Petromin Annual Report 2012 - Petromin PNG Holdings Limited

Transcription

PETROMIN
VALUES
VISION
CONTENTS
Participation by all Papua New Guineans in the ownership and
development of our minerals, oil and gas resources through
profitable partnerships for our future prosperity.
To generate and effect asset acquisitions and investments
and efficiently manage shareholder interests in petroleum and
mineral resources through ownership and revenue gains,
including reinvesting in profitable revenue generating projects
for the collective benefit of society, thereby delivering
profitable returns to shareholders.
MISSION
Petromin Corporate Objectives are defined by the enabling
legislation as follows:
02
Key Performance Indicators
04
Letter to the Trustee Shareholder
06
Acting Chief Executive Officer’s Overview
08
A Brief History of Petromin
10
Board of Directors
12
Management
18
Corporate Strategy
26
Corporate Governance
30
Petromin Group of Companies
34
Major Activities
Petroleum
Minerals
36
42
New Ventures & Business Development
Business Plan
Risk Management
50
52
Corporate Services
Government Relations & Public Affairs
Environment Report
54
54
Human Resources
Petromin People
Professional Development
Graduate Training
56
56
58
Shareholder Information
60
Financial Report
62
CORPORATE
OBJECTIVES
1. To operate as a commercial enterprise at least as efficiently as a comparable business
(in the resource sector) in PNG.
2. To maximize the value of the Shareholder’s investment in the Company through:
i. Developing mineral and petroleum tenements in PNG acquired from the State and
others, whether directly or as a nominee of the State; and
ii. Reinvesting in socially responsible projects which benefit society and which make a
profitable return to shareholders.
3. To engage in mineral and petroleum exploration, evaluation and development, both
upstream and downstream, and in the marketing, transportation and sale of minerals
and petroleum products.
4. To operate in accordance with principles of sustainable development, international best
practices and taking account of environmental considerations.
5. To operate with a sense of social responsibility towards the best interests of affected
communities.
6. To do all such things in pursuance of these objectives, anywhere in the world whether
alone or with others, as principal agent, contractor, trustee, joint venture partner, and
regardless of whether through agents, sub-contractors, trustees, or otherwise.
2012 Performance Summary
03
PETROMIN I ANNUAL REPORT_2012

• Re-appointment of Director Ian
Goddard on 4th March 2012 by the
Trustee Shareholder for another term of
three years.

• Sir Brown Bai, Chairman of Petromin
Board was knighted on 11th June 2012.
JUL
• Sir Peter Barter resigned as Director
from Petromin Board on 2 July 2012.
• Corporate uniform launched on 13th
July 2012.

• Reappointments of Director Muri bin
Muhammad on 4th March 2012 by the
Trustee Shareholder for another term of
three years.
JUN
• Deloitte Touche Tomatsu reappointed
Auditors for the Petromin Group for the
year ending 31 December 2012.

FEB
• Golder & Associate completed the Saki
Resource Report for Petromin
estimating a gold resource of 40,000
to 70,000 ounces.
• Diamond drill hole PDH002 intersected
porphyry style mineralization at Ipi
River, EL1352.
• 5th Annual General Meeting (AGM)
held on 12 June 2012.

• Tetra Tech Australia Pty Ltd completed
the independent review of the Solwara
1 EIS report for Petromin.
MAY

JAN
• Re-dedication of Petromin Haus and
celebration of Petromin 5th Anniversary
on 2 May 2012.

• Tetra Tech Australia Pty Ltd completed
the independent technical review of
the latest Solwara 1 resources report
by Nautilus Minerals for Petromin to
determine whether the resource
estimate presented in the report
is credible.
2012 PERFORMANCE
SUMMARY

• Diamond drill hole PDH001
intersected porphyry style |
mineralization at Ipi River, EL1352.

• Wayne Kasou appointed as Company
Secretary on 1 September 2012.

• Ipi Drilling Results finalized and
presented to Petromin Board.

• Directors /Trust Managers/Management
attended Mining & Petroleum
conference in Sydney on 2-3 Dec 2012.
DEC
• Dr. Wilfred Lus (Chief Geologist,
Minerals) presented the exploration
update on Ipi River Copper Gold
Molybdenum Porphyry Project, EL1352
at the PNG Mining and Petroleum
Investment Conference in Sydney,
Australia on 5th December, 2012.

