Home > Corruption, LNG, Papua New Guinea > Peter O’Steal Strikes Again! – allegations USD$1.2 billion loan is corrupt

Peter O’Steal Strikes Again! – allegations USD$1.2 billion loan is corrupt

Dr Patrick Onguglo

The Prime Minister Peter O’Neill (‘aka O’Steal) has personally and unilaterally directed that the State of PNG borrow US$1.2 Billion Dollars through international financiers syndicated by the Swiss UBS Bank, to buy 10% of Oil Search Limited (OSL) shares. It is believed this transaction is motivated by personal gain. Therefore, this loan is believed to be for a corrupt outcome. This corruption is perpetrated by UBS and other international banks lending the money.

PNG does not need the loan. It is Peter O’Neill who needs the loan for his own corrupt gain. He is using the country’s assets to obtain a personal benefit. This must be made very clear to the international lenders. On this basis no future PNG Government will be liable to repay the funds, lent for an illegal purpose.

As of this article the international lenders will be deemed to be aware of the allegations I make here.( I invite the Prime Minister to contradict me if he can).

This is not an ordinary share purchase (investment) made by the Prime Minister on behalf of the people of PNG. What I am about to reveal is only known to a few key people in government circles.

In 2013 Total, the French Petroleum conglomerate entered into a deal with InterOil Limited wherein it purchased 60% stock in InterOil with the intention to develop the Gulf/Elk-Antelope LNG Project. Total bench marked the price of the InterOil shares against the known oil and gas reserves of InterOil’s Gulf/Elk LNG reserves, and international price indicators.

InterOil was started by two men in this country, Phil Mulacek and Gayland Baker in early 1990s. These two men, one a Texan and the other from California walked into Port Moresby government offices with empty brief cases promising to build an Oil Refinery in PNG out of one abandoned by Chevron in Alaska. While Curtain Brothers offered the Motukea refinery, these two men with very slick marketing skills, and Gayland Baker’s position as a director of conservative Fuller Christian Seminary, gained the upper hand.

The rest is history, of the way they manipulated government decision making processes, public announcements, to gain every benefit, favour, approval, license and a free lift up in every other step of that company’s development.

InterOil today is testimony to how Phil Mulacek has carefully and deliberately manipulated the goodness of the people of PNG and their government, how he has ruthlessly and unscrupulously exploited the weaknesses of key leaders of PNG, to build a personal fortune worth several hundred Million Dollars for himself and his extended family. Mulacek has been ably assisted by Christian Vincent, the Frenchman, his brother-in-law who acts as Phil’s main go-to man who has also gained in the hundreds of Millions.

In a small town things can get a bit incestuous, as Christian Vincent’s long term girlfriend in PNG happens to be the Fijian-Indian Lady with the short skirt who is the CEO for Peter O’Neill insurance company. Peter O’Neill is no stranger to Vincent and Mulacek having had many private dinners and meetings over the years when Mr O’Neill was a Minister in the Somare Cabinet.

Having sold 60% of InterOil to the French Company for several hundred Million dollars, Mulacek and co have been holding out the balance of the shares of 40% for a price that is almost triple what the French have paid for per share previously. The French having pre-emptive rights could not pay the price that the Mulacek camp has been asking for the balance of the shares. Meanwhile the Gulf-Elk LNG Project is not going anywhere fast.

The Mulacek camp have been trying to play Total against Exxon and Oil Search Ltd, who both also expressed interest in a piece of the action. Mulacek had hoped Total would pay the price to own the whole lot or Exxon would pay a premium to participate. No one took the bait. Over the years people have become tired and weary of Mulacek and his antics, always trying to profiteer and gain unreasonably, when he came to PNG with nothing. The InterOil project could have been fully financial 5 years ago had Mulacek not been greedy and held out.

This game has developed into a stalemate with Total holding majority stock and cant fund the project until it took the rest of the stock. It required a game breaker.

