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Speeches, 05 December 2016

Creating lasting opportunities for Papua New Guinea

2016 PNG Chamber of Mines and Petroleum Conference, Andrew Barry, Managing Director, ExxonMobil PNG Limited

It is a pleasure to be speaking with you today and it is exactly two years since I sat in the audience as a participant of the conference and I started the handover with my predecessor Peter Graham. Great to see you still here at the conference Peter and I am sure you will smile as I have the pleasure of discussing the great achievements we have made which you were an instrumental part of.

Today’s presentation is going to focus on the strengths that ExxonMobil brings to our partnerships and the focus we have on creating lasting opportunities for Papua New Guinea.

But before I discuss our strengths I want to talk about the importance of the partnerships we have in country.

Partnering to create opportunity for PNG

As I reflect on the success of the PNG LNG project I cannot emphasize enough that it took a team effort to achieve the great things we have achieved. It was not a single group but it was a partnership and many of you who sit in the audience today were key to making that partnership successful.

So let me spend just a few minutes thanking each of you for what we have, collectively, achieved.

Firstly to the landowners and communities who are represented here today. We sincerely thank you for the support and cooperation through the construction and continued production of the project.  We appreciate that we are guests on your land and without your support we would not be here today.

To the government, thank you for your partnership approach to the development. You recognized that we needed to find a win-win solution that, during a time of much uncertainty with the 2009 Global Financial Crisis, you provided fiscal certainty and commitments to ensure ourselves and our Co-Venturer’s had confidence to invest in your great country.  It was a time, not unlike today, where bold decisions needed to be made to ensure that investment dollars were spent in PNG versus other areas of the world. The PNG LNG project is and will continue to be a game changer for this great country.

To our co-venture partners, thank you for your continued support. Your support and confidence in our ability to perform has been a driver to our success.

I would like to particularly thank Oil Search for their operational excellence and sustained commitment. I would like to also thank them for their support in the local communities, where we partner together to help in areas of need.

To our suppliers and contractors. Firstly let me thank you for your commitment to our safety, health and environment expectations.
You have bought into our commitment that no job is worth doing unless it can be done safely and in an environmentally responsible manner. You have been a key contributor to our performance that makes our company want to come and invest more in this great country.  Within our company the results are not good enough, it is how we achieved the results that is most important.

And finally to our workforce, who are more than 80 percent Papua New Guinean. We could not be more proud of the achievements you have made. You have embraced our high commitments surrounding our six core values of safety, environment, security, teamwork, integrity and excellence. You have exceeded all our expectations across all the metrics and it is what makes us, as a company, want to continue to invest more. We see the enthusiasm and pride you have working for PNG LNG and the positive impact it is having on you and your families.

So as we reflect on what it took to make the PNG LNG project a success I encourage all of us, across all segments of the economy, to reflect that to make a difference it takes teamwork and a partnership. We all need to work together towards a single, focused goal which is to improve the standard of living and create lasting opportunities for PNG.
We should be working towards understanding each other’s drivers and working towards solutions that are balanced win-win.


Creating lasting opportunities for PNG

So now let me spend the rest of the time highlighting what ExxonMobil brings to the partnership. 

I am going to break my discussion into three different areas to demonstrate how we at ExxonMobil are creating lasting opportunities for PNG as an important partner to the country’s success. They are:
• how we are building on the foundation with the PNG LNG project;
• what we are doing to reinvest the revenues and benefits from the project; and
• how that translates to sustainable development for the betterment of the country. 

Global experience

There are very few industries that compare with the energy industry in terms of size or scale.  Few which operate on time horizons as long or far-reaching as ours, which is usually decades.  Few face the same combination of risk and complexity.

ExxonMobil is the world’s largest publicly traded oil and gas company, with more than 125 years of experience in oil and gas operations. We are a globally integrated company, with upstream, downstream and chemical operations on six continents. ExxonMobil is a preferred partner to develop energy projects worldwide because of our employees, financial strength, global reach and the management practices built into the fabric of our operations.

PNG’s resources are not easy to commercialize - many companies have tried and failed – what sets ExxonMobil apart is our global experience in resource development, particularly in challenging geographical locations like PNG.

The most successful companies are the ones that plan – and prepare – for the long term and who meet their commitments across a range of outcomes.

Safety culture

Whilst global price volatility has impacted us here, as it has elsewhere in the world, ExxonMobil PNG and PNG LNG are continuing to perform well. 

