INTEROIL BID COULD RESULT IN PNG ENERGY MONOPOLY

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PORT MORESBY, Papua New Guinea (PNG Post-Courier, Nov. 24) – An oil industry analyst says there will be a monopoly in the supply and distribution of petrol and other products in Papua New Guinea if Canadian company InterOil Corporation purchases Shell (PNG) Limited.

He also fears that petrol and diesel distribution company Mobil Oil Niugini would exit PNG because they would not be able to compete against InterOil, which would use its monopoly in wholesale and distribution of petroleum products in its favour when setting prices.

Under the Napanapa project agreement signed between InterOil PTY Limited, EP InterOil Ltd and the Independent State of Papua New Guinea in 1999, Clause 19 states that the State must ensure that all domestic distributors of petroleum products must buy refined products from the Napanapa refinery. Any distributor that purchases petroleum products from outside sources will be penalised.

Meanwhile, Finance and Treasury Minister Bart Philemon yesterday refuted the front page report in the Post-Courier that the oil deal was a death trap for PNG. Mr Philemon said the import parity pricing (IPP) was among incentives given to InterOil to start up the refinery in the country as it was also one of the first investments of its kind.

He said the refinery would also be the catalyst to the establishment of domestic gas based industries at the planned Konebada Industrial Park, an industry that would provide employment opportunities.

Mr Philemon said the import parity pricing clause basically allowed InterOil to sell petroleum products at prices equivalent to those that would be charged if the products were imported from Singapore and by setting an upper price limit, this was in effect a method of price regulation similar to systems operated in many other countries.

November 25, 2005

Papua New Guinea Post-Courier: www.postcourier.com.pg/

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