This is where the creative genius of Phil Mulacek came to the fore once again, and perhaps for the last time against the people of PNG. He approached Peter O’Neill through the lady with the short skirt for a private meeting. In that meeting it was laid out to ONeill that someone should assist Oil Search Limited (who has expressed interest ) to buy the balance of the 40% shares in Interoil for the exorbitant price that even Total would not pay. That Oil Search Limited had already been sounded out on this, and provided someone funded OilSearch Limited for the price of the Interoil Shares they would do the deal to further fortify them against any corporate raid. The State of PNG taking the shares would surely be a poison pill for the Dubai based Arabs seeking to do a raid on OilSearch Limited. The aggregate agreed price for 40% InterOil shares and OilSearch 10% shares was in the vicinity of USD1.0 Billion with enough fat to go around.

What was put to O’Neill in that meeting was that if he could get the Government of PNG to borrow USD$1.2 Billion from international commercial lenders, and buy 10% of Oilsearch Limited shares, Oilsearch Limited would use the proceeds definitely to buy the 40% shares from Interoil at its ridiculous asking price, AND THERE WOULD BE A VERY TIDY KICK BACK OF USD$100 MILLION FROM MULACEK & CO TO ONEILL for making this happen.

This was the game breaker. O’Neill became the game breaker. He became Peter O’Steal.

Having shook hands on the deal in last quarter of 2013, Phil Mulacek has been working feverishly with Peter Botten of Oil Search Limited, to get international lenders to lend to the State this huge sum of money, while Peter O’Neill has been carefully moving the right people into right places to take the decisions for him, and to cover his arse in the State agencies. The last act was to move the Minister for Petroleum William Duma aside and put his own man Duban in place to approve the deal. O’Neill knew Duma would see through the deal as unfair, unreasonable and corrupt and not approve it.

Last week Peter O’Neill has had lawyers and Financiers and bankers camping all over town feverishly working to finalize the deal. The only Minister working closely with O’Neill to close the deal is Ben Micah, who will support O’Neill because he needs ONeill to turn a blind eye to his own stealing.

Most of the Members of Parliament in the Government side do not know about this very juicy and lucrative deal that is going down just this week.

In fact most of the Cabinet Ministers do not even know. The Opposition does not have the manpower or the resources to keep up with Peter O’Steall’s very active life of carrying on private business deals while pretending to be Prime Minister of Papua New Guinea. Only a few people close to him only know some of the deals, but not all.

This Prime Minister has made more money using his position as Prime Minister of this country than any other leader in the history of this country, and that folks, is the understatement of the Century. Nothing over K10 Million passes the Tenders Board, for example, without the Prime Minister getting a look in first. His fingers are so sticky that it is now common knowledge among all his Coalition Party colleagues that this man is not good for PNG.

Papua New Guineans need to ask, and ascertain very clearly that:

1. The State does not need the 10% of OilSearch Limited Shares. Oilsearch Limited is a public company. It can bloody well raise its own money and buy the shares. When Peter Botten was first approached to buy the Interoil shares he baulked at the sale price as he knew what Total paid. Interoil was asking far too much. When he was again approached with State Offer, he realized it would be a poison pill to have the State to hold substantial shares in OilSearch, so he happily agreed. Oilsearch quickly overpriced its batch of 10% shares and was also gaining from the sale of the shares to the State. Everybody gains from the State.

2. The Deal and the Loan is not in the best commercial or financial interests of PNG and its economy. The Country has already pledged its assets, including the previous Oilsearch Shares (18%), to the Dubai based financiers of our LNG interests. Why borrow more to get into debt with Swiss Banks this time and park the interest encumbered (shares) in the same commercial entity (Oilsearch) that the Dubai lenders already have priority in call over? Putting all our LNG eggs (revenue stream) in one basket is not a wise move.

3. Why didn’t Peter O’Neill opt to use the money to allow the State to exercise its option to acquire 22.5% of the Gulf Elk LNG Project?

4. Why is Peter O’Neill helping to protect OilSearch which is a public company- unless there is a catch?

5. Has Peter O’Neill relied on a fair and commercial valuation of the shares of Oil Search Limited to justify the price, despite the prevailing share price? Where is the professional valuation?

