Sunday Chronicle PNG Business

PNG Prime Minister says PNGLNG 'History in the making'

2010-04-04T12:50:00.001+10:00

PM’s STATEMENT IN NEW YORK ON FINANCIAL CLOSE CEREMONY FOR PNG LNG PROJECT

The PNG LNG Project ‘is nation-changing and life-transforming’

Honourable Ministers, Neil Duffin, President of ExxonMobil Development Company, Mark Albers, Senior Vice President ExxonMobil Corporation, other senior executives of ExxonMobil Corporation, Peter Graham, Managing Director Esso Highlands Limited, project partners and guests, ladies and gentlemen.

I have great pleasure to be here in New York with all of you for this official ceremony to mark the financial close for the PNG LNG Project. It has taken us almost three years to get to a stage where the co-venturers could commence spending US$15 billion to build this grand project.

For my Government and our 6.5 million people, the PNG LNG Project holds so much opportunity and promise. It is a history-making, nation-changing, life-transforming project. Today, we are already seeing so much hope and optimism in Papua New Guinea.

The tide of change has started to grip Papua New Guinea. It is my firm belief that this tide will transform the future landscape of Papua New Guinea forever.

My Government has thoroughly enjoyed the robust engagement we have had in this journey to take one of our most important natural resources from a conceptual stage towards our mutual goal of making it a reality.

The journey has taken us from our remotest villages and electorates to the corporate boardrooms of Brisbane and Sydney in Australia, Beijing, Singapore, Dubai, Tokyo and now here in Manhattan, New York.

During the journey, the true Papua New Guinean spirit, character and resilience was represented by our State team, led by a core of dedicated and young Cabinet Ministers.

This reminded me of my younger days when I was at the helm of a sovereign Government, after having led a core group of Papua New Guineans in our quest to secure political independence from Australia in 1975.

Today my Ministers are engaged in the task of securing economic independence and national prosperity.

Many Ministers and Members of Parliament gathered here have engaged with some of you on a wide range of issues to move the LNG project forward. I am sure these negotiations were not always easy.

I am certain they have always been frank, open and cordial and, above all, focussed on achieving our national interest objective of ensuring national prosperity. I am sure you on your side have strived to drive the best value for your organisations.

In many instances we began with positions that were far apart. We gradually worked our way to a middle ground that was mutually acceptable to Papua New Guinea and the project partners. The way forward always represented positive outcomes for all stakeholders.

My Government came half way by providing greater fiscal security while recognising we were in competition with projects from other countries.

Our common resolve produced the joint venture with valuable fiscal stability that made it possible for us to agree on optimal corporate tax arrangements in the win-win spirit I mentioned earlier.

Our Ministerial Economic Committee and State bureaucrats outlined a broad tax structure that ensured that over the medium to long-term any major upside in oil and gas prices would be equitably shared by project participants and the PNG Government.

This helped to underwrite the long-term security and stability of the PNG LNG Project.

Turning back to the project negotiations, I should note that the conclusion of the initial round of discussions was marked with the signing of the PNG Gas Agreement on 22^nd May 2008. That was a landmark that enabled ExxonMobil to commence Front End Engineering and Design (FEED).

The Benefits Sharing Agreement that my Government negotiated with landowners in the footprint area has been as much of a landmark as the PNG Gas Agreement and the conclusion of FEED.

I am not aware of any other country that conducts such negotiations. Our project partners tell me the same thing. Some 2,000 landowners gathered in Kokopo to participate in the Umbrella Benefits Sharing Agreement negotiations last May.

Last December licence-based negotiations were held at the remote gas fields and other project sites. Thousands of landowners heard first-hand details about the Project and actively debated the level of landowner benefits with my Ministers and Members of Parliament.

The package of direct benefits landowners will reap from the PNG LNG Project is around US$7 billion over the life of the project.

Landowner participation in resource ventures is unique to PNG – in this case there are some 60,000 landowners involved - and very much a part of the nation’s strategy of generating equitable distribution of wealth from any resource development.

Providing landowners with a significant stake helps to mitigate risks by making the landowners an important stakeholder in the development.

ExxonMobil, the world’s biggest oil and gas company, has secured for PNG this remarkable project. In record time, ExxonMobil has concluded the technical, marketing and financing agreements.

We have gone in just over 18 months from detailed feasibility studies on one of the world’s most complex LNG projects to financial closure.

We are often reminded that ExxonMobil has an excellent record in implementing LNG projects around the world on schedule and within budget. This is exactly the type of credible partnership that PNG seeks.

PNG’s first LNG project represents the largest ever loan finance for any international oil or gas project.

The critical FEED phase was completed in the final quarter of last year. It provided confidence that we had a viable project that could be completed in a set time frame.

However, more parts of the complex puzzle had to be put together before the co-venturers could comfortably give the all-systems-go signal. One of these was finalisation in early March of the last of four 20-year Sales & Purchase Agreements for LNG.

At the same time negotiations were finalised with potential financiers, particularly the Export Credit Agencies. We can appreciate that partly because of the Global Financial Crisis, the Government-backed ECAs were eager to provide financing to underpin potential exports of goods and services from these countries. It was also a difficult time for financial institutions to make big commitments.

ECAs from the United States, Japan, China, Italy and Australia have come together to provide the bulk of the financing, along with 17 commercial banks and a significant slice of co-financing from ExxonMobil itself.

I am glad ExxonMobil has helped PNG to keep such good company in the world of high finance.

I am extremely proud that today’s ceremony celebrates your ability to have raised for my country a loan of US$14 billion for the PNG LNG Project’s 70 per cent debt financing component.

This places PNG on the global financial map. I thank the Export Credit Agencies, the commercial banks and ExxonMobil for making this possible.

In celebrating financial close with all of you, I wish to congratulate Neil Duffin, President of ExxonMobil Development Company, and Mark Albers, Senior Vice President ExxonMobil Corporation, and their respective teams for their tremendous work in tying together every loose end to bring us here to Manhattan tonight.

The impressive team of individual ExxonMobil executives you have brought together, under Esso Highlands Managing Director Peter Graham, are a clear sign we have many more challenges before the first LNG shipment is made in late 2013.

I appreciate the efforts ExxonMobil has made to go the extra mile. This is a journey we have undertaken together for almost three years. Some of my key Cabinet Ministers that have made this journey are here with me to enjoy the moment.

The construction phase offers its own unique issues and challenges. In front of all of you today, I am urging my Ministers that they too need to go that extra mile in the coming four years to make this project come together as smoothly as possible.

Let me affirm to you Neil Duffin and Mark Albers, my Government will ensure it does all that is necessary to assist you in the challenge of commissioning this LNG plant by the end of 2013.

I am aware that we must face these challenges together. Any delay in the project schedule would result in cost blowouts that would hurt our overall achievements and goals. Having negotiated such a large loan we will only be able to service this loan once LNG exports commence.

Success of the PNG LNG Project is closely linked to another recent achievement of my Government in its efforts to improve the living standards of our people.

We will soon launch our National Development Strategic Plan covering the 20 years to 2030. Revenues that will flow from this project will underpin the ambitious targets laid out in that Plan.

The success of the PNG LNG Project will represent a country-changing event. It provides the development context and the dimension of the economic and social revolution that our current generation will witness.

Some of the development goals can only be delivered with smooth completion of the LNG Project. In many ways, this is another journey that the partners in the PNG LNG Project, and my Government, will forge towards a brighter destiny for Papua New Guinea.

Through the Development Strategic Plan, the Government has made realistic assessments of our current situation. It has laid down practical targets for every segment of the economy, given the resources that will be available to Government.

As I have noted in that document, our targets are aimed at creating a four-fold increase in per capita incomes in this 20-year period; and to improve the quality of life for all Papua New Guineans.

This is a highly honourable task that my Government intends to undertake in conjunction with you – our friends and partners in the private sector.

Once again I express my personal satisfaction and congratulate all stakeholders for this incredible effort in bringing us to financial close.

ENDS

Telikom PNG partners with Amdocs

2010-04-04T12:45:00.000+10:00

By TERENI KENS

STATE-OWNED ENTERPRISE Telikom PNG Ltd has partnered with St. Louis's Amdocs, the leading provider of customer experience systems to deploy Amdocs Compact Convergence - a network-connected, integrated solution for convergent real-time charging, customer care, self care and value-added services (VAS).

In a statement to the New York Stock Exchange (NYSE), Amdocs Compact Convergence said this solution is part of a larger project in which Telrad Networks Ltd., a leading network equipment vendor, is upgrading Telikom PNG's entire network infrastructure.

Currently, Telikom PNG's fixed-wireless, wireline and high-speed data offerings, including WiMAX, ADSL and broadband satellite including prepaid voice, data and SMS services is supported by Amdocs Compact Convergence.

Telikom's Chief Executive Officer Peter Loko (above right) reportedly said the move is in the right direction for the company.

"Using a single solution to manage our products, services and pricing offerings, across all our networks, will allow us to focus on expanding and enhancing our core business," said. Given the local environment, it's crucial to remain competitive by providing services that consumers want and by keeping operational costs low. The Amdocs Compact Convergence solution will help us do just that."

According to the statement on NYSE, the Amdocs Compact Convergence solution will be used to introduce new services such as calling cards, top-up vouchers and multi-wallet capabilities that enable subscribers to use a different wallet for a product or service.

In addition, the solution includes a multi-lingual interactive voice response (IVR) for self-care services such as balance query, balance announcements, top-ups and money transfer. With a single solution and low maintenance and operational costs, Telikom PNG will reduce its total cost of ownership. Telikom PNG will also be able to strengthen its competitive position with new services and pricing options and offer customers an enhanced and personalized experience.

Specifically designed for growth markets, new technologies and new business models, Amdocs Compact Convergence is a complete network-connected solution which enables service providers to quickly design, launch, charge for and manage new offerings.

LGL appoints new CEO

2010-04-04T12:40:00.000+10:00

LEADING gold miner Lihir Gold Ltd (LGL) has appointed former BHP senior executive Graeme Hunt (pictured left) as Managing Director and Chief Executive Officer (CEO).

LGL Chairman Ross Garnaut said Mr Hunt was the ideal candidate for the CEO role, possessing strong leadership skills, wide mining industry knowledge and extensive experience in strategic development.

A metallurgist by training, Mr Hunt, 53, previously spent 34 years with BHP Billiton. Starting as a metallurgical trainee in 1975 at the Port Kembla Steelworks, he advanced his career through a variety of roles, eventually becoming President of the global Iron Ore division from 1999 to 2006, and then President of the global Aluminium division in 2006 and 2007. His final role at BHP was as President of Uranium, including responsibility for the Olympic Dam Expansion. He left BHP in March last year.

As President of Iron Ore, Graeme presided over a major programme of building and utilizing strategic options for increasing value through expanding production from a huge resource, which continues today.

Mr Hunt will relocate to Brisbane from Melbourne, and will take up his position immediately.

"We are delighted to have an executive of Graeme's calibre in place to lead LGL to the next stage of its development," said Dr Garnaut.

"LGL is well placed to deliver increasing returns to shareholders in the next few years, with major growth projects well advanced in Papua New Guinea and in West Africa.

"Graeme possesses all of the qualities and experience the Board was looking for to ensure that the company delivers on its commitments and builds on its strong asset base to create value for shareholders."

