Oil Search leader says PNG ‘well placed’ to manage low commodity price regime, Ok Tedi expected to be profitable, and BSP reports 5 per cent profit increase. Your weekly digest of the latest business news.

PNG is well placed to weather the current low world oil price environment, but the Government and industry need to work together to achieve this, says Oil Search Managing Director Peter Botten. He told last week’s Leaders’ Summit that PNG is ‘better placed to manage this than most producing countries’ because of its competitive oil and gas production costs. He cited Oil Search’s low operating cost of US$13 (K39) per barrel as an example.

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Ok Tedi’s Peter Graham

Prime Minister Peter O’Neill and Ok Tedi Mining Limited’s Managing Director, Peter Graham, say the mine will be profitable, even in the current low price environment.

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Bank South Pacific (BSP) has reported a net profit after tax of K531.9 million (US$176.9 million) for the 2014-15 financial year, a rise of 4.8 per cent. Profitability was strong, with a Return on Average Equity (ROAE) of 27.8 per cent and capital adequacy was high by global standards. Tier 1 capital was 19 per cent, more than twice the Basel III stipulated minimum global standard of 8 per cent. BSP says PNG’s banking system has ‘strong potential for long term growth, given low loan penetration at 28 per cent of GDP. The majority of the adult population is currently excluded from the formal financial sector.’

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Woodside Petroleum, which failed to take over Oil Search last year, has posted a 99 per cent fall in profits for the 12 months to December. The full-year profit was US$26 million (K79 million). The Perth-based firm put the dramatic decline in profits down to the global fall in oil prices.

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Total SA, developer of the Papua liquefied natural gas project, says 2016 will be a year dedicated to finalising the appraisal of its Elk-Antelope discovery. Company representative Evgeniya Mazalova  says the aim is to complete the basis of the design of the project and to determine all the necessary requirements.

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Oil Search has reported a US$39.4 million (K119.82 m) net loss for 2015. Despite that, Managing Director Peter Botten told reporters he is looking at expanding the company’s interests in PNG, and is still open to a takeover bid ‘at the right price’. The company’s Earnings Before Interest, Tax, Depreciation Amortisation and Exploration Expenses (EBITDAX) was US$1.15 billion (K3.5 billion).

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Woodlark Island. Credit: Kula Gold

Kula Gold and WCB Resources have signed an MOU to look at  jointly developing Kula Gold’s Woodlark Island gold project and WCB’s Misima gold project. Both are located on adjacent islands in Milne Bay province.

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An investigation by the US-based think tank the Oakland Institute, has found the PNG government is losing over US$100 million (K304 million) a year because foreign logging firms avoid tax.  The report found that most of the logging industry in PNG has declared little or no profit. John Numapo, the Chief Commissioner of the Commission of Inquiry into Special Agricultural and Business Leases (SABLs) told the ABC that the Government has not abided by its promised moratorium on issuing new leases.

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Trukai Industries has launched a new TruCare brand, to lead its Corporate Social Responsibility program, which includes  ‘Healthy Living’ in the urban areas, by supporting sporting programs and events, and the advocacy of women in agriculture and business.

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Fiji’s remote islands hit hard. Credit: RNZI

Initial damage assessments report Fiji’s sugar industry has suffered US$36 million (K109 million) in losses from Tropical Cyclone Winston, which has killed at least 29 people. Australia has given an initial US$3.5 million (K10.6 million) package of assistance, while NZ has so far given around US$1.3 million dollars (K3.9 million) in emergency funds. The ANZ Bank in Fiji has given US$72,000 (K218,000)  to the Red Cross Appeal. However, 231 cyclone-proof designed homes by Peter Drysdale were untouched.

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And finally, the German city of Hamburg has become the first in the world to ban single-use coffee pods from all government-run buildings. They cause unnecessary resource consumption and waste generation, and often contain polluting aluminium, said Jan Dube from the Hamburg Department of the Environment and Energy. The capsules can’t be recycled easily because they are often made of a mixture of plastic and aluminium, he said.