The year 2008 saw a lot of activities in the Petroleum Industry fueled by the need to have alternative energy sources as a result of the beginning of the down turn in the World Economy, particularly falling oil price. During the same year the concern for the green house gas effect had generated significant interest for the need to have cleaner burner fuels around the world. The PNG First LNG Project operated by Exxon Mobil and another project by InterOil are regionally well placed to enter the world's most advanced LNG market (SEAsia). Once these projects are approved and developed they will significantly change the economy of the country to a scale never experienced before and set the stage for the beginning of industrialization and improve the living standard of the people. While much effort is put into long term energy sales and meeting demands of the LNG market, PNG's first LNG shipment will not happen until the year 2014.

Before this time the economic survival and management of MRDC's Petroleum Subsidiary Companies is important at the time when the only major income source in oil price is experiencing a free fall with no clear sign of a slow down. With that in mind and the need for the long term sustainability of the company's revenue source, the MRDC Management has taken an active role in identifying investment projects, properties and share markets to add to its growing list of business portfolios. This effort is pretty much supported by the Board of Directors of not only Petroleum Subsidiary Companies but also Mineral Resources Companies that see Porgera and Ok Tedi reaching their economic limit and the fall in all metal prices. While prices of other metals fall, the gold price has either stabilized or has the tendency to increase and this is good news for MRDC since its share of oil production is declining fast.


Figure 1: Location Map of Oil and Gas fields

The year 2009 saw a few of the events seen in 2008 change dramatically for instance the free fall of the oil price has now stabilized and is starting to increase at US$80/bbl. Some experts predict that the oil price would continue to rise for sometime. The other significant event, which occurred was the financial approval of the PNG LNG Project to go ahead which is by far the single largest investment decision made in the history of the country. MRDC has positioned itself to reap the benefits from the LNG Project from 2014, the Ramu Nickel Mine as early as 2011, the extended project life in Ok Tedi and Porgera Gold Mines and the existing oil projects. The revenue from these capital projects can support other income earning sources that give the company the opportunity to grow and sustain its operations.

No new oil fields have been discovered after Kutubu, Gobe, Moran, South East Mananda and North West Moran. In industry terms, having no new oil discovery would mean the oil industry is slowly dying in PNG. The chances of finding gas in the PNG foreland and the Papuan fold belt is about 70% compared to oil so the country is generally gas prone. However, the advent of the LNG project has caught the attention of the world exploration companies that see there is a lot more hydrocarbon potential in the country than was originally thought. To support this vision there are 4 other major geological basins under explored and few wells drilled both onshore and offshore. The Papuan fold belt and the foreland basins have proven to be hydrocarbon basin with the discovery of gas and oil fields. Of the two hydrocarbon basins, the Papuan foreland is producing oil and gas. MRDC on behalf of landowner companies have equity interest in all the oil projects but not in the Hides gas to electricity projects due to the fact that the scale of operation is small and therefore it’s a marginal project that does not generate meaningful revenue. The Hides GTE project will not be affected by the LNG project.

MRDC’s Petroleum Resources Companies and their participating interest in the various oil projects:


Figure 2: Oil Equity interest for landowner companies