Since July 2013 our workforce has worked around 63 million hours without a lost time incident and we continue to work to ensure no one gets hurt.

A lot of people say safety is a priority and that’s great to hear, but priorities can and do change. Safety has to go beyond that. It has to become a core value, one that shapes decision making at all levels. 

The way our Papua New Guinean workforce has embraced a culture of safety is one of the most satisfying aspects of my job. 
At the end of every day I always ask myself – did anyone get hurt at work today?   If the answer is no, then I’ve had a good day.  I’ve had a lot of good days in PNG thanks to a total commitment by everyone to keep each other safe, every day. 

Technology leadership

The application of state-of-the-art technology is an important enabler for the cost effective and efficient development of resources like here in PNG. 

It was nearly 50 years ago that ExxonMobil pioneered the 3D seismic imaging technology that has since become the industry standard.  And I can honestly say that predicting the subsurface geology of the PNG Highlands is one of the most technically challenging activities our geoscientists have undertaken anywhere in the world.  And it’s our global experience that has helped us to innovate and succeed. 

Advanced technologies have also enabled unprecedented offshore exploration and production. Today, the use of high-speed, sophisticated computers enable our people to build complex sub-surface simulations to determine where to drill and how to design rigs that can operate in water depths of more than 3,000 metres, to drill wells that are eight kilometres beneath the ocean floor.
We are looking forward to using this technology as we explore the Gulf of Papua in the future.

Project execution

ExxonMobil has a strong record in successful project development around the world, particularly in difficult conditions. 

The PNG LNG Project was one of the most technically challenging projects to execute – anywhere in the world.  Remote areas, rugged terrain and record-setting weather are just some of the challenges that we faced.  But one thing stands out for me above all else  - an engineering feat of massive proportions – that of the 700 kilometer long main gas pipeline from Hides which descends to the coast over 2700 metres from the mountains.

It took four years, over 28 million work hours and more than 5,000 people to build the pipeline. We completed 22,000 welds on the pipeline, and the team drove enough kilometres to go to the moon and back almost 50 times. It was by far the most challenging aspect of the entire Project. 

It was sound engineering, cutting-edge technology, innovation and significant engagement with the community that helped us to complete the pipeline and ultimately bring the entire project online ahead of schedule.

An environment of excellence

PNG LNG’s activities traverse a number of areas of high biodiversity significance and conservation value.  Implementing our strategy to safeguard biodiversity values is an important focus area.

We are aiming to balance the residual impacts associated with the construction of PNG LNG with equivalent biodiversity gains through our offset program. 

With the Wildlife Conservation Society we are developing a Protected Area Plan for the Kikori River basin. The development process for this plan engages highly experienced scientists from PNG and abroad to guide this process and its eventual output.

Our engagement with the Conservation and Environment Protection Authority has also seen substantial steps taken towards the development of the Protected Area Policy Action Plan. 

Our monitoring programs so far indicate that the PNG LNG project has not impacted the biodiversity values and regeneration of vegetation is proceeding above expectations. 

Importantly our preservation efforts are a true partnership with the Government, civil society organisations and the community. We are helping to enhance the capacity of Papua New Guineans to grow and deliver world class biodiversity research. We are connecting local communities with national and global conservation communities to share successful conservation practices.

We are proud that our commitment to preserving the environment has set a new environmental benchmark for future developments in Papua New Guinea. 

Flawless operations

In the two and a half years since the safe startup, our facilities have continued to operate flawlessly.  This is testament to the many tens of thousands of people who were involved in the design and construction of these world class facilities and the commitment from our Papua New Guinean workforce today, to run our facilities at exceptional levels of reliability and efficiency. 

Since production began we have safely shipped over 250 cargos of LNG to our customers in the Asia Pacific.  We are on track to deliver over 7.9MT in 2016. 

We also know that our facilities have the capacity to produce over 8 million tonnes per annum, an increase of almost 16 percent from the original design specification. 

The benefits of increased production are wide ranging and include additional revenues for the Government of Papua New Guinea, landowners and provincial governments. 

Reinvesting the benefits in PNG

The success of our foundation business and the strength of the relationships have with the people of PNG, provide us with the confidence to reinvest in future growth of our business and of PNG.  That reinvestment comes in many forms, financial and social, but equates to a deep commitment to put more into Papua New Guinea than we are currently taking out.  It comes back to that long term view. 