• Eda Minerals commenced diamond
drilling on Ipi River Copper Gold
Molybdenum porphyry project on
EL1352.
APR
SEP

MAR
• Dr. Wilfred Lus (Technical Team Leader,
Solwara 1 Project) and Kelly Mende
(Mining Engineer) attended the HAZID/
HAZOP Workshop in Houston, United
States of America, on technical aspects
of the Solwara 1 Project from
19-23 March.
• Final Assay Certificate received for Ipi
diamond core samples.
PETROMIN IS THE STATE NOMINEE
FOR ANTICIPATED MINING
PROJECTS WAFI-GOLPU (NEWCREST
HARMONY), FRIEDA (XSTRATA),
YANDERRA (MARENGO) AND
WOODLARK (KULA GOLD).
05
PETROMIN KEY PERFORMANCE INDICATORS
350
SHAREHOLDER EQUITY
Petromin’s corporate objective includes the maximization of the
shareholder value.
Petromin’s shareholder value is calculated as total assets minus
total liability. The shareholder equity has increased over the last
five years since Petromin’s inception. The initial high increase
of shareholder equity by 29 % between 2007 and 2008 and
by 30 % between 2008 and 2009 was due to the acquisition
of the State’s interest in the Moran oil project in 2007 and the
Tolukuma gold mine in 2008. These two assets were producing
assets. No further producing assets were acquired or developed
between 2009 and 2012, however investments were made on
developing projects that are projected to become producing
assets from 2013 and 2014 onwards. The shareholder equity
increased by 8 % between 2009 and 2010 and it decreased
by 2 % between 2010 and 2011. Between 2011 and 2012, it
further decreased by 10 %. From inception in 2007 to 2012,
the company has grown and maximized the value of the
shareholder by 59 %.
220
REVENUE
175
Petromin’s mission statement includes revenue gains.
Petromin’s main revenue stream flows from its equity share in
the Moran oil project’s crude oil sales and the Tolukuma gold
mine’s raw gold sales. In the last 6 years to 2012, a total of
K1.372 billion flowed through as revenue. In 2012 a total of
K177.67 million flowed through as revenue.
400
0
200
07
08
09
10
11
12
Annual revenue (kina)
80
Annual Growth in Equity %
0
07
08
09
10
11
12
Total Equity (million kina)
TAX
By law, Petromin is obliged to pay taxes to the State and
since the State is also Petromin’s beneficiary shareholder,
Petromin is proud to have paid taxes to the independent
State of Papua New Guinea since commencing operations
in 2007. In the last years six years to 2012 a total of K226
million in taxes, has been paid to the State. In 2012 a total
of K26 million was paid in tax to the State.
40
0
07
08
09
10
11
12
Annual Taxes Paid (kina)
COMPRENHENSIVE INCOME
110
0
07
08
09
10
11
12
Annual
comprehensive
income (million kina)
Petromin’s corporate objective includes the derivation of a
profitable return to the shareholder. Petromin’s comprehensive
income is derived from the revenue after deducting the cost
of sales, operating costs, financing costs and taxes. The
comprehensive income has been positive throughout the
previous five (5) years but was negative this year 2012. The
initial comprehensive income in 2007 was very high and it was
strongly influenced by the financial income from Moran project.
This year’s (2012) comprehensive income was negative and it
was heavily influenced by the high operating costs in Tolukuma
Gold Mine.
20
0
EMPLOYEE NUMBERS
07
12
Papua New Guinean employees
TENEMENTS
(MINERAL & PETROLEUM)
6
Petromin’s corporate objective includes engagement in
mineral and petroleum exploration and development and is
proud to have expanded its tenement portfolio to grow and
meet its corporate objectives.
DIVIDENDS
Petromin’s beneficiary is the Independent State of Papua New
Guinea and annual dividends are paid to the State through
its beneficiary shareholder, the Prime Minister of the day. The
Petromin Board declares the dividends annually at its Annual
General Meeting (AGM). Petromin has been declaring and paying
dividends from its first full year of operation in 2008 to 2011.
This year 2012 Petromin did not declare any dividend but paid
a part of its previous declared dividend of K450,000.00. A
cumulative total dividend of K8.35 million has been paid from
2008 to 2012.
583
3
Dividends Declared
0
07
08
09
10
11
12
Dividends Paid
Since Petromin started operations in 2007, its tenement
portfolio has expanded from the initially acquired exploration
and development tenements to include additional
exploration and development tenements and nomination
to represent the State on its retention tenements. The total
number of tenements has increased over the last six years
