(Repeats story published late Sunday; no changes to text)
* PNG aims to set LNG expansion tax terms in 2017
* PNG hard hit by commodities downturn
* PNG wants to reap more gas benefits for nation
By Sonali Paul and James Regan
SYDNEY, Dec 4 Papua New Guinea is preparing to
negotiate new fiscal terms for a $10 billion expansion of
ExxonMobil's liquefied natural gas (LNG) project in the
Pacific nation in a push to boost revenue, PNG Treasurer Patrick
Pruaitch said on Sunday.
The bid comes amid rising concern among rural landowners
that they have yet to see the full benefits of the $19 billion
PNG LNG project after more than two years of operation.
ExxonMobil now wants to add a third production unit.
PNG has been hit hard by a slump in oil and gas prices and a
drought which crippled farming and brought production to a halt
at its largest copper mine to a standstill.
"Current metal and oil prices do not support what we are
doing," Pruaitch told Reuters in an interview ahead of a
conference in Sydney where the government is looking to drum up
investment in the mining and energy sectors.
"Our message is that we have a sufficient pipeline of
projects...The time to do the hard yards is now," he said.
Two multibillion dollar copper and gold projects, Wafi Golpu
owned by Newcrest Mining and Harmony Gold, and Frieda
River owned by Guangdong Rising Assets Management,
are awaiting the government's green light by mid-2017.
The government has more than halved its forecast for GDP
growth this year to 2 percent. For next year it sees growth
picking up to 2.8 percent, based on higher copper and oil
To boost revenue, the government wants to raise $640
million by selling a 4.27 percent stake in the PNG LNG project
to landowners, but a deal has been stalled by disputes over
"I'm desperate to ensure that every available revenue that I
can use to fund this year's budget I will put my hands on,
including the proceeds of the sale of 4.27 (percent)," Pruaitch
PNG recently lined up a $500 million loan from Credit
Suisse, after putting on hold plans to raise $1 billion with a
sovereign bond issue, due to market volatility. Pruaitch said
the government still wants to pursue a bond issue in 2017, but
it was more likely to be for $500 million.
With dwindling revenue from mining, the government was
counting on LNG -- with contract prices tied to oil -- to return
the budget to surplus by 2020. Yet with a slump in oil prices,
it now expects deficits to persist for at least another five
Pruaitch said the government aims to reach a deal with
ExxonMobil over new tax terms for expansion of the PNG LNG
project in 2017, to ensure it goes ahead in time for an expected
upturn in the LNG market early in the next decade.
It is important to negotiate better terms for the country on
what is expected to be a $10 billion project, he said.
(Reporting by Sonali Paul and James Regan; editing by Jason