PNG Introduces Modern Production-Sharing Agreement for Oil and Gas Projects
Papua New Guinea's Petroleum Minister, Jimmy Maladina, has announced a significant shift in the country's resource management approach with the introduction of a production-sharing regime set to begin in 2025. Speaking at the PNG Investment Week conference in Sydney, Maladina highlighted the need for reforms to the Oil and Gas Act, which has been in place for over 25 years.
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| PNG Introduces Modern Production-Sharing Agreement for Oil and Gas Projects |
Maladina explained that the current legislation needed updating to align with the evolving industry landscape and to better serve both investors and the people of Papua New Guinea. “The new framework ensures the State secures early revenue from petroleum projects while maintaining competitive returns for investors,” he said.
A detailed stakeholder consultation process is scheduled to start next month to refine the proposed production-sharing agreement (PSA) framework. Key aspects of the PSA include standardized contracts for greater transparency, direct state involvement in every agreement, competitive bidding for exploration rights, and state ownership of infrastructure developed for petroleum production.
Under the new regime, the State will receive its share of production early, either as royalties, a direct portion of output, or both. Maladina noted that contractors would recover their costs through a transparent process, and profits would be equitably divided between the State and the developers.
“This approach is designed to create a stable and transparent environment for investors while maximizing benefits for Papua New Guinea,” Maladina said. He emphasized that the framework reflects global best practices and strengthens the nation’s competitiveness in the oil and gas sector.
The proposed changes mark a critical evolution in Papua New Guinea’s petroleum policy, prioritizing equitable distribution of resources and fostering stronger partnerships with investors.
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