6. Why is Peter O’Neill borrowing USD1.2 Billion to fund shares when the money can be best spent on health and education and infrastructure?

7. How can the PNG economy which is already burdened by debt and currently underpinned by 2 consecutive years of massive budget deficits afford to shoulder this huge debt burden? Why has Peter O’Neill further mortgaged our future?

8. Why has Peter O’Neill further exposed the PNG economy to the LNG Project. All the hopes of the politicians are on the LNG Project. This is a huge and monumental gamble; particularly because the State has failed to honour its agreements with the Landowners, and the State ( Arthur Somare) has failed to explain what happened to the 3% of the State’s 22.5% in the PNG LNG Project. What happened to the 3%? Mr ONeill was Finance Minister. He knows what happened to the 3% in the Dubai deal. Perhaps he can explain? The Landowners will not allow leaders to trick and mislead them anymore. They are wiser by the day.

9. Why didn’t Peter O’Neill allow the USD1.2 Billion to be borrowed by Kumul Holdings or National Petroleum Company or even the IPBC, for it to buy outright the shares of Interoil? Why gift Oil Search Limited this money at the expense of the people of PNG? Why does OilSearch have to own the InterOil Shares (thereby the Gulf-ELK LNG Project) when the State could easily acquire it and own it- and not for that price!

10. What is the underlying rationale and underlying value in the exorbitant price (of the loan) of the InterOil Shares? Who has done independent industry benchmarked valuations based on which Peter O’Neill has agreed with Mulacek to do this deal?

11. What is the nature of the Mulacek-O’Neill kickback and how was it designed to be delivered?

12. Is it true this major investment decision worth approximately K4 Billion was made by one man, Peter O’Neill, without Cabinet or Parliamentary approval or debate? If so then it is clearly an abuse of the office of the PM, and he should be referred to the Ombudsman for investigation.

There are many things absolutely and seriously wrong with this investment decision. The Prime Minister has no power to unilaterally commit this country like he has done with Manus Asylum seekers etc. It has become abuse of power. He has become dictatorial.

O’Neill is currently getting government agencies and Departments to approve this transaction for which even the Finance & Treasury officials and the Bank of PNG have not done any formal prior appraisal of this loan. He is trying to rail road the proper government agencies to approve this transaction, when they haven’t even done any proper evaluation of this loan against the country’s other commitments and debt levels.

I call on Ministers of Cabinet, Government Coalition Partners and Leaders to demand full briefing on this transaction, and all documentation on this transaction be tabled in Cabinet and Parliament for public scrutiny. I call on the Cabinet Ministers and coalition partners to block this stupid loan.

I call on Senior Ministers to feel sorry for this country and its people, to take their oaths to serve the people seriously. I call on responsible Ministers to stand firm and not endorse this deal even it means their sacking. It is time for principled leaders to stand up to this PM and his greed.

Already the PM has set it all up so that he does not sign any documents himself. He is using quiet pressure through other people including, once again Ministers Marabe, Polye, Micah and Duban to sign and endorse this deal that Parliament and Cabinet did not approve. Even if Cabinet approved it, it seems they would have been mis-informed. When the shit hits the fan, the PM will naturally go after these Ministers and once again, blame them, as he did with the Paraka deal.

This is a stupid deal, designed to benefit a few greedy and selfish people. IT MUST BE STOPPED!
The Prime Minister needs to declare his interest in this matter publicly and resign. He has taken far too much from this country and the small people. He has to learn that enough is enough!

  1. kanex Kanarepa
    March 10, 2014 at 10:37 am

    You got it right there, please dig up more and hope that leaders should always act responsibly for the goodness of the 7.5 million people. No one is above the law an PM is no acception for investigation and prosecution.

  2. Kiagi Nema
    March 10, 2014 at 4:07 pm

    This is depressing news and what percentage of PNG population are aware of all the corruption that’s going on, because only a few have access to internet, newspapers and radio. Why cant we propagate this corruption news on the Papers as well as airwaves and see what the consequences is going to be like because one person cannot decide for this country.