Mr Hunt said he was looking forward to the opportunity to lead LGL into the next stage of its growth strategy.

"LGL has great assets in three countries, a talented management team in place, and significant untapped potential," Mr Hunt said.

"I believe the company has an exciting future ahead of it and I am delighted to be a part of that growth and development," he said. Dr Garnaut also paid tribute to LGL's Chief Financial Officer, Phil Baker, who stepped into the CEO role on a temporary basis in January.

"Phil has done an excellent job in the interim, and was seen in the market as an outstanding leader of the company. We are very fortunate to have him on the senior executive team, and we look forward to his continued contribution," he said.

Mr Hunt's contract is available on the company's web site, at www.lglgold.com, along with a detailed career history.

Local market ends on low note

2010-04-04T12:37:00.000+10:00

THE Port Moresby Stock Exchange (POMSoX) reports local market ended the month on a negative note, with light volumes changing hands for BSP, NBO and OSH.

Dual listed stocks, NBO and OSH lost 50t each to land on a negative territory buoyed by a mixed leads from the offshore markets after a disappointing US job data humiliating hopes that global economy recovery will continue.

In this week's markets releases:

KAML in its end of year report shows its investment portfolio increased by K4 million, or 9.4 percent in 2009;
Credit Corporation recorded Operating Profit of K33.12 million for the year ended 31 December 2009 and;
LGL's shares are inserted in the FTSE All World Index as well as FTSE Australia Index, which put the stock on investors' radar screen

The Wednesday market opened flat with businesses closing early for Easter Holiday's. Offers for NGP are queued at K1.45 while bids for HIG continue at K0.68.

PX goes global for energy support

2010-04-04T12:34:00.000+10:00

THE country's flag carrier, Air Niugini and Chapman Freeborn have partnered in support of Papua New Guinea's energy industry.

It will now be able to offer its clients freighter aircraft from third-party operators managed by Chapman Freeborn.

The new venture will also provide shippers and forwarders a one-stop shop for project cargo with main deck charter solutions to Port Moresby and onward connections to smaller airfields and unpaved strips across Papua New Guinea.

An L-100 Hercules will be used to support the development of a major liquefied natural gas project in Southern Highlands as well supplement domestic cargo operations by Air Niugini's Dash-8 freighter aircraft. The two companies are also studying a niche regional freighter for smaller loads.

Air Niugini operates B767s from Port Moresby to Asia and Australasia and F100s and Dash-8s on domestic and regional routes.

Chapman Freeborn also has signed a block space agreement with Safi Airways. The privately-held Afghanistan airline flying to Germany and Belgium has increased its A340 Frankfurt-Kabul service to five flights a week .

The new agreement allows cargo customers to send shipments on the only regular direct service from Europe to the Afghan capital. The first flight carried a record 30 tonnes. Chapman Freeborn says it is currently finalizing plans to open an office in Kabul.

Earlier this year Safi signed interline agreements with Lufthansa, United Airlines, Emirates and Qatar Airways.

Petromin congratulates InterOil and Mitsui Corporation

2010-04-04T12:30:00.000+10:00

THE Managing Director and CEO of Papua New Guinea’s national, oil, gas and minerals company Petromin PNG Holdings Limited(Petromin), Joshua Kalinoe has congratulated InterOil and Mitsui Corporation for entering into a Preliminary Commitment Agreement for developing phase one of the Elk/Antelope LNG project, subject to final ratifications.

Phase one of the project includes the extraction of condensate and development of upstream LNG extraction facilities.

Mr. Kalinoe made these remarks on the occasion of the signing ceremony in Tokyo of the Commitment Agreement between InterOil and Mitsui in front of the Prime Minister, Grand Chief Sir Michael Somare on Tuesday 30th March, 2010.

InterOil is the upstream operator for the Elk/Antelope LNG project and Mitsui Corporation is one of the leading Japanese investment and trading companies.

The Preliminary Commitment Agreement allows Mitsui to fund 100 percent cost of the Condensate Stripping Facilities (CSF) which includes a liquid separation plant and pipeline in the project area, and earn tolling fees and various other benefits. Mr. Kalinoe said, under the arrangement Mitsui will also fund Petromin's share of the condensate extraction costs. This means that Petromin and the State will not have to seek separate financing arrangements to fund their share of the equity.

Mr. Kalinoe said that it is one of the best project financing deals for the current partners in the project which includes Petromin, InterOil and Pacific LNG. It also means that early revenue for Petromin and the State from the Condensate Stripping component of Elk/Antelope LNG project where first cargo of condensate is expected by the second half of 2012.

Under the arrangements Mitsui will co-build the extraction facilities and will receive toll fee as well as financing cost from condensate revenue at first production of condensate. The condensate will be sold on a net back basis to the InterOil refinery in Port Moresby at international market and local PNG market prices.

Mr. Kalinoe said this arrangement adds more value to Papua New Guinea than any other projects where all the LNG products are sold overseas.

Meanwhile, Petromin has entered into a long-term strategic partnership arrangement with Japan Petroleum Exploration Co., Ltd (Japex).

Japex is a publicly listed company and partly owned by the Japanese Government. It is the exploration and Development Company with oil and LNG interests in Japan and other parts of the world.

The Agreement on Principles for a Long-term Strategic Partnership was signed in Tokyo on Tuesday 30th March, 2010 in the presence of the Prime Minister, Grand Chief Sir Michael Somare by the President of Japex, Mr Osamu Watanabe and Managing Director of Petromin, Mr. Joshua Kalinoe.

In the signing ceremony, Mr. Kalinoe said the purpose and intent of the Agreement is significant for Petromin because of the value it will bring to the development efforts of the company in both operational and human resource development.

LGL rejects acquisition proposal from Newcrest Mining Ltd

2010-04-04T12:19:00.000+10:00

LIHIR GOLD Ltd (LGL) on Wednesday rejected an offer from Newcrest Mining Ltd to acquire 100 percent of LGL's issued ordinary shares through a scheme of arrangement.

The offer, which was received on 29 March 2010, was on the basis of 1 Newcrest share for every 9 LGL shares plus A$0.225 cash per LGL share, less any interim dividend declared for the half year ended June 2010. Based on Newcrest's closing share price as at 31 March 2010, the offer was equivalent to A$3.87 per share and valued the company at approximately A$9.2 billion.

While the Board recognized the strategic merits of the combination of the two companies, following careful review and analysis, directors unanimously determined that the offer did not represent good value for LGL shareholders. This was particularly the case given the conditions and exclusivity arrangements that Newcrest proposed.

LGL Chairman Ross Garnaut said the offer undervalued LGL, both in terms of its existing business, and in terms of the potential value the company expected to deliver to shareholders in the future. "It also did not include a sufficient premium for control," Dr Garnaut said.

"Directors and management made certain that Newcrest was given the opportunity to make an offer that would deliver full value for our shareholders, but the Board's assessment was that the offer ultimately received was inadequate. We felt we had an obligation to shareholders to reject the offer," he said.

In the course of discussions leading to the offer, LGL provided Newcrest with access to limited due diligence items. The due diligence was subject to a confidentiality deed and 9 month standstill agreement and gave Newcrest an opportunity to put forward an offer that LGL's Board may have considered to be in the interests of shareholders.

"LGL has an excellent portfolio of operating mines in three countries and has achieved record production outcomes every year for the last four years, reaching output of 1.124 million ounces in 2009. We have major growth projects currently being developed in PNG and in West Africa, which will deliver increasing returns over the coming years, lifting average annual gold production by approximately 40 percent from current levels to 1.45 million ounces from 2012 to 2016.

"There is considerable option value in the huge gold resource at Lihir Island, which increased 31 percent to 43 million ounces in 2009, and also in the company's assets in West Africa.

"We were keen to ensure that our shareholders capture the full value of that growth," Dr Garnaut said.

"The Board is strongly of the view that LGL is undervalued in the marketplace, and that view has been expressed to us on a number of occasions by shareholders. We have recently made management changes and taken other steps that will assist us in the process of rebuilding market confidence and correcting that valuation shortfall.

"In that context, it was clear to the Board that the Newcrest offer failed to provide full value for the underlying assets with an appropriate takeover premium," Dr Garnaut said.
"The world class, long life nature of LGL's pure gold assets would add a great deal to the value of Newcrest, as it would to some other companies, and the offer price did not provide an appropriate sharing of the potential benefits of the proposed combination," Dr Garnaut said.

LGL's Board remains committed to maximising value for its shareholders and this will continue to be the only criterion by which any further proposals or strategic options will be evaluated.

PNG building boom attracts Fiji firm

2010-04-04T12:15:00.000+10:00

THE booming building industry in Papua New Guinea has at least attracted Fiji's leading manufacturer of concrete, masonry blocks Standard Concrete Industries.

Basic Industries Ltd chief executive officer Mosese Volavola said they were aggressively pursuing expansions into these markets to make up for the 20 per cent to 30 per cent drop in revenue in Fiji's 'quiet' construction industry.

He said SCI, a major division of Basic Industries, aimed to penetrate the "promising" PNG market. Mr Volavola said Tahiti and New Caledonia were also in their expansion plans.

"We're now looking outside Fiji to make up for the drop in revenue because while the local market is quiet and subdued, we're picking up on exports," Mr Volavola told the Fiji Times.

"We're currently selling our products to Vanuatu, Samoa, American Samoa, Tonga and Cook Islands and now we're targeting other island nations, particularly Papua New Guinea," Mr Volavola said.

"And this should be good because instead of laying people off and reducing our operations, exports are still keeping us going."

Mr Volavola said the demand for cement and concrete building materials was high given the recent signing of two multi-billion dollar contracts for the extraction of natural gas.

"There is no direct shipping to PNG at the moment and that is what we are looking at right now. Hopefully, by the second quarter of 2010, we should achieve the PNG market and the other option is to establish our operation there," he said. "That of course will depend on the size of the market to determine the viability of our operation but in PNG, the market is there, it's big with a population of around six million the PNG market is very promising."

Mr Volavola said many of Fiji's neighbours did not have good quality sand, gravel or rocks available locally and Fiji was a cheaper option for quality over Australia and New Zealand, complemented by a regular shipping service.

SCI national manager masonry and export Umesh Kumar said their increase in exports over the last five years was attributed to the quality of products manufactured locally.

Harmony continues growth despite challenges

2010-04-04T12:10:00.000+10:00

HARMONY Gold Mining Company Limited (Harmony) with operations in PNG has announced that the past quarter saw continued focus on safety and disciplined mining, but was not without its challenges.

The South African based company in releasing the production update for third quarter 2010 financial year (FY2010) based on preliminary estimates, gold production for the quarter decreased between 1,000kg and 1,300kg compared with the previous quarter.

Loss-making shafts that were closed during the quarter resulted in a reduction of approximately 620kg of gold, as compared with the previous quarter. Restructuring costs in respect of these closures amount to approximately R120 million. Going forward, only care and maintenance costs for the closed shafts will be incurred. "Longer term the effect of this decision will be shown to have been the correct one, lowering the cash costs and eliminating losses, however, the first 3 to 6 months of these decisions are always painful", said Harmony's Chief Executive Officer, Graham Briggs.

