Time to assess hydrocarbon component parts
LAST week, Kumul Petroleum Holdings Limited (KPHL) sold its first LNG cargo to China.
The cargo comes from excess volumes produced by PNG LNG over and above 6.6 metric tonnes per annum (mtpa) that is its nameplate volume.
Every dollar made from that shipment comes to KPHL and, therefore, to PNG.
It is a milestone achievement and there are going to be 14 more such shipments.
The big question will be whether that windfall earnings actually makes its way into the country or remains abroad.
This is one of the big questions that are being raised at present.
It is understandable if multinational companies are shy about bringing all their earnings on-shore, but what about PNG’s own big budget operators such as those in the oil and gas fields, in forestry, fisheries and even superannuation entities.
For many, the sheer difficulties to do with accessing foreign exchange, especially US dollars, to make quick investment decisions abroad is limited or difficult under the present atmosphere. It makes sense, in the interest of conducting business, that they must necessarily keep US dollar earnings abroad.
And yet, PNG desperately requires US dollars to trade itself out of a difficult shortage that is now extending beyond a decade. Companies must bring US dollar earnings onshore to ease this drought.
At some point, the Government must make the call and bring all US dollar earnings on shore, from PNG’s own companies and those multinationals that operate here.
A second point which might take a longer look into is the matter that a lone fighter by the name of Alfred Kaiabe, the executive chairman of National Gas Corporation Ltd, has been carrying on in the media and in the courts.
The former MP for Komo Margarima is one of the architects of the Oil and Gas Act of 1998.
He has been claiming that PNG is giving away too much under present arrangements.
In part he says the Government is applying the wrong law.
He has been claiming that the country ought to have been refining its gas onshore and that, even under present arrangements, it is short selling the product to its own detriment.
It is a long process to argue the legal issues but a far simpler matter is put before the Government and the people when Kaiabe dissects the LNG into its component parts and claims each has value that is overlooked.
A reservoir of oil and gas comprises various compounds in addition to water, nitrogen and carbon dioxide, Kaiabe claims.
These hydrocarbon compounds include:
- Methane – (C1H4) (PPL holders product of interest from the fractionation process);
- Ethane C2H6;
- Propane C2H8;
- Butane C4H10;
- PentaneC5H12;
- Hexane C6H14;
- Hectane C7H16;
- Octane C8H18;
- Nonane C9H20;
- Decane C10H22; and
- C11 etc – other heavier hydrocarbons.
Whether from PNG LNG, Papua LNG or any other LNG plant, the multinational corporations involved in petroleum prospecting licences (PPL) seem more focused on methane as a product of interest.
Methane has to be exported to their clients to produce energy and consume heat, electricity, fuel etc.
But what of Kaiabe’s other gas compounds? Are they contained in PNG LNG or Papua LNG and if they are, what are their uses and what value, if any, do they fetch?
As we contemplate power and money and refining issues, these concerns must be brought up in discussion.
As the country contemplates a petrochemical industry, these component parts of its hydrocarbon products become very important.
Hydrocarbon Octane (C8H18), it is said, produces diesel, petrol and jet fuel that this country is crying for and got itself and its Central Bank entangled into the recent fuel crisis issue with Puma Energy.