  3. March 10, 2014 at 4:42 pm

    nice name for our prime minister. sorrily here people forget to fast (NPF saga)

  4. Robert Sam
    March 10, 2014 at 5:01 pm

    May the perpetrators of this crime be cursed. May there children and their grandchildren be cursed.

  5. CKoa
    March 11, 2014 at 11:41 am

    Thanks Dr. Onguglo, I read this article yesterday afternoon. It definately made sense after watching the 6 o’clock EMTV news – Polye sached, PM assumes role of Treasurer. The negotiation with with InterOil, UBS, Mulacheck and Oil Search on the Gulf Elk/Antelope gas/oil. PM has just scored his cut. With the removal of Polye PM has removed the blokage and by assuming the role of treasurer he will push the negotiations thru.

    No!!.. No!!. Not again.

  6. Douglas c blackley
    March 11, 2014 at 2:02 pm

    This makes me so sad,and angry ,to read this article , ,the people of PNG need ,hospitals,schools,better roads,the list goes on.Elected politicians around the world seem to think its their god given right to fill their cup till it flows over and to keep it flowing ,at the expense of the people. WHY ? Such a beautiful country ,beautiful people.So sad.

  7. fox
    March 11, 2014 at 3:01 pm

    there is a big difference between corruption by the previous government and corruption by the current government. corruption in the previous government can be easily identified because most of it where crimes that can be seen clearly as, against the policies and constitution of this country.

    with the Oniel’s government, the policies and the laws are designed in a manner which, corruption initiated by the current government can be covered/ seen through the existing laws as, un corrupt practice.

    For example, the establishment of the Task Force Sweep Team. this group was created by Oniel to eliminated those the he figured would be a possible threat to his reign. they conduct investigations, however only to those who Oniel feels that they will become a threat to him.

    In WWII, Adolf Hitler created the secret police, a group which goes around eliminate those that against him and his rule. the Task Force Sweep Team is a similar organization enected by Oniel to eliminate his possible threats.

    I am saying this because, corruption is rampant in PNG, but this has specific individuals that they investigate and this individual a possible threats that are handpicked by Oniel himself.

  8. anti corruption
    March 11, 2014 at 3:23 pm

    I hope that the proceeds of crime will cause more headache and heartache than happiness to those thieving individuals and their associates.. the cries of the simple innocent rural people are going all the way up to the heavens and he is listening. One more life lost because funds are not available to deliver the much needed medications is a crime in its barest form.

  9. Kadai Manio
    March 11, 2014 at 3:49 pm


    At last……..that was what i suspected would happen…………POLYE out of teh way then…..what now? NO HURDLES………HOORAY!!.

  10. Peter Aglum
    March 12, 2014 at 1:41 pm

    I agree with Kiagi Nema. This post should be printed in our two dailies and broadcast through the radio airwaves. Thanks for the first hand information and please keep updating more on Government Corruption issues.

  11. NR
    March 14, 2014 at 10:11 am

    Very touching. Only the good Lord knows when such practices will end. I believe one fine day O’Neil, MPs, former PMs and minister and bureucrats will reap in what they sow. I’ve seen some had been reaping their fruits already, and I believe others will reap their soon, if they don’t then definately their sons and daughters will.

    Everyday poor people dying, we feeling just too much pain, and only God knows when all these will come to an end.

    To the poor, our message from Word of God is: “.. Be still, and know that I am God.” Psalm 46:10. Therefore, “It is better to trust in the LORD than to put confidence in man.” (Psa 118:8 KJV). …“for he that toucheth you toucheth the apple of his eye.” (Zec 2:8 KJV).

    And know that they will reap what they sow: “.. Be not deceived; God is not mocked: for whatsoever a man soweth, that shall he also reap. (Gal 6:7 KJV)” And the wage of sin is death: ” … For the wages of sin is death; but the gift of God is eternal life through Jesus Christ our Lord. (Rom 6:23 KJV)”

    Please to the poor: Lets serve God in Truth and in Spirit (Jonh 4:24), struggle further to live a godly and rightous life as this won’t cost us a toea at all to live right! And live correuption to God to deal with it! God bless.