The remaining loss in kilograms was from South African operations, of which the main contributing operations to this decrease include Tshepong, Masimong, Joel and Kusasalethu (previously known as Elandsrand). Tshepong and Masimong had a slow start-up after the Christmas break. Joel saw lower grades, mainly as a result of the commissioning of the plant and Kusasalethu faced ore-pass problems during the quarter, which are being investigated.

Hidden Valley continued its commissioning process, with the silver flotation circuit being commissioned in the March quarter. As mentioned in the previous quarter, we expect the Hidden Valley mine and processing plant to reach its original design capacity and throughput in the June 2010 quarter. The mine`s March quarter results will be capitalised.

"This has been a difficult quarter. Shortly after having recorded 99 days fatality-free, a fatal accident occurred at Evander. Slow start ups following the Christmas break and the closure of shafts resulted in a decrease in forecasted production and Kusasalethu, in particular, had a disappointing quarter. Our management team is working hard to try and understand the ore pass situation better and aims to find a solution as soon as possible. Having just visited Hidden Valley, good progress is being made in dealing with the commissioning phase. In general, we expect to see improved results during the June 2010 quarter, with all of our management teams dedicated to meeting production targets," Briggs said.

Harmony`s results for the third quarter of FY2010 ending 31 March 2010 will be announced on Monday, 10 May 2010 at 09h00 and 15h00 SA time.

InterOil responds to allegations

2010-04-04T12:07:00.000+10:00

INTEROIL CORPORATION (NYSE: IOC) (POMSoX: IOC) believes that allegations made in an article concerning certain litigation which has been ongoing in Texas since 2005, have been raised now in an attempt to divert attention from the successful operations of the company.

Operations conducted by the company which were evaluated by independent engineering evaluations consultants, GLJ Petroleum Consultants Ltd., resulted in an increase in our gross best case contingent resources estimate by 889 million barrels of oil equivalent resources, to a revised total of 8.2 tcf of natural gas and 156 million barrels of condensate, in the past fiscal year. The article was timed to benefit recent short selling activities. The "short" interest in InterOil increased to 3,548,056 shares in mid-March.

InterOil's policy is to not provide commentary on ongoing litigation beyond the description of it appropriately and consistently set forth in our Annual Information Statement and Form 40-F available on our website or from the SEC.

In our Annual Information Form (AIF), filed on March 1, 2010 the Company continued to disclose that Company's Chief Executive Officer, Phil Mulacek, and his controlled entities Petroleum Independent & Exploration Corporation and P.I.E. Group, LLC, together with the Company and certain of its subsidiaries, are defendants in Todd Peters, et. al. v. Phil Mulacek et. al.; Cause No. 05-040-03592-CV; pending in the 284th District Court of Montgomery County, Texas. Appropriate details concerning this long running action are provided.

InterOil and its subsidiaries were not party to, nor otherwise involved in, the Nikiski Partners filing referenced in the article.

Mining tracks ahead in PNG

2010-03-01T12:06:00.000+10:00

PAPUA NEW GUINEA is continuing to be at the forefront of exciting developments in the mining and resources industries, building a strong framework for future growth within the nation.

Kina Securities CEO Syd Yates said despite the slower recovery in the US and European economies, key sectors of the global economy are moving in full swing to ensure supply chains for resources are available.

"Record results delivered by global mining companies working in PNG have continued to send a timely message to the world that there are strong development and exploration opportunities within the Nation. With the global economy continuing to show signs of a recovery, this message becomes all the more important.

"However, there unfortunately continues to be negative issues raised in the local and international media concerning site and location disruptions, which again reflect poorly on the prospects of the nation," Mr Yates said in the company's Kina Communiqué'

Last week Papua New Guinea ranked poorly as a place to invest in mining by the New York-based mining consultancy company Beare Dolbear.

Beare Dolbear's "2010 Where NOT to Invest" report ranked PNG in 21st place out of 25 major mining countries.

It ranked PNG in the bottom group of countries according to the way it handles social issues such as poverty, in the second bottom group on mine permitting delays, and near the bottom on corruption.

Global gold producer Lihir Gold Limited recently announced it had delivered a record underlying profit of US$290 million for the year ending 31 December 2009. This reflected a significant increase of 57 per cent when compared to the previous year's activities.

The company indicated the strong result was primarily due to the group achieving the major milestone of producing and selling more than one million ounces of gold in a year, combined with reduced unit costs and strong gold prices.

Lihir Gold chief executive officer Phil Baker said that a record performance from the Lihir Island operation in PNG and a full year's contribution from the Bonikro and Mt Rawdon assets acquired in mid-2008 had also enabled the solid underlying profit result.

However, the company also reported $413 million in impairment charges and operational losses associated with its Ballarat operation, leading to an overall loss of $234 million.

Despite this, Mr. Baker said the company had achieved a number of strong results throughout the year.

"The excellent production outcome of 1.12 million ounces for the year, together with rising gold prices, translated into record revenues for the company. For the first time in LGL's history, total revenues surpassed US$1 billion," Mr. Baker said.

"The record performance at Lihir Island has confirmed the significant progress we've made in our drive for operational excellence and cost competitiveness," he said.

Clearly the global hunger for resources continues to excite exploration and new development opportunities throughout PNG. This has been reflected by ongoing developments of the LNG pipeline and other key projects throughout the Nation.

Earlier this year international mining organisation Nautilus Minerals announced that it had officially received the final Environmental Permit for the development of its Solwara 1 Project for the next 25 years, expiring 2035.

This historic announcement takes PNG yet another step closer to successfully hosting the world's first undersea copper and gold mining operation. The milestone also symbolises the start of an exciting new era for the global mining industry, which is now benefiting from the development of innovative techniques designed to collect valuable minerals from depths of more than 1,500 metres under the sea.

Throughout the past decade, the Nation's mining and natural resources sector has developed into a genuine cornerstone of the domestic economy.

Importantly the industry is continuing to provide strong opportunities for growth and development which will become all the more important as the global economic recovery continues to take effect.

A strong and diverse mining industry is integral to a prosperous national economy, with the sector creating many productive investment opportunities across PNG and generating numerous flow-on employment options for locals.

PNG's mining sector is now being recognised internationally as a diverse and well-managed sector and the positive benefits of this will continue to emerge for years to come.

Horizon gets PNG, Maari boost

2010-03-01T12:02:00.000+10:00

THE sale of a 50 percent stake in PRL 4 in Papua New Guinea and the production start-up from the OMV-operated Maari oil field in New Zealand has had a huge impact on Horizon Oil's balance sheet.

According to PNG Industry news, Horizon posted a net profit of $US56.6 million (K155 million) for the half-year ended December 31, 2009, due to a $US54.1 million (K148 million) gain on the sale of the stake in Petroleum Retention License (PRL) 4 to Talisman Energy.

This compares with the net profit of $US1.9 million (K5.2 million) made in the half-year ending June 30, 2009.

Revenues were also up 200 percent to $US24.4 million (K67 million) over the same period as production climbed from 164,444 barrels of oil to 403,302bbl.

Horizon said planning for drilling of the Stanley-2 and Elevala-2 wells in PRL 4 and 5 respectively was progressing well, with Stanley-2 scheduled to spud in the third quarter of 2010.

More gas on the cards for Oil Search

2010-03-01T12:00:00.000+10:00

OIL Search plans to focus 2010 exploration efforts on finding more gas to underpin liquefied natural gas expansion in Papua New Guinea and expects to resolve the remaining issues for PNG LNG this quarter reports PNG Industry news.

Managing director Peter Botten said in a statement key exploration activities this year included drilling the Wasuma, Korka and Mananda Attic wells, as well as onshore and offshore seismic in Southern Highlands province.

He added the company would also continue its seismic and drilling program in the Middle East and North Africa.

While development activities will focus on gas conservation and improving facilities, infrastructure reliability as well as extending facility life to support the PNG LNG project, Oil Search is still looking to get the most out of its oil assets.

This includes drilling one or two development wells on the Moran field; appraising the Agogo deep play, which had encountered oil in several intervals in a previously untested footwall forelimb compartment; and carrying out a workover campaign in the Kutubu, Moran and SE Gobe fields.

Botten said the new deep intervals at Agogo will be flow tested to determine hydrocarbon content, reservoir productivity and the potential for further development opportunities.

"Importantly, the discovery of oil in the Agogo footwall forelimb has opened up a new play fairway in the Fold Belt and has significant implications for the development of analogous structures below existing fields and the prospectivity on trend in adjacent licences."

Botten also touched on progress for the PNG LNG project.

"The remaining issues to financial close, including the signing of the final SPA (sales purchase agreement), which will result in the PNG LNG plant's initial capacity being fully contracted, are expected to be resolved during the first quarter of 2010 with first draw-downs from the project financing facility expected shortly before financial close," he said.

Meanwhile, Oil Search reiterated that full-year 2010 production would be about 10 percent lower than in 2009 at 7.2-7.4 million barrels of oil equivalent.

The company posted a net profit after tax of $US133.7 million (K367 million) for 2009, down from $US313.4 million (K860 million) in 2008, due to lower production and lower oil prices.

Revenue for the year was down 37 percent from 2008 to $US512.2 million (K1.4 billion) while production was 5 percent lower to 8.1MMboe, due to natural decline at its mature PNG oil fields, facilities downtime and the sale of the Middle East producing assets in May 2008.

Landowners call for AGL to be blacklisted

2010-02-22T17:02:00.000+10:00

By TERENI KENS

Papua New Guinea's Simberi landowners in New Ireland province are demanding the PNG government to immediately black list Australian miner Allied Gold Limited (AGL) among others from all mining activities in the province.

This comes after the company which operates the Simberi Gold mine believed to have committed serious offences in the recent engagement of the 14 controversial Fijian guards.

The list of demands by the landowners which will be given to the government soon stems out of serious offences particularly smuggling of foreign former military or paramilitary personnel into the country, raising of illegal paramilitary force, possession of illegal arms and conducting armed threat against the landowners and communities.

In strongly condemning the offences the landowners through their Simberi Mining Area Association (SMAA) have declared the list of demands in a prepared statement which reads:

Demand the government for the absolute and unconditional revoking of all mine associated licenses issued to Simberi Gold Company or Allied Gold in the whole of Tabar Islands tenements.
Demand the government for its role in to facilitate a new economic landscape for the Simberi mining project and one where the landowners, people of Simberi and rest of the Tabar Islanders including the New Ireland Provincial Government have a dignified fair and just play and say.
Demand the government to facilitate a smooth transition of players involved in the Simberi mining project pertaining to issues of ownership, operation, and settlements of debts.
Demand the government to lay down effective regulatory criteria in the spirit of the relevant MOA and MOU to shape a new economic landscape for the Simberi mining project.

The SMAA also demands the government to institute further investigations into the unfinished business of accounting of all arms that were brought into the island including two unidentified expatriates, four rumoured marksmen, unknown containers on MV Geraldine and sudden departure of ship and expatriates.

While addressing the medium term demands the association urged the government to impose relevant sanction against any further contracting of enterprises by the Simberi mine project that acted as accomplices in some form to the commit crime. The contractors include Airlines PNG, G4 Security Services, and Eurest.

"We hope and trust the government may accept and act upon these demands in a speedy and favourable manner," the landowners said.

The SMAA however commended the government and its central agencies for swift action in removing the 14 Fijians from Simberi Island.

The association also praised the Royal Papua New Guinea Constabulary (RPNGC) for a professional piece of work and job well done with risk free outcomes.

