the remaining costs of the processing and sale of condensate from the Elk and Antelope fields.Petromin, a 100% State entity, is State’s nominee to participate in the project for State’s 22.5% equity.Sir Michael said the KTA outlined the relationship between InterOil Corp, Petromin Ltd and the Mitsui Group.The non-binding KTA demonstrated Japanese support for Petromin, the natural resources holding company of PNG, and InterOil’s upstream development.“This KTA signing follows a memorandum of understanding (MOU) that was completed several months ago and sets the stage for a binding agreement to be signed upon further negotiations,” he said.Mitsui representatives were present for the world record breaking flow test at the Antelope-2 well on Dec 1 and the signing of InterOil’s LNG project agreement on Dec 23.Mitsui Group is one of the largest corporate conglomerates in Japan and one of the largest publicly traded companies in the world.Mitsui Group has interests in LNG and petrochemicals, among other industries, and is recognised as one of the largest traders in naphtha and high quality petrochemical products.Sir Michael said: “We are pleased to have support from Japan in furthering the development of our natural resources and look forward to a long and prosperous relationship with Mitsui Group.”

Oil stays above US$81 per barrel

SINGAPORE: Oil prices edged up in Asian trade yesterday, supported by higher consumption of heating fuel due to a cold snap in the northern hemisphere, analysts said.Data showing that the US manufacturing sector posted its strongest pace of activity since April 2006 also bolstered prices, with analysts saying that a firmer recovery in the world’s biggest economy is good for energy demand.New York’s main futures contract, light sweet crude for delivery in February, was up US$0.32 to US$81.83 (K221.16) a barrel in morning trade.Brent North Sea crude for February delivery gained US$0.11 to US$80.23 (K216.84).“It’s an encouraging sign to see quite reasonable declines in the stockpiles of distillates... so you’ve got a bit of momentum in the market,” Mark Pervan, senior commodities analyst at ANZ bank in Melbourne, said.Prices were also lifted by news of robust activity in the US manufacturing sector, in a further sign that the US economy, a key engine for global growth, is well on its way to recovering from a deep recession.The Institute for Supply Management said its manufacturing index, also known as the purchasing managers index, climbed to 55.9% in December from 53.6% in November, for a fifth consecutive month of expansion.The figure was stronger than the consensus estimate of a modest rise to 54.3%. Any number above 50% indicates growth.“Most analysts are brushing over their 2010 outlook and I think most of the market is taking a more favourable outlook on demand than last year,” Pervan said.London-based consultancy Capital Economics said the rebound in the US manufacturing index “should restore some faith in the sustainability of the industrial recovery”. – AFP

Bank lending rates expected to decline

Source:
By SHEILA LASIBORI
THE indicator lending rates (ILR) set by commercial banks is bound to decrease as the Central Bank will keep the kina facility rate (KFR) at 7% this month.With Bank of PNG’s KFR at a low 7%, the next immediate action is that the banks and licenced deposit-taking institutions will reduce their lending rates.According to BPNG’s recent statistics, when KFR is low and inflationary pressures continue to decline, BPNG will ease its monetary policy similar to that of last month when KFR was also at 7% after a reduction by 1% from 8%.KFR is a rate set by BPNG to control monetary policy.It indicates the stance on the monetary policy.For instance, if it is high, then BPNG tightens its monetary policy but if it is low, then the monetary policy is eased. KFR is used as a formula to measure monetary policy.Meanwhile, inflationary pressures might continue to decrease.An increased (higher) imported inflation with none or fewer exports to balance the balance sheet would lead to increased inflation.The construction phase of the ExxonMobil-led PNG liquefied natural gas (LNG) project and other activities in the country might give rise to higher imported inflation.The strength of the kina, especially against the Australian dollar also affects inflationary pressures, and so BPNG watches closely movements in the exchange rates since PNG is an open market.Since the Aussie dollar has large trade weigh at 40%, its movement against the US dollar has immediate effect on the local currency.When it increases against US dollar, the kina depreciates in value, prompting inflationary pressure.But when the Aussie dollar depreciates against greenback, the kina appreciates and so there is ease in inflationary pressure.BPNG could not indicate the KFR for next month, but maintains it will watch closely movements in the exchange rates.

Esso to sign supply deal with Taiwan buyer in Q1

Source:
By SHEILA LASIBORI
THE signing of a final sales deal with China Petroleum Co (CPC) of Taiwan is expected to take place within the first quarter this year, the owners of the PNG gas project said.The deal involves an estimated 1.3 million tonnes per annum (mta) of still uncommitted liquefied petroleum gas (LNG) from a total of 6.6mta of LNG from the project.Signatories to the deal are ExxonMobil's subsidiary Esso Highlands Ltd and CPC.It is understood that the CPC board is scheduled to meet later this month in which they would deliberate on the final sales and purchase agreement (SPA) with the gas project owners.The PNG LNG project is an integrated development scheme that includes gas production and processing facilities, onshore and offshore pipelines and liquefaction facility with the capacity of 6.6 million tonnes of LNG per year.Peter Graham, managing director for Esso Highlands, said on the occasion of the final investment decision (FID) the project was to go ahead pending completion of sales and purchase agreements with LNG buyers and finalisation of financing arrangements with lenders, expected to be concluded early this year.According to Oil Search, the second major partner, the project has a common ownership structure across the value chain which will include, among others:lAn upstream facilities comprising 12 well pads at Hides, Angore and Juha fields, production wells;lGathering systems and processing plants at Hides and subsequently Juha in the Southern Highlands; andlAssociated gas facilities at Kutubu, Moran and Gobe
LNG liquefaction plant, storage and loading facilities located at Portion 152, near Port Moresby; andL Gas pipeline from the main upstream processing plant in Southern Highlands to the LNG plant at Portion 152. Discovered gas resources committed to the project exceeds nine trillion cubic feet (tcf). About 80% of the gas supply will come from the Hides, Angore and Juha gas fields, with the main gas processing plant located at Hides.

LNG project to trigger increase in port business

THE volume of cargo entering national seaports is expected to increase as the PNG liquefied natural gas (LNG) project takes shape, Customs commissioner Gary Juffa said.At the same time, Mr Juffa said Customs have the important responsibility in protecting the borders and collection of customs duties and import goods and services tax (GST) due the State.“PNG is experiencing a major boom in economic activities in many sectors and it is crucial that agencies like Customs are up on its toes to perform its duties effectively on its part.“It is a tough challenge, but Customs is very aware of its responsibility to facilitate trade and at the same time the duty to encourage compliance in payment of duty due state as customs duties and import GST (goods and services tax),” he said.Mr Juffa said Customs had established the capacity to perform its duties, especially to clear all cargo effectively and efficiently as it was its responsibility to facilitate legitimate trade.He added PNG Customs had already taken measures to tighten seaports and improve efficiency to ensure Government tax duties were paid and declared goods were brought into the country.He also commended his officers for working tirelessly over the last few years to clear goods and items despite drastic increase in quantity of cargo reaching the country’s wharfs mainly spurred by the boom in oil and gas industry in the country.Mr Juffa also expressed confidence that Customs was strategically positioned to carry out its functions and roles effectively, adding Customs had increased staffing levels to meet demand.It also purchased new equipments such as patrol boats and x-ray equipment and has engaged in arming of its enforcement unit.“In recent times, Customs has shown efforts to secure borders and protect community,” Mr Juffa said.