THE SOUTHERN summer is the time of year when people cast an eye over their finances and make plans for the future, with resolutions to be more frugal, and to spend more wisely, high on the agenda.
With the recent falls in commodities prices, resources companies around the world are doing the same thing – especially in Papua New Guinea.
As Ross Verne reports in this quarter’s edition, gold prices have fallen significantly, while the Brent crude oil price was at US$64.85 a barrel at the time PNG Resources went to press – well down on previous prices.
Companies are finding at present that they must find new ways to operate at lower prices – while costs increase – leading to companies laying off staff while joint venture projects drop off.
Nonetheless, it appears there are more concerns with what the lower prices will mean for companies’ ability to raise capital than for their future ability to operate their projects.
Amidst all this stands a government looking to pursue a reform agenda and boost services across the nation, banking on economic growth of 15 per cent on the back of the first full year of LNG production.
Changes to the budget will see funds that were dedicated to Papua New Guinea’s Sovereign Wealth Fund allocated to separate ventures – leaving former PNG Treasury advisor Paul Flanagan concerned about what future role the Fund will pay.
At the same time, a review of Papua New Guinea’s petroleum licencing laws has found that few licence holders are complying with regulations – with delays in delivering on work programs meaning that fields were not developed in line with government expectations.
Mining Minister Byron Chan told the 13th PNG Mining and Petroleum Investment Conference in Sydney that improvements to the nation’s Petroleum Licencing System would be his “key focus” for 2015.
This will include an increase to all compulsory prescribed fees and penalty rates.
A total of K15.6 million is currently owed to Papua New Guinea in outstanding fees and penalties, Mr Chan said.
Enforcing penalties to see projects developed, rather than held in limbo indefinitely, is a change well overdue.
However, it is likely to come at a very bad time for at least some in the sector.
PNG Resources is proud to introduce two new members to its editorial team, following the departure of Lauren Barrett.
Ross Verne, formerly with Fairfax, has been responsible for the lion’s share of reporting in this edition. He is joined by a more recent appointment in Sarah Byrne, formerly of Aspermont.
Both journalists boast quality experience and have provided a series of innovative stories for this edition. I, along with other members of our editorial team, hope you find it illuminating.