"Worth mentioning is the safe conduct of MV Lelani in transportation of troops despite having battered by worst weather conditions twice and having to make two turnarounds for safety," SMAA said in a statement.

However, the SMAA noted that the non appearance of the national delegation on the island including Mineral Resources Authority (MRA), Foreign Affairs and Labour had disheartened and frustrated the people.

The association views government special intervention on the island as relevantly demonstrative of a government authority and influence but said the mission would be undermined if no follow up engagements is anticipated by relevant central government agencies.

"Landowners' encounter with the devil on the island should not be simply underplayed by central government agencies. Allied Gold on Simberi Island must leave our shoreline immediately."

They said extended search for arms and investigation of breaches is needed to stabilize the local security and law and order scene. With only one policeman left on the island, the SMAA urged that the usual beef up of rural police presence must be attended to immediately.

"The implications of security toothlessness of the community mean the community taking matters into their own hands to fill in a void. This problem was the very substance of the plea for government intervention in the first place."

The SMAA said while it understands very well the limitation placed in the national security order, a review of that order in light of the aforementioned needs to be immediately addressed.

Meanwhile, despite all these problems Allied Gold says it is on track with its expansion program to produce 200,000 ounces per year of gold by the March quarter of 2011.

It is also optimistic that it expects to produce a minimum of 17, 500 oz of gold in the third-quarter of its 2010 financial year.

Barrick to begin field operations

2010-02-15T12:50:00.000+10:00

AS part of the preparations for the upcoming exploration programmes on the Coppermoly Nakru and Simuku projects in West New Britain province, Barrick (PNG) Exploration Ltd (Barrick) have undertaken on-site inspections.

They have completed a formal risk assessment for camp re-construction, geological mapping and geochemical sampling. Preparations have also begun for the upgrade of track access to the Nakru project site.

Barrick can earn a 72 percent of Coppermoly's three existing projects by spending A$20 million (K42 million) within eight years. They are currently establishing their own office, staff and communications for their base of operations in Kimbe, the capital of West New Britain Island province. Coppermoly will continue to assist until March.

The diamond drilling programme at Nakru is expected to begin early in the second quarter of 2010 and will test depth extents of surface mineralisation and the copper related geophysical Induced Polarisation targets. It is anticipated that a broader exploration programme will include extensive surface sampling beneath ash cover, mapping and diamond drilling programmes both at Nakru and Simuku.

Barrick is reviewing the existing Nakru drill core and taking representative samples for petro graphic and petro physical studies to help understand the mineralisation and its relationship with geophysical anomalies. Drill hole samples are being reassayed for a broader suite of elements and historical geological, geochemical and geophysical data are being compiled to assist interpretation and definition of mineralisation potential in the broader area.

Coppermoly is currently reviewing other copper and gold prospects in Papua New Guinea for possible acquisition.

BSP Launches New ATM at NASFUND Building

2010-02-15T12:41:00.000+10:00

BSP, the Nation's largest Bank and leading bank in the Pacific has launched a new ATM at the Nasfund Building in Boroko in the NCD.

The installation of the new ATM is intended to meet local area demand for convenient ATM services. Hundreds of people visit this location everyday and having an ATM there will not only help the customers around that area but those who regularly wait for transport to Tubuserea, Gaire and Barakau.

The official launch took place at 2pm Wednesday 10th February and was attended by the CEO and Managing Director of BSP Mr. Ian Clyne, along with Mr. Ian Tarutia Joint CEO of Nasfund.

BSP launched the new PNG Kundu design ATMs in June last year. Screens offer both Pidgin and English language options and are also able to produce mini statements for BSP customers.

The launch of the new BSP ATM now increases BSP ATMs to over 150 ATMs throughout PNG. This is the largest network in the country, and is further supported by more than 2,200 EFTPOS devices.

The new BSP ATMs and EFTPOS devices are also heading to other areas of our South Pacific branches, with 42 ATMs and EFTPOS devices already installed in Fiji. A further 40 ATMs are already on their way to Fiji with BSP's recent acquisition of the Colonial National Bank there. Installation of ATMs and EFTPOS devices are also underway at BSP in the Solomon Islands.

Highlands Pacific denies media reports

2010-02-15T12:39:00.002+10:00

By TERENI KENS

RAMU NI-CO’s (MCC) major joint venture partner, Highlands Pacific Limited and State-owned Mineral Resources Development Corporation (MRDC) have denied reports in one of the dailies pertaining to the exact net cost of the Ramu project.

In a joint statement e-mailed to Sunday Chronicle on Friday said the article and another almost identical which appeared in the Post Courier on Friday January 29^th, titled “Ramu Mine worth K92b” are misleading.

“Unfortunately the articles contained a number of errors that have completely misrepresented the net worth of the project,” Managing Director of Highlands Pacific, John Gooding said.

He explained that the figures attempted to quantify the potential value of the material in the ground (using erroneous and very optimistic assumptions) and made no attempt to quantify the operating costs or the metallurgical recoveries.

“On the basis of the assumptions used by the writers it could be suggested that all of PNG fisherman have trillions of kina worth of fish based on all the sea life that may swim in and out of PNG’s territorial waters over the next 30 years.

“It is well known in the industry that laterite plants are costly to build and must be managed well to make profits. The closure of Ravensthorpe and Cawse laterite operations in Western Australia are examples of recent failures in this industry sector. Indeed BHP Billiton spent US$2.8 billion to construct the Ravensthorpe plant only to close it eight months after opening and then recently to sell it for US$340 million.”

Mr Gooding noted that while it is true that MCC (the majority stakeholder) has managed to contain the construction costs of US$1.5 billion (K4 billion) within budget and at a figure significantly lower than other equivalent plants, the operating costs still remain and will limit the net returns from the project.

He added that these operating costs include reagent costs (e.g. sulphur), power generation fuel, transport, mining, maintenance, compliance, labour, shipping, marketing, management, royalty and refinery.

“Furthermore, it needs to be recognized that metal prices fluctuate widely between highs and lows. Any project of this size needs to be mindful of the periods of low metal prizes and its ability to repay outstanding loans during these periods. In addition to this risk, allowance needs to be made for increases in operating costs (e.g. fuel and sulphur), which further eat away at the net returns.”

Promote locally produced honey: Basil

2010-02-15T12:34:00.000+10:00

By TERENI KENS

HONEY production in the country is seen as a major economic activity within the agriculture sector and should be enhanced and promoted at the rural level.

Recent research has revealed that Papua New Guinea produces an estimated 40 tons annually valued at K400,000.00 which is consumed annually while PNG consumption rate is estimated at 200 tons or K2 million annually which is heavily subsidised by imports mainly from Australia.

Bulolo MP Sam Basil outlined this in a recent honey harvest in his electorate saying this is the way forward for the country's local entrepreneurs and farmers to consider investing in local honey production to gain high returns.

"The honey market can be captured by promoting locally produced honey in the rural areas or districts in PNG," Mr Basil said.

The MP together with Eastern Highlands Provincial Bee Keeping Coordinator, Tella Loie witnessed the first harvest from the bee hives project.

The project is funded under the local Mp's District Service Improvement Project (DSIP) and the hives have matured for harvest in just four months from being established which has exited Mr Loie and his Eastern Highlands team.

Mrs Sally Sonoling the interim president of Bulolo Honey Mamas Association and three of her colleagues, Ms Yonga Heva of Garaina, Waria LLG, Labu Archie of Mumeng LLG and Elsi Willie of Wabu Urban LLG has accompanied Mr Loie and have conducted many harvesting and extraction recently.

The association said one of the farmers Steven Bani of Lagis Village in Buang LLG has brought his 8 frames with contents of approximately 16 kilograms of honey and earned K160.00. This has brought some good news to the bee team that Mr Bani's village has experienced increasing in the productions of coffees beans, avacado, oranges and 'laulau' fruits which is due to the presence of honey bee and its pollinating activities.

Mr Loie has estimated that by Tuesday the team would harvest a total of 300kg or K3000.00 worth which would be invested back into the farmers' hands.

MP Basil will later in March session of parliament plans to present each jar of 250g, 500g and a 2kg respectively to the Prime Minister, Agriculture Minister, Mps and the DAL officials respectively.

He said while presenting the results, will urge the other Mps to invest into honey production as PNG has wasted its flora and fauna, which could be useful for the honey industry that also has some other indirect benefits such as employment, food security, education and income generation.

PPL and HG power sign contract

2010-02-15T12:32:00.000+10:00

STATE-OWNED entity PNG Power Ltd and HG Power Transmission Ltd have signed a contract to begin the construction of an optic fiber network on PNG Power's power line network and tower infrastructure.

PNG Power CEO Tony Koiri and HG Power Business Development Manager, Rama Junan signed the documents at PNG Power's Port Moresby headquarter at Hohola.

Mr Koiri said he was pleased that HG Power were contracted to develop the project and added that he had a lot of confidence in the project being completed on time.

Mr Junan said it was their second project in PNG and he assured PPL that the project would begin and finish on time with all quality and safety requirements met.

HG Power with PPL's supervision will construct, test and commission the Optical Ground Wire (OPGW), ADSS and APPROACH cables on PPL's power network that will link Madang and Lae through Walium, Gusap, Yonki, Mutzing and Erap.

Once installed, the optic fibre cables on PPL's transmission and distribution infrastructure will allow Telikom to use the technology for telecommunication purposes.

PPL and Telikom had signed an MOA on January 11 this year that allowed Telikom use of PPL's infrastructure for telecommunication.

UK firm buys Pacifica HR

2010-02-07T16:03:00.000+10:00

By TERENI KENS

PAPUA NEW GUINEA'S market leader in Human Resources consultancy, Pacifica HR has been bought by a Manchester -based recruitment firm Air Energi.

The acquisition will enable the two companies to venture into providing recruitment services for contractors such as engineers, design and technical specialists and managers for projects for clients such as the ExxonMobil's multi-billion PNG LNG and the existing BP and Shell companies in the country.

This follows last year's announcement by Air Energi Group for the signing of an operational alliance agreement with Pacifica HR. The alliance was formed to support upcoming resources projects in PNG.

In the new merger some of the services that they will be offering include expatriate and local recruitment, visa and work permits, local payroll and tax, airport meet and greet, security, accommodation and local transport.

Pacifica has 15 employees in Port Moresby and said it is confident that it will provide the Manchester-based company with a springboard to supply energy companies aiming to tap liquefied natural gas in the country.

The two companies did not disclose how much was the buy but said together they will provide a service-driven product to the multi-billion kina projects due to be completed in the region over the next decade and beyond.

Air Energi, headed by chairman Ian Langley and chief executive Duncan Gregson, is also opening a branch in Yokohama, Japan, which is also aimed at supplying engineering staff to major LNG projects.

The United Kingdom (UK) company part owned by private equity firm Zeus, said in a statement it is projecting a turnover of £160m this year and a profit of £6.1m.
The firm is eyeing revenues of £200m within five years.

The company employs around 175 staff worldwide and the Pacifica acquisition adds around 15 employees.
Air Energi stands to benefit from increased interest in producing liquefied natural gas.

Mr Langley said: "Some of our major clients have announced plans to build world-scale LNG facilities in Papua New Guinea. Estimated capital expenditure there over the next decade is at least $20bn. There are some tremendous opportunities for us there."