  12. Siwi Spooky
    March 14, 2014 at 1:21 pm

    Having a stake in oilsearch is a wise move. Cannot understand why people are jealous of Interoil’s success. Welcome to the world of capitalism. Someone had a dream and came to PNG when it had its back against the wall with severe economic stagnation. Worked very hard with lots of US investors backings and set up company which is providing jobs for our people. That is exactly what start up companies do.
    ONEIL should be kicked out in 2017 if he fails to deliver. Iam happy with what I am seeing right now:
    . Free education
    .free health care
    Massive infrastructure boom in pom and provinces
    .new mt hagen tèrminal
    .protecting innocent people by strengthening sorcery act.
    .wewak police rapist jailed
    .bomana jail improved after demise of hardcores.

    China managed to remove 300 million people out of poverty. Done by a no nonsense regime. Oneil may needs to get more aggressive. Resource nationalisation is the way to go in order increase revenue to deliver this country from poverty.
    I say lets support Oneil until 2017. Its good to see everyone practising free speech.
    I love this conspiracy theory cookery blog site.

  13. Hadsji
    March 19, 2014 at 6:51 pm

    This conspiracy theory cookery blog site has many readers who are genuinely concerned about the welfare of this country. If O’Neil has been honest about his deals then he deserves praise. But if he has been doing deals for the sake of self interest that takes precedence over the people of this country then God help him, sooner or later he will be exposed. Truth always prevails. This country is ripe for plunder when leaders of this country love money more then their people.

  14. Phil E. Mulacek
    March 26, 2014 at 9:10 pm

    By Phil E. Mulacek

    Facts on Elk & Antelope and general information to clear up false and manipulative political statements posted above by “Dr. Onguglo” on March 10, 2014.

    I normally would not respond to the kind of baseless innuendo, irresponsible rumor-mongering and political manipulation in the original post. However, the blatant untruths and gross extreme lies have compelled me to clear the record with facts. It is clear that the so called Dr. Onguglo must be a ghostwriter with no professional understanding of the petroleum industry or what actually happened. Therefore, I can only assume that the “doctor” is really a corrupt Minister or government entity with a political agenda entirely removed from the best interests of the people of PNG and facts.

    I am currently not employed by InterOil, and have not been active on a daily basis in the company for almost a year, since April 2013. I therefore speak as a concerned shareholder and strong believer in PNG and the PNG people, and only to ensure my reputation is protected.

    Background of work in PNG by Phil Mulacek:

    I absolutely reject the slanderous, politically motivated lies of the writer about my history and work in PNG. I have been active in Papua New Guinea for more than 20 years, and I stand by my record. I have always strived to build business confidence in the nation of Papua New Guinea, and I have pioneered numerous value-adding industries for PNG to supplement the purely extractive resource industries historically active here. I have made the integrity and well-being of Papua New Guinea and its people a high priority, and I have been an enthusiastic ambassador for the Papua New Guinea business community over the past 20+ years. In fact, I have supported/backed PNG more than many of the political persons I have seen during my work in the country.

    • The InterOil refinery was one of the first significant value-adding developments in the county’s history. The refinery has created jobs, supplied key services to the nation and built a can-do mentality and installed confidence among the workforce. It was never a major profit center that focused on moving wealth offshore. In fact, when the Kina was crashing at US$0.17, we placed 25% of our foreign reserves in the currency to help stop the collapse.

    • While at InterOil, I lead the back-to-back discovery of three (3) significant hydrocarbon discoveries – the world-class Elk and Antelope fields, and Triceratops. These assets have more natural gas and condensate than all the combined discoveries of ExxonMobil and OilSearch in Papua New Guinea. Over time and production history, I believe the discoveries will be recognized as a leading value added creation for the country of Papua New Guinea.

    • I was on record as having opposed the old PNG- Queensland gas pipeline. I believe it would have robbed the country of PNG with low-price gas sales to Australia. I helped lead the movement to promote LNG development instead, long before Exxon pushed the PNGLNG project.