by 192 % with 38 tenements in 2012, compared to 13
tenements in 2007. Two petroleum prospecting tenements
were also applied for in 2012.
Petromin is the State’s oil, gas and mineral company
and it is proud of creating employment opportunities
for Papua New Guineans. Petromin Group’s growth is
demonstrated by an increase in staff numbers from 20
in 2007 to 583 in 2012. The workforce is almost 100 %
comprised of nationals and this helps to realize Petromin’s
vision of participation by nationals in the ownership and
development of the country’s oil, gas & mineral resources.
15
7.5
ML(S)
APPL(S)
EL(S)
PDL(S)
PPL(S)
0
PRL(S)
07
08
09
10
11
12
07
LETTER TO TRUSTEE
SHAREHOLDER
Honourable Prime Minister of Papua New Guinea, Mr. Peter O’Neill, CMG, MP, it
is my privilege to present to you, Petromin PNG Holdings Limited’s (Petromin)
Annual Report for its full year of operation in 2012.
Year 2012 marks Petromin’s 5th full calendar year of financial
operation from January 1st to December 31st. and its 6th year
of operations since the company’s establishment in early 2007.
Petromin’s Shareholder equity has increased in the last six
years by 59 %. In December 2007 it was K198.8 million and by
December 31st 2012 it has risen to K316 million.
The 2012 financial year ended with an operating loss of K33
million. The loss was largely influenced by very high operating
costs attributed to the Tolukuma Gold Mine Limited (TGM).
Petromin’s established vision from 2007 continues to be one of
direct participation by Papua New Guineans in the ownership,
exploration and development of our mineral, oil and gas
resources through profitable partnership to contribute towards
our future prosperity. This is demonstrated through the company
holding direct equity in its own acquired exploration acreages,
the development of the Greater Moran Oil Field and PNG LNG
and as well as its ownership and management of TGM.
The Petromin group of companies in total generated revenues
of K178 million in 2012 but with business expenses and taxes
of K211 million, the company recorded a loss. Despite this, the
Group’s cash balances as at year’s end was still a robust K113
million. It may be noted here that Petromin has paid K234 million
in taxes and K8.35 million in dividends since inception to date.
Re-capitalization of TGM has been an ongoing challenge for
Petromin over the last five years. Various options for improving the
mine have been considered and the strategic path going forward
is now apparent. The company has prioritized its investment
opportunities through a five (5) year business plan which the
company will consider for investment in the next five years.
Petromin’s alliance with Royal Dutch Shell (Shell) saw our
petroleum geoscientists undertake a joint major regional study
of the Gulf of Papua with Shell this year. The study involved the
interpretation of over 12,000 kilometers of 2D marine seismic
data that used Shell’s petroleum exploration technology. The
petroleum Geo-Science skillset within Petromin was significantly
enhanced through this joint study and the broader alliance.
The company’s tenements over the last five years have
increased by 185 % from one petroleum development licence
(PDL), one mining lease (ML), and eleven mining exploration
leases (ELs) in its early years to two PDLs, eleven petroleum
prospecting licences, eleven petroleum retention licences, two
MLs, and eleven ELs in 2012. The potential to realize value from
these tenements and further grow the Shareholder’s equity is
high and indicative of a prosperous future.
Petromin has built up a healthy, educated and skilled labour
force that is geared to create wealth for our country and
contribute significantly towards the wealth creation pillar in
aligning with and achieving the country’s Vision 2050.
I would also like to bring to your attention the resignation of
founding MD & CEO of Petromin PNG Holdings Limited, Joshua
Kalinoe, CSM, CBE. After tirelessly working to establish and
grow the Petromin Group since 2007, Mr. Kalinoe resigned in
early 2013 to pursue other opportunities. Under his leadership,
Petromin endeavoured to deliver on its national mandate
as required by the Petromin Act as highlighted in the Annual
Reports for 2012 and for previous years. I take this opportunity
to thank Mr. Kalinoe for his leadership to progress the company
and its People, as we move into the next phase of Papua New
Guinea’s growth, development and management of its mining
and petroleum resources.
Prime Minister, the Petromin asset value is in the millions now