APNG halts Goilala flight services

2010-02-07T16:02:00.001+10:00

AIRLINES PNG has indefinitely stopped its local flight services to Goilala due to safety concerns regarding the standard of the airstrips at Onogue and Fane.

The Port Moresby Stock Exchange (PoMSOX) listed company in a brief media release said flight services to these two destinations will remain suspended.

The decision follows from an earlier airstrip review that also resulted in AusAID and Airlines PNG deciding to suspend services to Manari, Efogi, Kagi and Milei in the Koiari area.

It said it will continue to engage with relevant authorities with the aim of upgrading the two airstrips to ensure they each meet the minimum standard for the airline's operations and, accordingly, a resumption of services.

But the company confirms that both scheduled and charter services to Kokoda, Tapini and Woitape will remain unaffected.

The airline further acknowledged disruptions which have occurred in recent weeks to flights to and from these and other destinations in the domestic network.

"These disruptions have largely been a result of the heavy wet season and its consequent impact on the airline's schedule.

It said it is expecting similar disruptions for the remainder of this month until weather conditions improve.

Vangold buys NGG properties

2010-02-07T15:57:00.000+10:00

By TERENI KENS

JUNIOR miner and Canadian Vangold resources Ltd has bought of New Guinea Gold (NGG) Corp's four gold properties in Papua New Guinea in a recent business transaction.

This will see the Toronto Stock Exchange (TSX) listed company, Vangold to acquire and consolidate a 100 percent interest in the four gold properties which include Mt. Penck - West New Britain, Allemata - Milne Bay, Fergusson - Milne Bay and Feni - New Ireland. The company has also obtained shares in Pacific Kanon Gold Ltd ("PKG") and associated interests in certain mineral properties.

To complete the acquisition Vangold has spent approximately Cdn$500,000 (K1.2 million) and over 6 million common shares to NGG of the purchase.

In a company announcement Vangold has also agreed to provide NGG a 5 percent carried interest in the Mt. Penck, Allemata and Fergusson properties, and a 10 percent carried interest in the Feni Island property, in each case until completion of a "bankable feasibility study" at which time NGG will contribute its share of costs for the property or be diluted in accordance with normal industry standards. The common shares are subject to a hold period expiring May 30, 2010.

The CEO and President of Vangold Dal Brynelsen while commenting on the transaction said he is satisfied with the acquisition so far.

"I am very pleased that Vangold has secured a 100 percent interest in the Kanon and Feni gold camps. This will allow Vangold to achieve its long sought after goal of creating a viable advanced gold exploration company based in Papua New Guinea.

"Each of the four gold properties offers a unique path to discovery. It is important that New Guinea Gold continues to have direct involvement in these gold properties, providing invaluable technical and administrative expertise and support when called upon. We are pleased to have New Guinea Gold as a major shareholder and value our continued relationship with them."

Meanwhile, NGG and Private Company 7238550 Canada Ltd (PC) have modified PC's Option Agreement to include the Weioko Project, Sehulea Property, EL 1069, situated in Milne Bay Province.

The total expenditure commitment to earn a 50 percent interest has increased from C$5 million (K12 million) to C$8 million (K20 million). This commitment is expected to be completed within 3 years and sixty days of the date the PNG Government renews EL 1091, Normanby, expected to be on or before April 25, 2010.

The company's CEO and Chairman, Bob McNeil said the expansion is economical.

"We have expanded the Joint Venture to include the Weioko project which is only 12 kilometres from Imwauna on Normanby Island. It makes sound economic sense to include development of Weioko with Imwauna".

"At the present time, we would anticipate the exploration funding commitment will be spent quickly, with our Joint Venture partner intending to begin underground exploration to determine how best to mine this high grade gold system. Underground exploration will also allow deep exploration (drilling) of the system to better determine its depth extent. It is currently anticipated that future mining at Imwauna would be partly open pit and partly underground, and this exploration program will move us more rapidly in that direction.

We are very pleased that this new Agreement will provide for the expeditious development of both these important projects," concluded Mr. McNeil.

Westpac to conduct financial literacy training

2010-02-07T15:54:00.000+10:00

THE oldest bank and PNG's first bank, Westpac has joined forces with the Australian Government's Agency for International Development (AusAID) to deliver money management and business skills training across Papua New Guinea.

AusAID and Westpac are working in partnership to deliver financial literacy and business development training within communities across PNG.

With Westpac celebrating 100 years in PNG this year, it well placed to provide these communities with the necessary skills training to contribute towards the partnership's objective - to increase the capacity of local communities to participate in the formal private sector.

"Education is fundamental to the development of all nations and this partnership seeks to increase the standards of living and private sector participation of PNG communities, while also focussing on improving the participation by women in private enterprise," said Robin Scott-Charlton, Acting Minister-Counsellor, Aus AID.

The partnership further strengthens Westpac's local community ties and will deliver a number of free money management and business development workshops around PNG.

"Financial Management is our business development workshop and is aimed at small medium business owners, or key managers within business. It provides training and tools to help participants to start or grow a business," said Mr Ross Hammond, Managing Director, Westpac Bank PNG Ltd. "The workshop is delivered in a way that is easy to understand, uses simple everyday language, is relevant to all types of businesses and provides skills that can be put into practice immediately."

The financial literacy component will be delivered through Westpac's Financial First Steps, a three hour workshop which introduces participants to range of topics from budgeting and saving, to credit cards and is designed to encourage people to better understand basic money management matters.

The workshops will be conducted in urban and rural areas around PNG and launched in March, 2010.

EFIC awards contractor over K1.3b

2010-01-30T10:11:00.000+10:00

By TERENI KENS

MORE than US$500 million (K1.3 billion) in performance bond from Export Finance and Insurance Corporation (EFIC) has been made available to support an Australian engineering and construction firm to undergo contracts in the multi-billion kina ExxonMobil led PNG LNG project in the country.

The firm McConnell Dowell Corporation Limited (McConnell Dowell) specialized in engineering, construction, maintenance and building company working on infrastructure projects in mining, oil and gas, water, petrochemical and transport will be involved in two contracts in the country.

This includes the construction of the new Komo Airfield in the Southern Highlands province and roads and bridges required for construction, together with the installation of a fibre optic communications cable.
According EFIC, McConnell Dowell will undertake the contract work with international joint venture partners. The performance bonds, worth over $US20 million (K53 million), have been issued under an existing bonding line that EFIC provides to McConnell Dowell.

The EFIC is the financial arm of the Australian government's export credit agency that provides finance and insurance solutions to help Australian exporters overcome financial barriers when growing their business overseas. It also helps successful businesses to win, finance and protect export trade or overseas investments where the local bank is unable to provide all the support they need.

The Executive Director, Origination and Portfolio Management of EFIC, Peter Field said the credit agency will lend $US350 million (K927 million) as part of a syndicate providing finance to the project.

"We're delighted that McConnell Dowell has won these contracts, as the principal reason for EFIC's involvement in the financing is to encourage the use of Australian companies like McConnell Dowell in the project. We expect to see more contracts awarded to Australian companies in coming months, as the project gathers momentum."

McConnell Dowell's bonding line with EFIC was established in 2006 and has supported several major construction contracts in Asia undertaken by the company.

"The scope, complexity and location of our projects means bonds aren't always available in the commercial market. Our ability to utilise EFIC's bonding line has streamlined our process for securing international projects and freed up our finance and bonding facilities for local projects," said CEO of McConnell Dowell, David Robinson.

Telikom Launches new product

2010-01-30T10:09:00.000+10:00

TELIKOM PNG on Friday launched its Fixed Xcess Wireless CDMA Service.

The third generation technology used involves refinement of simple value added features to the Xcess phone currently on the market.

It also features a dual handheld wireless Xcess Mobile phone with a 3 toea per minute SMS service. The handheld wireless version can receive and send emails.

Telikom CEO, Peter Loko said solar power options are being looked into as the biggest challenge to the wireless system is charging of the phones in rural areas.

He added that other simple features such as FM Radio receivers for the convenience of rural users will be incorporated into future Xcess phone designs.

Another added feature would be access to information posted by subscribers.
Mr. Loko said the wireless internet and phone service, currently accessible in major centres like Port Moresby, Lae, Mt. Hagen, Madang, Buka, Kimbe and Alotau will be extended in the next three weeks to cover Manus, Kerema, Kavieng and Arawa.

He said the equipment for the additional sites is ready and there will in total be sixteen operational sites throughout the country by the end of March or early April.

Briggs: Harmony drill outcomes thrilling

2010-01-30T09:59:00.000+10:00

By TERENI KENS

HARMONY GOLD says its current drill results at Wafi-Golpu project in Bulolo, Morobe province proves there are more gold and copper resources than the main Golpu area.
According to miningweekly.com the company reported that recent drilling conducted at the Golpu West prospect had indicated that intercepts at that deposit were significantly higher.

Golpu West is located off the western margin of the Golpu orebody and entirely outside of the existing resource limits. Drilling to date has defined approximately 160 metres of strike and the high-grade mineralisation remains open in all directions.

Harmony which is the world's fifth largest gold producer stated in a company announcement the drilling has recently uncovered over 100 million tons of combined gold and copper resources at 0.6 g/t gold and 1,1 percent copper for 2.93-million ounces of gold and 1.76-million tons of copper.

As part of its exploration program in the country the company confirmed that Golpu West drill results outline potential for a step-change impact on the minable resource base. This would provide a key driver to fundamentally alter the economics of the project.

"We are thrilled with the outcome of the drilling results at Golpu West. The results are very encouraging and highlight the fact that the Golpu system is poorly constrained at depth. Excellent potential exists for additional mineralised intrusions and/or structural repetitions around the margins," said Harmony CEO Graham Briggs.

Drilling to scope out the geometry and full extent of the new mineralised zone is continuing, with three exploration drill rigs. Two additional deep capacity rigs will arrive in mid-February to accelerate the work programme.

The South African based mining giant (Harmony) which has 50/50 Joint Venture with Australia's Newcrest Mining Limited expects that this drilling would significantly expand the current Golpu resource.

It said in a statement the 2007 Golpu prefeasibility study contemplated a block cave operation that would mine 100-million tons of ore and produce 1,7-million ounces gold and one-million tons of copper, over a ten-year life-of-mine.

Harmony noted that it was considered that a resource upgrade or significant change in upfront capital would be the most likely means to increasing the margin and lowering the risk profile for a favourable development decision.

The current schedule for the completion of the new resource model and progressing of the concept study is June.

Meanwhile, Trading Markets.com reports Harmony has been restructuring its operations to focus on lower-cost production, closing mature shafts at mines in South Africa.

It said it expects commercial levels of production at the Hidden Valley open-pit gold and silver mine in Papua New Guinea, being developed jointly with Australia's Newcrest Mining Ltd. (NCM.AU), during the March quarter of 2010.

Harmony's second-quarter results are scheduled to be released Feb. 8.

Polye backs Kramer-Ausenco merger

2010-01-30T09:54:00.001+10:00

By TERENI KENS

THE recent merger between PNG's Kramer Group and Australia's Ausenco has gain support of the country's minister for works, transport and Civil Aviation, Don Polye.

In the merger Ausenco Limited (ASX: AAX) ("Ausenco") has acquired a 50 percent equity interest in Kramer Group ("Kramer"), a leading PNG-based engineering company, providing a strategic local presence and access to the region's growing energy and resources market.