We believe that working alongside the government to improve power generation capacity will have one of the greatest multiplier effects for the growth of business and an improved standard of living for the people of PNG.

The 25 megawatts of electricity we are supplying to the Port Moresby power system from gas generators in the LNG Plant, has resulted in a significant improvement in the reliability of electricity to Port Moresby. 

Construction of a new 50-megawatt power plant outside Port Moresby is also planned to begin in early 2017.

The power plant will be located near the LNG plant and use gas from the PNG LNG project. Upon completion, the new plant will add enough power generation capacity to supply 40 percent of Port Moresby’s peak demand, helping to meet the nation’s growing energy needs using a reliable and cleaner burning source of energy. 

Importantly the power plant will provide one of the most cost effective sources of generation for PNG Power providing opportunities for reduction in tariffs and most importantly to provide revenue to be invested in other areas of the country, particularly in the areas of transmission and customer connection.

We need it all to be successful and I suggest we need focus on options that can be scaled as demand increases, like the planned power project in Port Moresby. The initial project is for 50 megawatts, but it has been designed such that it can be expanded to a total of 200 megawatts as required. 

The ability to match demand with supply through relatively minor investments will ensure long lasting success with the benefits being passed on to the end consumer.

Expanding PNG LNG infrastructure

This year we have continued to invest in foundation project infrastructure.  A new wellpad has been built and connected to the spineline feeding into the Hides Gas Conditioning Plant.

Wellpad F is our highest wellpad at an elevation of 2800 metres.  As you can see from this photo, we had another challenging incline for the pipeline to traverse.  We expect production to commence shortly, following mechanical and pressure testing.

We have also significantly advanced work to tie the Angore field into the production facilties, following drilling of two wells last year.  The project involves a new wellpad and 15 kilometre pipeline to connect the Angore field to the Hides Gas Conditioning Plant.  We expect early works to begin in the New Year with construction mobilization around mid-2017. 

Some equipment for both projects has been flown into Komo airfield on board Aleutian aircraft.  While slightly smaller than the Antonovs used during construction, they are still a very impressive sight landing in the Highlands of PNG. 

Ongoing exploration investment

ExxonMobil’s exploration team and licence co-ventures have invested more than 2 billion kina in exploration since 2010. 

Many of you will be aware that Muruk well has recently spudded.  The Muruk well, operated by Oil Search, is targeting a gas resource of approximately 2 tcf at a depth of around 3,450 metres.

Last year we completed a seismic data acquisition program covering more than 100 kilometers around the Juha and Hides fields in the Southern Highlands, which once analysed, we hope will lead to future drilling programs.  And earlier this year we were part of a 72-kilometre 2D seismic survey in the greater P’nyang area, completed by Oil Search.

Expansion projects

We are continuing to work with the government on the petroleum development license and associated pipeline licenses for the P’nyang field.  Future work plans include a potential well to further define the resource.
This work will help enable us to make an informed decision about how best to proceed toward front-end engineering and design. 

Offshore exploration

Subject to Ministerial approval we also have plans for seismic in three petroleum prospecting licenses offshore in the Gulf of Papua.  ExxonMobil is the operator of the licences under various joint ventures.  The licenses are located approximately 150 to 200 kilometres offshore southern Papua New Guinea in water depths averaging more than 1,500 meters.  This will be our first venture into offshore exploration in Papua New Guinea but with a wealth of global experience in seismic collection and analysis and deepwater drilling, we are very excited about the offshore potential.

Generating economic and social growth

Through our operations and our ongoing commitment to invest in capacity building within Papua New Guinea, we are making a significant contribution right across the country.

PNG LNG has contributed 14 billion Kina to local business, the government in employment taxes, MRDC disbursements, Kumul disbursements, development levies, royalties, and licence maintenance fees. 

Communities are also continuing to benefit through landowner equity, dividends, jobs, development levies, infrastructure development, social progress and much more. 

Much of what ExxonMobil is reinvesting into PNG is harder to measure, but we believe we are delivering just as much, if not more benefit, than revenues or numbers on a sheet of paper. 

Long term capacity building

The benefits received from PNG LNG and anything else to follow, must translate to sustainable growth for Papua New Guinea and improved livelihoods for its people. 

Our success is reliant on the continued growth of Papua New Guinean people, businesses and communities. Without their support, PNG LNG and ExxonMobil’s plans for expansion would simply not be possible.  