    The Elk & Antelope Fields:

    1) The Elk & Antelope fields are incredibly valuable. The amount of gas/condensate in the Elk & Antelope fields economically recoverable at this time has been certified by three (3) separate world-class, independent certifiers (GLJ, GCA and Knowledge Reservoir) as between 7 and 12 tcfe of gas, with estimates of over 15 tcfe in place, meaning 1.6 billion to 2.5 billion bbls of oil equivalent (“BOE”). The Elk/Antelope fields (which are within the PRL-15 license area) could develop to be larger than the gas supply in the PNG LNG project. Exxon-Mobil has also used some of the same certifiers in worldwide sales of its own assets.

    2) This is an enormous quantity of gas and condensate by any measure, and has placed PNG on the world map as a producing country. Once the Antelope field begins production, very detailed studies (called “material balance” analyses) will show the real magnitude of the discovery.

    3) The Antelope reservoir is not only world class in size, but its quality is also extremely high. Elk & Antelope has confirmed the world-record highest flow rate, which confirms the quality and means that the operating and development costs will be vastly lower than the formations that support gas production in the highlands. That fact should translate into a gas cost per produced gas volume from Elk & Antelope that is only 20% to 30% of the gas cost in the highlands. As a result, there will be 300% to 500% more economic value per discovery, and more profit for stakeholders and net income for the PNG economy.

    The OilSearch Transaction

    1) To clarify, OilSearch (OSL) did not buy shares of InterOil stock. What OSL bought was a ~17.7% Net Revenue Interest-“NRI” (~22.8% Gross Working Interest – “GWI”) in the PRL 15 license (which includes the Elk & Antelope fields) from the independent owners in Elk & Antelope.

    2) OilSearch closed a great transaction and so did PNG (indirectly, however, and to a lesser extent). It is important to note key financial facts of record: Japanese investors previously bought the AGL 3.6% interest in PNG LNG project for about US$800 million. Based on the same relative total resource volume, the 17.7% NRI bought by OilSearch, for which it paid US$900 million, should be worth approximately US$4 billion (490% larger interest than the AGL sale). Further, this ignores the real value and the quality of Elk/Antelope being 300% to 500% better on cost metrics than the highlands production. I personally commend Mr. Peter Botten of OSL for closing on the purchase of the independent minority interest quickly and at such a low price. OSL has never had a successful exploration track record in Papua New Guinea, but has excelled in extracting development value. It has bought already discovered assets at a low price and then developed them to extract full value without ever selling the assets until they are producing. OSL’s investments include the PNG BP assets, PNG Chevron and now a key position in Elk & Antelope. In my opinion, this purchase will ultimately be worth about US$15 billion to OSL shareholders, based on the low purchase price and better cost effective development value in Elk & Antelope.

    3) To save upfront cash, it is typical in the industry for investors to use an initial purchase price that is lower and then adjust the payment for price and higher resource volumes after the production begins to save on a large upfront purchase price. Here again, in my opinion, OilSearch has done the best transaction out of all parties.

    4) As noted above, the 17.7% sale of interest to OSL was from independent owners of interests in the Elk/Antelope fields and PRL-15, not from InterOil Corporation. InterOil’s transaction with TOTAL should not be a metric to compare the OSL deal or any other transaction. The stock market expressed its view with the crash of the IOC stock, which lost almost US$3 billion (about Kina 8 billion loss) in about 30 days.

    a. In my view as a shareholder, the TOTAL transaction had 4 main faults:

    i. Low gas/condensate price;

    ii. TOTAL was allowed to base its initial cash payments (before further assessment of the fields) on an unreasonably low gas volume, which hurt InterOil’s near-term cash-flow;

    iii. Delay of potential LNG cash-flow from a new TOTAL project, which could take years to develop, as compared to joining the existing EM PNGLNG project; and

    iv. Overall uncertainty of TOTAL ever reaching a timely FID on its proposed LNG project.

    b. Another reason the market reacted negatively was that IOC was not clear & transparent. IOC proposed to sell ~ 80% of its interest in the Elk & Antelope fields (it held ~59% net interest / ~76% gross interest), by far the company’s most material asset, to TOTAL, leaving IOC with about ~11% net in PRL-15. Then, IOC planned to leverage the independent owners and secure the other owners’ ~18.6% for IOC, putting IOC back at a net 30% of the field.