Mr Polye in a brief media release said the Kramer-Ausenco merger which occurred in early August 2009 is good for the country.

"It is pleasing to learn of the merger... I support this initiative as it will benefit the country in the long run in terms of lifting the profile of the country in the area of engineering.

"Both companies must be commended for taking a bold step forward in their respective endeavours to enhance their business operations within the region and at the global level."

Minister Polye encouraged other local companies to follow this as an example to support the government in its effort to boost the capacity of nationally owned companies to take on larger, more capital intensive projects within and outside of the country.

"Whilst similar mergers between foreign and PNG owned companies are encouraged it is important to emphasize the need to ensure that in all such arrangements equal or majority ownership must always be maintained locally so that a controlling authority is retained."

Ausenco Chief Executive Officer Zimi Meka said "the acquisition solidifies Ausenco's presence in an area of strategic importance to the oil and gas and resources sectors and enhances the solutions that Ausenco and Kramer offers to key clients in the region".

Through the acquisition, Kramer Group will be renamed KramerAusenco and will be managed by the existing Kramer Group team.

"KramerAusenco will provide a strong local presence and extensive infrastructure expertise in the South Pacific region, where investment in natural gas, gold and base metals is expected to grow significantly in the near future," Mr Meka said.

"Kramer's local experience, combined with our global expertise and strong balance sheet support, positions us well to deliver the significant projects planned for this region.

"Kramer Group already has a familiarisation with some of these projects, having provided early works services to support the multi-billion dollar PNG LNG project.

Kramer Group founder and Chief Executive Frank Kramer said he was very pleased to partner with Ausenco for what he saw as the next exciting phase of Kramer's growth.

"Together with Ausenco we are now able to offer an expanded range of services to our clients and we look forward to growing the business in PNG and the Southern Pacific Islands," he said.

Ausenco recently completed a well supported capital raising to, among other things, enable strategic acquisitions that assist in solidifying the diversified delivery of services in growth market sectors.

Mr Meka said he believed there were signs of improvement in the current market, but Ausenco's activities and financial results last year had been affected by delays in the timing of projects commencing.

"We've tendered for significant amounts of work with positive signs in recent months of improvements in most client sectors reinforced by the announcement of some recent project wins. The level of enquiries in all business lines has increased and we are looking positively to 2010. However, we have been faced with delays of several months beyond normal tendering processes before clients have made decisions about projects," he said.

"Solidifying our presence in key growth markets and sectors, like PNG infrastructure, oil and gas and resources, through equity interests in KramerAusenco will position us strongly for growth."

With annual 2008 revenues of $7 million (K22 million), Kramer Group has been operating for over 30 years and is the largest engineering and project management company in the South Pacific region. Kramer has approximately 100 employees based in Papua New Guinea, Australia, Solomon Islands, Vanuatu, Fiji, Samoa and Tonga.

Ausenco will have representation on the KramerAusenco Board, while KramerAusenco will have access to the full suite of Ausenco services and capital management. KramerAusenco's results will form part of Ausenco's process infrastructure business line.

Resource boost at Fried project

2010-01-30T09:53:00.000+10:00

By TERENI KENS

MINING group Xstrata and major developer of the Frieda River copper and gold project in Sandaun province could see an estimated increase of 26 percent in resource tonnage.

The Brisbane based company revealed this in a recent announcement to the Australian Securities Exchange (ASX) and the Port Moresby Stock Exchange (PoMSox) through Highlands Pacific – partner in the Frieda River project.

Xstrata as a major global diversified mining group is also listed on the London and Swiss stock exchanges
The company official Peter Forrestal said the latest results confirmed Frieda River as potentially a very significant copper-gold producer in the Asia-Pacific region.

"The resource estimate includes significantly increased inventory and improved confidence levels, including a 26 percent increase in resource tonnage," said Forrestal, executive general manager for project evaluation at Xstrata's copper unit.

The new estimate released recently shows over 1 billion tonnes at 0.53 percent copper and 0.29 grammes per tonne of gold.

Xstrata, the world's fourth biggest copper producer, said a pre-feasibility study for the deposit is due to be completed in the third quarter of this year.

“Our current focus is to conduct various technical studies to support a pre-feasibility study which is scheduled for completion in the third quarter of 2010. Stakeholder engagement and environmental studies are also under way.

“We are committed to moving forward with the Frieda River project in genuine partnership with our joint venture partners Highlands Pacific Limited and OMRD, the project’s host communities and district, provincial and national governments,” said Mr Forrestal.

Anglo-Swiss Xstrata owns 76.3 percent of the Frieda River project, with stakes of 16.95 percent held by Highlands Frieda Ltd and 6.75 percent by OMRD Frieda Co Ltd.

LGL joins ranks of 1 million ounce producers

2010-01-23T06:35:00.001+10:00

PRESS RELEASE

GLOBAL gold company Lihir Gold Limited (LGL) delivered its fourth successive year of record gold production in 2009, with output exceeding one million ounces for the first time in the company’s history.

Production for the year totaled 1.12 million ounces, up 27 percent on the prior 12 months and in line with market guidance. Output rose to 278,000 ounces in the final quarter, an increase of 19 percent over the preceding three month period.

The LGL group maintained its track record as one of the world’s low cost producers with total cash costs for the year of US$397 (K1,052.40) per ounce. Fourth quarter total cash costs were $454 (K1,203.40) per ounce, down from $487 (K1,290.92) per ounce in the September quarter.

In 2010, output from LGL’s three producing operations is expected to be in the range of 960,000 to 1.06 million ounces. Group production is forecast to rise to 1.3 million ounces in 2012 as expansion projects lift output at Lihir Island and Bonikro.

Chief Executive Officer Phil Baker said the full year production result had advanced LGL decisively into the elite ranks of gold miners producing more than one million ounces of gold per year.

“Operationally the company performed very strongly in 2009, enabling us to meet market guidance for both gold production and unit cash costs,” Mr Baker said. “Going forward we aim to achieve consistent and reliable performance at all our operations, delivering on our guidance and keeping expansion projects on track.”

LGL’s production growth in 2009 was due to a combination of record output at the cornerstone Lihir Island operation, together with a full 12-month production contribution from the Bonikro and Mt Rawdon mines acquired in mid-2008.

Full year production at Lihir Island totaled a record 853,000 ounces in 2009, up from 771,000 ounces in 2008 and well in excess of the 770,000 – 840,000 ounces forecast for the year. The Million Ounce Plant Upgrade progressed into construction in 2009, with the project on track to lift gold production at Lihir to an average of one million ounces from 2012.

“The strong result from Lihir Island confirms the enhanced reliability of the operation following the various improvements we’ve implemented over recent years,” Mr Baker said.

In Côte d’Ivoire, the Bonikro mine produced 150,000 ounces in its first full year of production, within the guidance range of 130,000 to160,000 ounces. Strong progress was made in the feasibility study examining the potential to develop new deposits at Hiré, approximately 10 kilometres from Bonikro, and regional exploration activities continued to generate encouraging results.

At Mt Rawdon, in Queensland, gold production reached 108,000 ounces, above the 90,000-100,000 ounces forecast for the year.

In 2010 LGL has forecast production at Lihir Island of between 770,000 – 840,000 ounces, approximately 110,000 – 130,000 ounces from Bonikro and 80,000 – 90,000 ounces from Mt Rawdon. Total cash costs are forecast to be below US$450 (K1,192.84) per ounce.

The company will release its 2009 full year financial results on 18 February 2010.

Oil, metals down

2010-01-23T06:30:00.000+10:00

WEAK energy demand continues to weigh down oil prices with the US Energy Information Administration reporting a 1.8 percent drop in refinery activity to its lowest level in at least 20 years, barring occasional periods of hurricane-related refinery outages reports PNG Industry news.

Options Express senior commodities analyst Mike Zarembski told Dow Jones Newswires refineries did not want to produce when demand was lacklustre and the money was not there.

The refinery rate overshadowed a 400,000 barrel dip in US crude inventories and a 3.3 million barrel drop in distillate stocks, including heating oil and diesel.

Oil was also affected by US President Barack Obama's proposal to limit the size of financial institutions and prevent commercial banks from engaging in certain investment activities, including owning hedge funds and proprietary trading.

Singapore's Tapis crude closed down from $US79.58 (K210.95) per barrel on Wednesday to $79.06 (K209.60)/bbl on Thursday.

Meanwhile, copper dropped off overnight to its lowest level this year.
The red metal was trading at $7250.75 (K19,220) per tonne on the London Metal Exchange, its lowest price since December 29.

Earlier this week, traders were expecting copper to bounce back over $7500 (K19,880.70)/t but concerns that China may tighten its monetary policy pushed the metal downwards.

However, Macquarie Bank expects copper imports to China to reach up to 850,000t this quarter, compared with 620,000t in the last quarter of 2009.

It was a similar story for gold this week, with the precious metal trending lower.
Gold opened the week at $1130.50 (K2,997) per ounce on the Comex division of the New York Mercantile Exchange, but closed at $1103 (K2,924)/oz overnight.

Spot gold dipped below $1100 (K2,916)/oz, closing at $1096(K2,905)/oz overnight.
Despite hurting other commodities, Obama's plans are expected to boost the price of gold.

"We believe that gold prices are likely to recover, based on loose US monetary policy, no significant change in gold lease rates, and expectations of still-strong global commodity demand," HSBS analyst James Steel told Dow Jones.

Oil Search spins Gobe drill bit

2010-01-23T06:27:00.000+10:00

OIL Search has begun drilling a well in PPL 219, Southern Highlands province, targeting a seismically defined conventional area analogous to the producing SE Gobe oil field reports PNG industry news.

The company began drilling the Wasuma-1 well on January 18 and was yesterday drilling ahead at a depth of 920m.

Wasuma-1 is an oil prospect about 7 kilometres northeast of the SE Gobe oil field. The well is targeting both the Iagifu and Toro sandstones with mean potential recoverable reserves estimated at 25 million barrels.

The well is expected to take 40-45 days to drill to a depth of 2400m and may be deepened to test another target subject to the results.

Oil Search holds a 71.25 percent interest in Wasuma-1 while Nippon Oil Exploration Company has 28.75 percent.

Simberi finds more gold

2010-01-23T06:19:00.000+10:00

... Over 200,000oz expected in 2012

By Freelance reporter - YEHIURA HRIEHWAZI

SIMBERI gold mine on Tabar Islands, New Ireland, has discovered new high grade gold at its Pigiput deposits that are expected to pump up production to 200,000 ounces (oz) a year in 2012.

At current gold prices, this junior miner is expected to rake in over $US200 million (K540m) annually. The good news is also expected to shoot up the company's share prices and its total capitalization. The mine is 100 percent owned by Allied Gold of Australia and listed on the Australian, Toronto and London stock exchanges.

The mine which recently made news headlines for the wrong reasons - government-ordered shutdown over health and safety issues - had resumed production two weeks ago. Its current production is 75,000oz - 80,000oz a year.

Information released to the stock markets on Friday said Simberi gold mine is on track to deliver in excess of 200,000 oz a year after reading high grade samples from diamond drill cores at its Pigiput deposit which is part of its ongoing 17,000m drilling program that is nearing completion.

