Long-term forward sales contract unrealistic: Polye

By MATTHEW VARI

Wednesday, December 31, 2014 (Midweek Chronicle, PNG)

RESPONDING to statements made from the Prime Minister’s Office about the future fixed price revenues expected from the LNG Project, Opposition Leaders Don Polye has labeled the explanation as unrealistic in a global economic climate that has seen a substantial drop in oil prices.

He said international buyers will not maintain that on speculated prediction because they know that the sales they get for integrated products into their own markets for their consumers whose retail prices are a lot lower will not be sound for business.

“These people who are buyers of the sellers of the PNG LNG produces will expect lowers prices because there is an abrupt drop in oil prices directly affecting LNG prices,” Polye said.

“No where in the world is it logical that who is buying from us in comfortable to trade at a loss by buying at a higher price to sell at a lowers prices.”

“You buy to have a profit margin to build into as you are selling to do that, and the claim by the office of the PM does not stand- for someone to come out and say that the opposition is lying and that it is on a fixed price. What analysis have you done?”

He called on the Prime Minister not allow officers and himself to lie to the people on important issues where they have been mandated by the people to tell the truth.

“Of course there will be some pain, some challenges, of course we will not win everything but the truth must be told in order for individual Papua New Guinean so that they know when to spend and when not to.”

“I maintain my position that the LNG price will be affected, it will be determined on a spot price that the country will earn its income based on the market determinants.”

“PNG has also played a role in the drop as we have now joined the LNG club of the world and we are adding on to the supply that is already out there in the market.”

Polye added that any determined prices will most definitely be affected by the drop in oil prices, referring to public statements made by Oil Search boss Peter Botten.

Adding to his statement the opposition leaders went further to call on the PM that the time was right for him to sell of the states share in Oil Search

“PM should now sell the 10.1% shares of the state in Oil Search and we must start to sell it despite the fact that it will be at a lower price.”

“It is time to sell the 10.1% in Oil Search- it is not a safe investment as we have seen the fluctuations taking place.”