KPHL supports the energy industry!

Many people see Kumul Petroleum as the state shareholder of PNG LNG. What is your response to this statement?

Our advertising states that Kumul Petroleum Holdings is a national oil and energy company committed to “nation building through our energy resources” in line with its vision.

Importantly, KPHL actually fulfills this commitment in many different ways, some of which are rarely recognized. I would like to discuss some of them.

• What is KPHL’s role in PNG’s oil sector?

Our primary source of income remains our interest in the PNG LNG project, an equity position that we recently increased by acquiring an additional 2.6% of the project equity from Santos.

Our concern is how to best utilize KPHL’s net proceeds from the ExxonMobil Operator after deducting loan repayments and paying necessary royalties, development fees and taxes.

Kumul Petroleum holds interests in a number of other oil licenses, including four retention licenses containing already discovered gas deposits, where we are the operator. We will be conducting further seismic surveys in some of these areas later this year to explore the feasibility of aggregating and commercializing these previously stranded gas resources.

• How does KPHL use its net income from its interest in the PNG LNG project?

KPHL pays dividends to its shareholder, the state, of at least KP300 million annually, while supporting the construction of major rural electricity networks and health infrastructure such as the National Heart Center at Port Moresby General Hospital and Port Moresby’s cancer treatment centers and Lae.

We have made a number of direct interventions in the energy sector. Since 2015, KPHL has been running the Kumul Oil Academy, which provides specialized technical training for the industry. The scope of supported training will soon expand when our training and production facility, currently under construction adjacent to the PNG LNG facility in Caution Bay, becomes operational. This facility, costing approximately $100 million, will provide a wide range of industrial trades training.

• What is your other activity in the energy sector?

KPHL is a 50/50 joint venture partner with Santos in the NiuPower gas-fired power plant, which supplied electricity to the Port Moresby grid. We have also built hundreds of kilometers of low-voltage rural transmission lines, mainly in the Highlands, to connect communities and government facilities to PNG Power’s Ramu high-voltage network.

• KPHL is now directly involved in LNG marketing

In April this year, KPHL exported its first LNG cargo, which is a historic event as it was the first time that a PNG domestic company had independently sold and exported crude oil from the country since it began operations in 1992. This was KPHL’s “equity size”. LNG production above the volumes specified in long-term sales contracts.

• What is KPHL’s role in PNG’s fuel supply chain?

Also earlier this year, KPHL stepped in to address the fuel supply crisis caused by Puma’s withdrawal from fuel imports, particularly Jet A1, by arranging fuel shipments.

KPHL will be actively engaged in the import and marketing of fuel for as long as necessary to ensure a reliable and consistent supply to the country to ensure uninterrupted fuel supply to essential businesses, industry and society.

KPHL is also working on a medium and long-term fuel supply solution, in line with NEC’s request and our legal mandate to ensure a fair and level playing field for the country’s energy industry.

This involves building fuel import and storage infrastructure, initially in Port Moresby and later in other major ports.

As you can see, KPHL is an active participant in the energy sector, engaged in upstream, midstream and downstream activities.