A resource/reserve upgrade will follow, underpinning a minimum 100,000oz per annum sulphide expansion pre-feasibility study which is due in coming months.

Allied Gold executive chairman Mark Caruso said on Friday that the results were an integral part of the Oxide and Sulphide studies aimed at lifting gold production from the current 75,000-80,000oz per annum to in excess of 200,000oz per annum in 2012 from both Simberi's oxide and sulphide ore open-pit sources.

He said: "Today's drilling results, particularly the recent result from SD068 which include a down hole intercept of 314m from 2.82g/t gold from 70m, continue to highlight the grade and depth potential of the Simberi mine and its associated satellite deposits of Pigiput and Pigibo."
The Pigiput prospect lies in the central part of Allied's 100 percent owned mining lease ML136.

Allied said that as its Phase II resource drill-out programme nears completion, the latest results supported the study, which foresees production at Pigiput kicking off at 100,000oz per year. The studies target increasing total oxide and sulphide production to in excess of 200,000oz per year by 2012.

The Phase II program will be completed by the end January 2010 and Phase III will continue through the March 2010 quarter.

The latest drilling and assay results from 11 diamond core holes have further defined the extent of gold mineralisation, which still open to the north east. A further seven holes were completed and two are in progress.

The gold intercepts have expanded the data available for a resource update for the deposit. Both resources and reserves for the Pigiput and adjacent Pigibo deposits are scheduled for re-estimation by the end of the first quarter in 2010. Further drill testing of the extents of gold mineralistion at both prospects, is set to continue in Phase III.

Big jump for InterOil shares

2010-01-23T06:16:00.000+10:00

By freelance reporter YEHIURA HRIEHWAZI

INTEROIL share prices took another big leap up last Thursday on the New York Stock Exchange on announcement that its Antelop-2 appraisal well had encountered oil shows.

A statement on the oil shows was released to the New York Stock Exchange (NYSE) on Wednesday night and to the Port Moresby Stock Exchange at 10am yesterday. Local investors are unmoved by the announcements and the PomSOX prices remain at K90/ share which is equivalent to $US33 - the NYSE price in May 2009.

The shares jumped 12 percent to trade at $US81 (K228) per share on the announcement making it one of the fastest growing stocks on the NYSE. Last year the shares quadrupled from about $30 (K84.5) to over $70 (K197) by the end of the year in reaction to various pronouncements by the company. Among the reports to the NYSE were the first world-record flow of 385 million cubic feet of gas per day at Antelope-1 and the next record breaker of 705mcf/day in Antelope-2.

One of the market analysis companies, Raymond James, which consistently follows InterOil's performance said yesterday: "This morning, InterOil announced the confirmation of oil shows from its Antelope-2 appraisal well. The obvious question is: Does this amount to a commercial oil discovery? Additional testing will be required to determine this, which could take up to a month or even longer."

It said the company had its sights set on drilling laterally into the potential oil leg, a move that should provide a far clearer glimpse at this lower, liquids-rich zone.

" After IOC shares reached an all-time high two weeks ago, a fairly neutral drilling update took some of the wind out of its sails and sent the shares drifting lower - a natural result of some profit-taking in the face of apparently inflated market expectations. Today's news release has once again perked investors' ears, but what has really changed?"

" As it stands, this confirmation of oil shows essentially restates what the market has already known from the days of Antelope-1. While confirmation of oil commerciality would certainly be a "game changer" for the story - in that it would enable much more rapid cash flow generation relative to liquids-stripping, to say nothing of LNG, since the oil could be shipped by barge directly to the company's refinery - we would still caution investors from calling this an oil discovery just yet," it said.

"Let's rewind back to the Antelope-1 sidetrack, in which InterOil encountered a potential oil leg spanning nearly 300 feet in height. Oil was encountered in three separate Antelope-1 drill stem tests (DSTs)."
"That said, the company encountered difficulty when testing this lower section in Antelope-1 given the tight nature, limited porosity, of the rock within that particular interval," it said.

"In other words, the company was unable to obtain a clear picture of the heavy condensate levels (let alone the oil leg) at the base of the reservoir."

But this time round, according to Raymond James, InterOil's drill pit was getting deeper into better porosity levels throughout its drilling at Antelope-2. "Furthermore, the presence of dolomite throughout the entire upper reservoir section bodes well for the porosity levels in the lower, liquids-rich zone. Bottom line, we will have to wait and see, but the signs thus far have been positive," it said.

"We readily acknowledge that the confirmation of a commercial oil leg could lead to meaningful upstream earnings in the relatively near term versus the extensive timeline set forth for the proposed LNG facility - with first production not expected until at least late 2014. On the other hand, there are obvious execution risks in a 'well watching story,' as exhibited by the sell-off over the past two weeks."

" While recognizing the longer-term valuation upside, we believe it remains essential for investors to recognize that the operational and timing risks as the upstream assets and the LNG plant are developed over the next five-plus years have not disappeared. We maintain our Market Perform rating," it said.

Xstrata, Highlands Pacific upgrade Frieda River

2010-01-23T06:05:00.000+10:00

COPPER, gold and silver resources have been upped at the Frieda River project, an Xstrata Copper and Highlands Pacific joint venture in East Sepik province. (Pictured above is the base camp at Frieda River project).

The Horse-Ivaal-Trukai deposit has been increased by 26 percent, with 40 percent of that now being in the measured and indicated category reports PNG Industry news.

The deposit contains 1060 million tonnes of copper at 0.53 percent copper, 0.29 grams per tonne gold, and 0.8gpt silver at a copper cut-off grade of 0.3 percent copper on a 100 percent-ownership basis.
An exploration licence covers the resource - over an area of 150.6 square kilometers.

Measured resources were reported for the first time and are 30Mt at 0.6 percent copper, 0.32gpt gold and 0.7gpt silver.

Xstrata has a 76.3 percent equity stake in the Frieda River venture through a subsidiary, Xstrata Copper Frieda River, while Highlands Pacific's subsidiary Highlands Frieda holds 16.95 percent and OMRD Frieda holds 6.75 percent.

Xstrata Copper general manager project evaluation Peter Forrestal said results confirmed Frieda River had the potential to be a significant copper-gold producer in the Asia-Pacific region.

He said the company was committed to moving the project forward in partnership with its joint venture partners and was focused on conducting technical studies to complete a pre-feasibility study by the end of the third quarter, 2010.

Highlands Pacific managing director John Gooding said Frieda had the district and depth potential for many decades of production.

"The Frieda copper-gold project is shaping up as a one of the largest open pit Greenfield copper projects in the world," he said.

The deposit's indicated resources sit at 390Mt containing 0.57 percent copper, 0.33gpt gold, and 0.8gpt silver.

Inferred resources are 640Mt at 0.51 copper, 0.26gpt gold, and 0.8gpt silver.
Highlands Pacific was up 1c to at 37c by early afternoon.

Santos PNG gas investment to boost earnings

2010-01-23T05:55:00.000+10:00

Santos expects to earn more from its PNG gas venture

By YEHIURA HRIEHWAZI

AUSTRALIA's oil and Gas Company and third major partner in the ExxonMobil led PNG LNG project Santos Ltd said recently its PNG investment in gas commercialization will transform its earnings come 2014.

Despite reporting an increase in production for the fourth quarter of 2009 compared to the previous year, its overall revenue dropped by 21 percent, hurt by lower oil prices.

In its report to the stock markets the chief executive officer Mr Dick Knox said it was pinning its hopes on PNG lift the company's earnings when production starts.

"The approval of PNG LNG in the quarter was a significant step forward in the company's growth strategy. PNG LNG alone will transform Santos' earnings quality when it comes on line in 2014," said Mr Knox

The company's production for the fourth quarter was 13.9 mmboe or million barrels of oil equivalent, up 2 percent from the prior-year period and flat with the preceding third quarter. Revenue for the quarter was A$600 million (K1.6 billion), down 7 percent from the year-ago period and up 8 percent from the previous quarter.

Santos' average realized price during the fourth quarter was A$85.37 (K226.44) per barrel, down 5 percent from the same period last year. The company noted that gas production from the Oyong Phase 2 project in Indonesia commenced during the fourth quarter.

Total capital expenditure for the quarter was A$413m (K1.09b), down from A$528.6m (K1.4b) a year ago.

The company said that its production for 2009 was flat with the prior year at 54.4 mmobe, and within the company's guidance range of 53 mmboe-56 mmboe. However, revenue of A$2.18 billion (K5.78b) was 21 percent lower than last year, primarily due to lower international oil prices.

Santos said that its production cost guidance for 2009 was reduced due to cost efficiencies realized in the fourth quarter combined with favorable foreign exchange impacts on US$ denominated production costs. Royalty related taxation expense guidance was reduced, primarily due to actual realized oil prices during the fourth quarter being lower than assumed in previous guidance.

PIFS trade advisor position queried

2010-01-23T05:51:00.000+10:00

QUESTIONS have now been raised about the conduct of the Pacific Islands Forum Secretariat (PIFS) in implementing decisions made by Forum ministerial meetings.

As PACNEWS reports one of those decisions was the endorsement by Forum Trade Ministers of the appointment of a new Chief Trade Advisor (CTA) to assist Forum Island Countries in the negotiations of PACER Plus with Australia and New Zealand.

In October 2009, the Secretary General of the Pacific Islands Forum Secretariat, Tuiloma Neroni Slade assured regional trade ministers that his office would expedite the appointment of New Zealand academic and trade expert, Dr Chris Noonan as CTA. He was to join a special unit within the Secretariat initially before taking up his appointment in Vanuatu.

Three months later, Dr Noonan's appointment is still not formalised.
He told PACNEWS from his Auckland office that "arrangements proposed by PIFS for OCTA and his employment as CTA are not satisfactory for me personally and for Forum Island Countries."

"I believe if I accepted the proposed changes, it would not make the office of OCTA independent as mandated by Forum Trade Ministers in October last year.

Dr Noonan said while negotiations on his contract are still continuing, he's concerned with the proposed time frame for PACER Plus negotiations to begin in February.

"Judging by the contract they are offering me, my role and the Office of the Chief Trade Advisor will not be independent. There is no guarantee that the OCTA will be able to provide independent advice nor able to get staff and other resources required in time to perform its functions.

"But the CTA and OCTA will be under the direct control of the Director Economic Governance of the Forum Secretariat.

"If I am appointed, I will need to recruit technical advisors and consult and strategise with FICs on negotiating positions. We will not be able to do that in the short time we have, said Dr Noonan.

Responding to concerns raised by Dr Noonan, former PIFS Director of Economic Governance, Dr Roman Grynberg questioned what he calls 'attempts by the Forum Secretariat to block the development of an independent office of OCTA.'

'How long will it be before the Pacific Island ministers and leaders finally realise that the Forum Secretariat, under the current executive and management team, is not there to serve them but to give them advice that Canberra and Wellington want? Rather than the body that once helped the islands the Secretariat is now simply another instrument of Australian and New Zealand power in the region, Dr Grynberg claims.

He went on to say that 'It is better to have no CTA than a CTA which has no voice and legitimacy and can be dismissed at any time that he upsets the Australian and New Zealand trade negotiations. All this will do is give a fig leaf of legitimacy to the PACER + negotiations rather than give the islands a real voice.'