    As announced on March 26, 2014, after the OSL transaction IOC and TOTAL will both have a lower ownership interest with TOTAL having a 40.1% GWI (31% NRI position) and IOC with a slightly lower position of 35.5% GWI or 27.5% NRI.

    In my opinion, the past TOTAL proposal was the result of a pressured sale by IOC reacting to the former Petroleum Minister. It was not a fair indicator of the value of the Elk & Antelope fields or in the best interests of PNG. This situation does not apply today, and OSL and the State currently have a vested interest to see the asset developed with an expansion train 3 at the PNG LNG project. However, complexities will be present with EM running the PNG LNG project.

    TOTAL and InterOil should strive to improve the transaction for all stakeholders and ensure a revised proposal does result in a material delay in development of LNG. It is estimated that every year of delay has hurt the PNG economy by Kina 10 billion to Kina 15 billion. Any new proposal must avoid the “mega-project” mentality that creates “mega” cost over-runs.

    3) In my opinion, it would have been better for the State to buy the minority interest in the fields directly from the independent owners. However, there was no clear means for the State to do so. Why? The article conveniently ignored the fact that former management at Petromin was previously in-line to receive a US$100 million success fee from a super-major, if Petromin could force a damaging sale of Elk/Antelope. This was falsely manipulated to shift the facts, with clear lies in the PNG blog article, driven for political agendas. Obviously, the State could not hope for serious consideration of any direct offer to buy the ~17.7% ownership. It also would have been a fairly complex transaction to value. Therefore, it was easier for the State to simply acquire easily valued shares in OSL and lose the value it would have received in a direct acquisition, but PNG will receive a portion of this value indirectly.

    In my opinion, I feel the Prime Minister supported the OilSearch transaction because he believed it was in the best interests of the country. The Japanese buyers paid about 500%+ more for their interest in PNGLNG than what OilSearch paid for Elk & Antelope. Please remember the Japanese also received a much lower quality asset than what OSL and the PNG government have in Elk & Antelope. Unfortunately for the State, the biggest value gain in the OSL transaction was OSL’s US$15 billion in increased shareholder value, although the State will get some uplift on its OSL shares as a result. Nevertheless, the State and PNG as a whole do win with a faster Train #3 for the PNGLNG project supported by the PNG State and OSL. The economic activity, job creation and increased taxes on better profits will increase the benefits to PNG by fast tracking the Elk & Antelope development to the supply of Train #3 LNG in conjunction with some highlands gas.

    In closing, in my opinion the winners in the OSL transaction are:

    1) OSL by far;

    2) The State from the gain in OSL shares, and faster development for the country vs. a yet-to-be-defined Total LNG project. OSL and the State can now ensure TOTAL/InterOil LNG must deliver value.

    3) TOTAL got a great transaction too but to a lesser extent than OSL if TOTAL/IOC delay LNG production.

    4) IOC has a gain but not what others had gained in past sales in LNG related sales in PNG. The upside is IOC may get to be in the ExxonMobil train 3 with better pricing and faster LNG revenue. Still, IOC must rely on TOTAL for holding a budget and avoiding the mega project cost blowouts seen at Woodside and Chevron in Australia

    The losers are:

    The former independent owners in PRL-15, who lost billions of dollars. I worry that this sets a bad precedent of forcing minorities to sell out of valuable projects.

    • Tom Monemone
      October 12, 2015 at 10:28 pm

      Mulaceck, go bury your head in the sand. The USB loan is a scam. We don’t need to listen to your rubbish.

  15. Meska
    June 23, 2014 at 8:44 pm

    This is total madness. All our leaders in government have totally lost their senses and are worshiping this Beast. But they must not forget that justice is God and God is justice. When justice finally catches up with these leaders, so God help O’Steal and his little gang at haus tambaran, they will all rot in jail and I cant wait for that day. God help Papua New Guinea.

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