and it has the potential to rise into billions in the near future
under your trust.
On behalf of the Board, the Management and the Staff I would
like to thank you for supporting and allowing us the opportunity to
direct, manage and cultivate the Petromin asset that you hold in
trust for the citizens of our great country. May the Petromin asset
be further developed for wealth creation to underpin the pursuit
of prosperity and happiness by the citizens of this great country.
Good health to you, your family, the government and citizens of
this great country.
Sir Brown Bai
KBE, CBE,CSM
PETROMIN HAS BUILT UP A HEALTHY, EDUCATED
AND SKILLED LABOUR FORCE THAT IS GEARED
TO CREATE WEALTH FOR OUR COUNTRY AND
CONTRIBUTE SIGNIFICANTLY TOWARDS THE
WEALTH CREATION PILLAR IN ALIGNING WITH
AND ACHIEVING THE COUNTRY’S VISION 2050.
09
ACTING CHIEF EXECUTIVE
OFFICER’S OVERVIEW
Petromin consolidated its operations in 2012 through its subsidiary companies with focus on exploration, revenue generation and
portfolio increase. Critical milestones were achieved in both the mining and petroleum divisions, which included the State awarding
nine new Petroleum Prospecting Licenses (PPL’s) to Petromin in the New Ireland Basin and the mineral resource estimate for Saki
first phase drilling being completed by Golder’s & Associates.
INVESTMENT PORTFOLIO
Our current Mining portfolios include Tolukuma Gold Mine,
Solwara 1 Project and eleven exploration tenements in the
Central and Oro Provinces and bordering on the Morobe Province.
We have also been nominated under the Petromin Act in the
emerging mining projects of Freida River, Woodlark, Yandera and
Wafi-Golpu mining projects.
Our Petroleum assets comprise of 11.275 % in the Greater
Moran Oil Project and 0.2037 % in the PNG LNG Project. In
addition, we now have a portfolio of ten PPLs in the New Ireland
Basin and a minority interest in PPL 328 (Pasca) in the offshore
of Gulf Province. We have also been nominated in ten Petroleum
Retention Licences in the Gulf and Western Provinces.
OPERATIONS & DEVELOPMENT
Petroleum activities were focused on the Unitized Moran Project
and the PNG LNG Project (the latter of which is scheduled for
first gas in 2014).
Eda Oil Limited (EOL), a subsidiary, holds Petromin’s interests
(11.275 %) in the Unitized Moran Project. EOL’s share of oil
production was 427,212 stock tank barrels of oil (stbo) against a
forecast of 571,646 stbo for the year. The decrease in production
was a result of a shut-in of production facilities for five weeks
due to a suspected seepage at the Kumul terminal. However
investigations by the Operator confirmed that there was no seepage.
Our current and only mining operation continues to be the
challenging Tolukuma Gold Mine (TGM). TGM’s annual production
declined to 21,413 oz from 35,868 oz in 2011. Various factors,
including unfavourable weather conditions resulting in severe
flooding of the underground Mine, affected production in the
first half of the year. The second half of the year witnessed
some recovery in production but not enough to recoup the loss
from the first half. Unfortunately the situation did not improve
in the new year as production remained below budget due to
operational and staff related issues.
TGM has contributed immensely to the Goilala District since its
operations began in early 1990s. TGM Management is aware
of the importance of the operation to the people of the region.
Management is now working on a recapitalisation plan along
with updating the resource to see how best the operation could
be sustained.
Exploration in Saki, a tenement near TGM, continued during
the year. The first and second phase drilling program has been
completed. The program completed 47 Diamond Drill Holes
(DDH) with a total cumulative depth of 4,609.85 metres. Golders
& Associates completed exploration resource estimate of
40,000 to 70,000 ounces from the drilling program.
MINERALS EXPLORATION
Petromin subsidiary Eda Minerals Limited (EML) conducts
exploration activities in its six (6) tenements in Central and
Oro Provinces. The Ipi River Prospect (EL 1352) has been the
focus of its mining exploration and drilling activities during the
year. EML also oversaw exploration activities in TGM’s five (5)
exploration licences.
Petromin acquired a drill rig (SC-11) for the first phase drilling
program resulting in three (3) exploration drill holes (PDH001,
PDH002 & PDH003) in Ipi River Prospect with a cumulative
depth of 1219.40 meters. The assay results indicate a typical