Dr Grynberg, who was employed by the Forum Secretariat until March last year said the concept of the OCTA was developed during his tenure to help the islands because 'we did not believe that the Secretariat would represent the island's interests and would always bend to Australia and New Zealand's demands.'

"Now rather than have an independent adviser the contract Professor Noonan has been offered says he can be removed in five days and is directly answerable to Dr Bowman a former AusAID trade official, and now

Director of Economic Governance at the Forum, Dr Grynberg said.'
He urged leaders of the Melanesian Spearhead Group (MSG) to 'remove this very important post from the Forum Secretariat and have Dr Noonan transferred to the MSG.'

"I also call on the European Union, which has removed funding for this post at the Forum to provide this to the MSG which is at the moment the only independent voice the islands have, Dr Grynberg said.
Comments have been sought from the Pacific Islands Forum Media officer, Johnson Honimae..PNS

BPNG improves national pay system

2010-01-15T20:35:00.000+10:00

THE Central Bank through its development program is working towards improving the country's national pay system.

The bank's newly appointed governor Loi Bakani revealed this following the recent launch of the National Payments System Development prgramme at a seminar hosted in association with the Institute of National Affairs (INA) on 30 November, 2009.

Finance and Treasury minister, Patrick Pruaitch who gave the keynote address has expressed the Government's support for the reform. The Retired Governor, Sir Wilson L Kamit CBE also presented this Development Programme on the National Payments System at a breakfast organised by the PNG Business Council on 04 December 2009.

According to the bank's press statement the programme will see the introduction of a number of key elements that will significantly improve the safety and efficiency of the payments system in Papua New Guinea.

The first element the bank noted is an Automated Transfer System (ATS) which will provide real time electronic clearing and settlement of all interbank payments.

"The ATS will bring significant benefits to everyone in PNG" said the Governor of the Bank of Papua New Guinea Mr Loi Bakani. "Not only will it work towards the elimination of risk, it will encourage banks and other financial institutions to introduce a range of new and innovative services".

Mr Bakani stated that "With the introduction of direct debits and credits, the system will have the ability for people to make payments to businesses or service providers, irrespective of who they bank with".

The Bank is also introducing a Central Securities Depository that will hold Bank of PNG and Government issued securities such as Central Bank Bills, Treasury bills and Inscribed Stock. This system will make the purchase of securities much more efficient by giving on line access to approved dealers, and encourage a secondary market for trading of these securities.

The Governor also announced that the reform to the payments system includes the establishment of a National Payments Council (NPC), a body representing the wider interests of the financial sector and he noted: "It is essential when introducing such wide ranging reforms that the financial community, and others affected by the changes are fully consulted and involved". The NPC will provide oversight and guidance to the Bank of PNG during the course of implementing the programme.

"We believe that this development programme will see the financial sector and the country as a whole well positioned to take full advantage of the significant economic changes that will occur in Papua New Guinea over the coming years".
The implementation of this reform will commence with the assistance of an experienced international consulting firm. Further consultations with major stakeholder will be undertaken during the implementation phases.

The Governor urged major stakeholders to cooperate with the Bank in implementing this very important reform in Papua New Guinea.

bemobile establishes customer base in Solomon Islands

2010-01-15T20:33:00.000+10:00

NEW mobile service provider bemobile says it plans to attract at least 25,000 customers by the end of this year.

The Papua New Guinea-based company under its recently issued licence is required to start operations in April this year and cover about 80 per cent of the country in its first year.

According to Solomon Star news bemobile's chief executive officer Julien Coustaury and his team arrived this week in Honiara to begin ground work.

The company has engaged sub-contractors that included engineers, civil engineers, human resource personnel, as well as local and foreign technicians.

"We have about 50 people on the ground both expatriates and locals who are teaming up to start the work," he said.

He said recruitments will start soon, with the creation of between 200-300 new jobs.

Mr Coustau ry said in areas where Solomon Islands does not have the skills, overseas experts will be sought.
"But in the coming years, bemobile Solomon Islands will be operated by 95-98 per cent Solomon Islanders," he said.

Mr Coustaury said ground work started in December straight after Prime Minister Dr Derek Sikua issued them their licence.

"This is done without any office," he said.

He said a new office will be established soon but the CEO declined to reveal where they will be operating from.

Mr Coustaury said he already visited parts of Guadalcanal since arriving in the country and if weather permits his team will travel to other nearby islands today to look for and survey potential sites.

He said the company will launch its services by mid this year and rollout to other provinces from there.

He also clarified that they've applied for a business licence under PNG bemobile which is still legal and they hope to get their licence soon.

"All paper works have been done, our delay earlier is due to other missing paper works before the licence was issued," he said.

The new company will be called bemobile Solomon Islands.

The French man yesterday assured Solomon Islanders of the best and quality services that will be affordable.

He said they are excited about the new development and thanked everyone for having trust in them.
"We want to send a message to the Solomon Islands. You can count on us," he said.

BSP opens doors on Saturdays

2010-01-15T20:25:00.000+10:00

By LAPAN LIMS MIRUPASI

BANK South Pacific (BSP) yesterday open its doors giving opportunities to parents nationwide to start applying for school fee loan services for their children's school fee needs.

BSP Branches will be open every Saturday, which commenced yesterday, Saturday 16th January until 27th February 2010.

BSP says it understands the importance of education for your children, so to assist you with School Fee Loan requirements, such as loans and school fee payments; BSP will open every Saturday from 9am to 3pm just to help you.

The bank also noted that for every successful School Fee Loan application, an option will be given to customers to purchase a BSP School Bag and BSP Pencil Case. A complimentary Kilometric Set comprising a ruler, pencil sharpener and eraser will be included.

They have called on parents to call into their nearest BSP branch and see the friendly BSP staff who will help process their School Fee Loan requirements.

Budget accommodates shipping services in New Ireland

2010-01-15T20:23:00.000+10:00

A REGULAR shipping service offering cut price freight reductions by almost half has came into force in the least developed area of southern New Ireland that promises breakthrough in economic development for people of the "last kona."

This has come into action since the announcement of the 2010 Budget by the Governor Sir Julius Chan last December.

Announcing this, the Governor, Sir Julius said the outcome of the successful negotiations between his Government and the Asian Development Bank (ADB), the maiden voyage was launched within one month of the special arrangements with the first ship sailing into Danfu recentlyfor the trial run.

Sir Julius said the ship will complete a route which will take in Rei, Morokon, Bakok, and around the southern tip to Lambom, Kaboman, Watpi and Palabong in the Konoagil area before sailing into Rabaul on what is contracted to become a monthly shipping service.

The Governor said "this is the first time such a service was ever offered the forgotten areas."

"As announced in my Budget Speech we will not only provide a regular shipping service but in addition a subsidized freight arrangement that will give our people in the 'last kona' equivalent access to market facilities."

Sir Julius said those people have missed out on the good things and they never ask which makes this ADB project very significant.

The cost for both freight and passenger fare have been cut by almost half on the current rates which will enable the people to enjoy greater price benefits.

                        Before                  Now
Cocoa    -   K 20 per bag              K10 per bag
Copra    - K 15 per bag            K10 per bag

Cargo    - K65 per cubic             K40 per cubic

Adult fare - K 60                  K 40
Students -    K 45                  K 25
Children -    K 30                  K 15

"This is a great freight and subsidy package, making Konoagil comparable to Namatanai and Kavieng.

Sir Julius said that while the new shipping route opens, road work is continuing on the Weilo to Silur road on the east coast of Namatanai while workmen resumed this week on the west coast construction of the Burukalai - Palabong and Burukalai - Kokola roads after the festive holidays.

The Governor said he hope this project with the Asian Development Bank will be successful and continued.

Stocks soar in 2010

2010-01-15T20:10:00.000+10:00

THE new decade is off to a bullish start with most PNG-focused companies making gains as copper, gold and oil prices remain strong.

The London Metal Exchange official cash price for copper is steady at $US7594 a tonne, while the three-month delivery price shed 1.63 percent yesterday to $7610/t.

LME official cash prices for nickel shed 1 percent to $18,750/t, while the three-month price fell by the same amount to $18,850/t.

Singapore's Tapis crude closed at $US83.64 per barrel overnight, up 1.3 percent for 2010 so far but down slightly from the $84/bbl set midweek as encouraging industrial production figures helped push up the US dollar.

Spot gold is looking strong at $US1131.27 per ounce, falling a mere 0.67 percent in the last 24 hours.

Proving that the first week of the year in trading is often positive, stocks around the world have staged rallies, with PNG explorers and producers being no exception.

InterOil has grabbed more attention, with some reports suggesting it has struck a stripping plant deal with Mitsui though the company has not made any announcements.

Last month's world record gas flow at Antelope-2 of 705 million cubic feet of gas per day is impressive, and it also yielded 11,200 barrels of condensate per day.

Mitsui attended the gas flow and InterOil looks set to gain quick cash flow from the condensate, and even more if Antelope-2 uncovers an oil leg in the coming weeks.

The NYSE-listed company also landed a long-awaited project agreement with the PNG government before Christmas.

Shares in InterOil are up 7 percent for the week while the world waits for more news from Antelope-2.

Vangold Resources shares are up almost 90 percent following a stock split and further progress on its planned spin-off into separate Vanoil and Vangold listings, as well as its acquisitions in PNG.

Developments with PNG LNG have Oil Search shares safely over the $6 mark, while an Abu Dhabi sovereign fund waits for the price to reach $8.55 as part of a 2008 financing deal with the PNG government.

Highlands Pacific was a standout on both the Australian Securities Exchange and the Port Moresby Stock Exchange in the last week, and was undoubtedly one of the better performing stocks of 2009. Closing at 8.3c a year ago, it is now at 38.5c.

PX selects firm to provide expertise

2010-01-15T19:59:00.000+10:00

THE national flag career, Air Nuigini has selected Dubai-based Mercator to provide its loyalty and customer relationship management solution, CRIS (Customer Relationship Information System) to create and manage its frequent flyer programme.

'Destinations' is Papua New Guinea's first ever frequent flyer programme and offers Air Nuigini passengers the opportunity to earn a point for every kina spent on travel with the carrier.

Air Nuigini, which operates scheduled passenger and cargo services to more than 28 domestic and international destinations across Asia, Oceania and Australia, selected Mercator's CRIS programme after an extensive and detailed evaluation. Their choice was based on the product's state-of-the-art functionality, technical capability and Mercator's renowned round the clock support.

Wasantha Kumarasiri, CEO of Air Niugini, said, "We recognise the value of having our own loyalty programme to reward our customers. Our market, valuable passengers and staff are excited with this new initiative and keen to make it a success. Our valuable customers will now see that their loyalty is rewarded. We selected Mercator because of their superior capabilities and proven results. I am confident this partnership will grow in the years to come."

CRIS, created and developed by Mercator's specialist team in Dubai, has been designed to effectively manage both a customer relationship and a frequent flier programme within one single integrated system. The loyalty solution is versatile and flexible and can also be used for non aviation businesses. Recently the solution was implemented for their Dubai-based customer Etisalat, the UAE's largest telecommunications provider.

Duncan Alexander, Vice President, Sales and Market Development, Mercator, said, "This partnership is very significant for us. We now have customers for CRIS worldwide - in Africa, the Americas, Europe, the Middle East and Asia Pacific, managing millions of frequent flier accounts allowing our airline customers to add value to both customer service and help in bringing about commercial success."