Work has begun on Kumul Petroleum Holdings Ltd’s US$100 million steel fabrication plant just north-west of Port Moresby. In an exclusive interview, Managing Director Wapu Sonk outlines how the facility will boost Papua New Guinea’s manufacturing sector, and anchor a new Special Economic Zone in the Caution Bay area.

According to Kumul Petroleum’s Managing Director Wapu Sonk, the plant will initially have the capacity to manufacture 20,000 tonnes per annum of steel fabricated piping and related products required by the resources sector.

The rationale behind the project, he tells Business Advantage PNG in an exclusive interview, is value-adding onshore so that PNG can realise greater returns from its natural resources:

‘The national content component of the PNG LNG Project was less than anticipated, mainly because we were not ready. This project will help prepare PNG for the Papua LNG Project and other major projects that follow it.’

‘We will expand our facilities into a larger energy park that will also include an import-export terminal and fuel storage facilities’

Significantly, it will also create more than 1,000 skilled jobs, with additional flow-on economic benefits for local communities, whose business interests are represented by their landowner company, Laba Holdings. A training facility will be constructed next door to ensure adequate supply of people with the requisite skills.

Vision

The site of the new fabrication facility. Credit: KPHL

While this first stage of the project already represents a breakthrough for local manufacturing, the second plans to go even further.

It will involve creating the capacity to produce the actual modules that LNG and similar industrial projects require in their construction phase (these are typically pre-fabricated, then delivered to the actual project site).

Appropriately, that would also include the components for Kumul Petroleum’s own e-train (to process gas from its own licenses), to be constructed as part of the forthcoming Papua LNG project.

‘Our ultimate vision for this project is for our own LNG train to be fabricated at this facility by Papua New Guineans who have been trained next door,’ says Wapu Sonk. ‘And once we can do that, we can fabricate for anything else, e.g. for mining, ship-building, general construction.’

Caution Bay SEZ

Kumul Petroleum’s Wapu Sonk. Credit BAI

The fabrication plant will also provide the anchor investment for a new Special Economic Zone at Caution Bay, which has already been granted a license.

PNG has had limited success with the SEZ concept in the past but a survey conducted by the Japan Development Institute in late 2023 identified Caution Bay as a prime candidate.

And it’s not hard to see why. It is located in a highly strategic location, between Port Moresby and ExxonMobil’s PNG LNG plant (where the Kumul Petroleum-operated LNG train will in fact be located), and close to the capital’s main port of Motukea.

There are already two gas-fired power stations in the area (Niupower and Dirio) along with other key infrastructure such as roads, water and telecommunications.

Boera Holdings, a shareholder of Laba Holdings, has developed the Edai Town residential estate in the area and has plans for a second one across the road.

‘We will expand our facilities into a larger energy park that will also include an import-export terminal and fuel storage facilities,’ says Wapu Sonk. ‘We want to attract service providers into the industry and there will be tax incentive packages for companies that set up there, based on what has worked before in other countries.’