This requires strategic investment in long-term capacity building – investment in our workforce, our supply chain and in community development. 

We genuinely believe partnering with people and organizations - and using our organizational strengths to help them build effective programs and governance structures, is the pathway to building long-term capacity in Papua New Guinea. These partnerships take a long time to build and are based on trust and understanding, but when done right, become self-sustaining and the benefits are passed on for generations to come. 

Developing Papua New Guinean Talent

One of the most important partnerships we have in Papua New Guinea is with our workforce.  Around 2400 people are responsible for operating PNG LNG.  More than 80 percent are Papua New Guinean. 

Building operational and intellectual capacity in Papua New Guinea is one of our top priorities. 

Our business is incredibly technical and complex, and the skills required in some areas can take decades to build, but already we are seeing increasing numbers of Papua New Guineans taking the place of expatriates in key supervisory and leadership positions. 

We recently took on board our fourth intake of Papua New Guinean Operations and Maintenance trainees, increasing the number of trainees at various stages of their career to more than 210.  Impressively twenty five percent of our trainees are women who are forging new career paths for young women in Papua New Guinea. 

The fourth intake this year will also for the first time receive some of their complex technical training from a Papua New Guinean provider – Kumul Academy.  We are delighted to see the development of this important training facility – whose very existence has come about because of PNG LNG. 

Growing local companies

A key component of our strategy to build institutional strength and capacity in Papua New Guinea involves creating opportunities for local businesses - from small micro-SMEs all the way through to large landowner companies. 

Since 2010 the PNG LNG project has spent over 12 billion kina on services provided by Papua New Guinean companies. Of this, more than 3 billion kina has been spent with landowner companies.

Today we engage local suppliers for a range of production-related activities.  We currently contract landowner companies to provide labour hire, maintenance, transportation, fuel distribution, container freighting and vegetable supplies. 

Our partnership with the PNG Institute of Banking and Business Management Enterprise Centre has been instrumental in helping Papua New Guinean businesses and landowner companies build long-term sustainable businesses. 

Helping communities to lead better lives

In our local communities we have invested more than 780 million Kina to build infrastructure, develop social programs, and enhance skills and knowledge to improve the quality of life for the people of Papua New Guinea.

Our key programs focus on education, health and environment, women’s economic empowerment and agriculture.  Let briefly talk about a couple of those focus areas. 

Strengthening education in PNG

We are investing significantly to improve access to education in project areas.

We are continuing to build on our scholarships program, working in partnership with respected education providers.  We are building capacity in schools through infrastructure improvements, training and housing support for teachers. 

We have developed innovative training to strengthen academic and administration leadership in PNG LNG project area schools, which we hope will one day be used by schools throughout the country. 

Staff volunteers are also inspiring the next generation students to think about careers in science, technology, engineering and math as part of our schools Science Ambassadors program.

Improved health care

Our community health program is a holistic effort to support the health of Papua New Guineans.  Our partnership with the PNG Institute of Medical Research continues to improve PNG’s data collection and health diagnostics. 

We are partnering with NGOs and others to implement public health initiatives broadening awareness on important health issues.

At a local level we are providing training for health care workers and making infrastructure improvements to community clinics. 

Just last month we handed over a new 1 million kina Sub-Health Centre and ambulance at Para near our Hides facilities.  We are also helping hospitals with medical supplies.

There are many examples I can give you, and not enough time today to do them justice, but what is consistent throughout, is our desire to build sustainability so that in time we help to build strength, resilience and capacity in communities so that the benefits are passed on to future generations. 

Creating lasting opportunities for PNG

I believe ExxonMobil and PNG LNG are playing a very important role in PNG LNG’s long-term development.  We have shown what is possible when you bring global experience and local talent together to create something really special for everyone involved.
I hope I have given you a sense of how deeply committed we are to the people of Papua New Guinea.  We do not take lightly our responsibility to ensure the benefits of PNG LNG and any future endeavors, are shared with the nation to help drive its growth further.

We have a big job ahead of us and we have the team to do it. 

It requires a long-term commitment and the key comes back to my earlier point.  Success is built on partnerships – partnerships with the government, your co-venturers, your workforce, local suppliers - and the community – you cannot go it alone.   

The partnerships and friendships that you make will be exciting, at times humbling, but always extremely rewarding. 

Thank you.