I met with someone from Interoil today for a general chat about the petroleum industry. It was shared with me privately that Interoil is close to getting the government to enforce their refinery project agreement and mandate all local oil company to buy product from Interoil and hence ban imports. That will mean that Mobil Oil, New guinea Oil Company, Islands Petrolium and all other little oil companies that import cargoes from Singapore will be banned.
Last month and other 3 months ago, price for Diesel was ~$128/Barrel and Petrol ~$120/Barrell which is equivalent to K1.75/liter and K1.70 respectively. Nonetheless, the Import Parity Price(IPP) which is now set by InterOil on behalf of PNG government is charging the freight, and other costs and pump price is usually K2.80/Ltrs for Diesel and K3.10 for Petrol, making it a huge burden for the people of PNG. Well the Small energy Industries benefit on the difference between the costprice and Freight from Import Parity price set by Interoil plus the wholesale markup. Usually, Interoils pricing is also much higher than all other energy players.
Why Petrol price is very high is because Customs charge 61toe/per liter for Gasline imported and 6toe for every Liter of Diesel imported. So if the government is concerned about the people, it should cut the duty and GST on the energy price.
Well do you think small oil companies will loss? Hell No. They will get from the refinery and put their markup and the consumer will pay for it.
My concern is Inter Oil’s reliability to supply PNG and the consistency. For the last 6months, Crude Refining Unit is down and Interoil is importing cargos from Singapore. That has resulted in many of the Inter Oil’s customers not having enough gasoline at the moment. Soon Rabaul, Kimbe, Kavieng, Orobay and Alotau will stockout of gasoline as the next replenishment vessel is scheduled around the first week of February. So minus Import cargoes, PNG will be in a disaster. I am very sure because Interoil’s refinery is 30years old and it is not 100% fit to sustain the demand in PNG.
Whoever is in the forum have the contacts, please stop Inter Oil from pushing for luck as its never proven its capability with the current players. William Duma would be the best person to talk or even the PNG business council.
If Government gives the go-ahead, this will certainly KIL PNG for good. No energy, No car on the road. Or monopoly will further increase the cost of Goods and Service in PNG to another level that will strain everyone to poverty because you need energy.
This is not to post and attract comments but its something coming soon and it’s a killer storm. Watchout PNG.
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