porphyry style mineralisation.
PETROLEUM EXPLORATION
Petroleum exploration focused on the south-east part of the
New Ireland Basin . Exploration is still in the preliminary stages
as geological and seismic data is required to further evaluate
the petroleum potential of the basin.
FINANCE & ADMINISTRATION
The year has been extremely challenging. Loss in production in
Moran and Tolukuma affected the profitability of the Petromin
Group. Although higher than expected oil and gold price did
compensate the loss to some extent but decreased output at
Tolukuma affected the Group’s profitability as recovery of costs
was significantly impacted.
Petromin PNG Holdings Limited, as a parent company, recorded
a profit of K37.4m. This is attributed to higher dividend income
from EOL which recorded a net after tax profit of K40.8m.
Tolukuma Gold Mines Limited made a net loss of K51.6m and
the net consolidated result was a net after tax loss of K33.1m.
AS FORMER AND FOUNDING MANAGING
DIRECTOR & CEO, JOSHUA R. KALINOE, CSM, CBE,
EMPHASISED IN OUR 2010 ANNUAL REPORT OUR
PEOPLE “ARE OUR PRIDE AND FUTURE”
It may be noted here that since inception in 2007, Petromin as a
Group has paid K226.6m in company tax, K25.7m in Group tax,
K2.4m in infrastructure tax credit schemes and K33.2m in royalty
and development levy to the period ending 31st December
2012. In addition, Petromin has also paid a total of K8.35m in
dividends to the Independent State of Papua New Guinea.
In summary, although 2012 did not turn to be as good as we
would have wished the overall contribution by the Petromin
Group, since 2007 has been of significance.
LOOKING AHEAD
The Petromin Act was enacted in 2007 by Parliament with
the intention of having a commercial National minerals and
petroleum company. Current events will dictate the future of
Petromin, the Company, however our future has always been
in our primary and most significant asset, our People. What we
have achieved and the lessons we have learnt over the past
seven (7) years will be the foundation with which our People can
promote Papua New Guinea’s interests through participation in
both the petroleum and mining industry. Our graduate trainee
program has been a success with 17 graduates from various
fields going through our ranks, and either working with prominent
international resource companies or retained. The program
is perhaps the greatest achievement and contribution that
Petromin has made to Papua New Guinea in its short history. We
believe all of these young professionals will progress and flourish
in the natural resources industries.
In addition to the graduate trainees, senior officers and
Management have been put through training programs,
graduating one undergraduate degree in HR, three Masters (in
Law and Business Administration) and one Doctorate in mining
geology in progress.
Under the Government’s recent decision to consolidate its
mining and petroleum assets, Petromin’s life may see its last
horizon while its People will be part of a new and exciting dawn
for Papua New Guinea’s extractive industries. As former and
founding Managing Director & CEO, Joshua R. Kalinoe, CSM, CBE,
emphasised in our 2010 Annual Report our People “are our pride
and future”.
Arunava Basu,
BCOM, F.C.A
Acting Chief Executive Officer
011
A BRIEF HISTORY
OF PETROMIN
2007
Petromin was incorporated under the companies act of 1997 after the National Parliament
passed the Petromin Act, through which the Government aims to ‘hold and develop mining and
petroleum tenements in PNG’. Operations commenced with a staff of 5 employees under the
direction of the founding Managing Director and CEO, Joshua Kalinoe. Eda Oil Asset acquired from
MRDC through commercial arrangements, becoming the first acquisition for Petromin
Petromin acquired 100 % of Tolukuma Gold mine and its tenements from Emperor Mines Ltd.
Petromin also signed a key agreement with InterOil Corporation for participation in the Elk/
Antelope gas fields.
2008
2009
The company continued to establish key operational strategies and brand identity through a new
HR Management policy, launch of a corporate logo, development of a corporate plan and held its
inaugural AGM. 2008 also saw the Company’s Trustee Shareholder, Prime Minister Grand Chief
Sir Michael Somare officially adopted Fit & Proper Guidelines for the appointment of Petromin
Directors to strategically direct Petromin’s activities. These guidelines were retrospectively applied
to the MD and Board.
PETROMIN MADE ITS FINAL
PAYMENT TO MINERAL RESOURCES
DEVELOPMENT COMPANY (MRDC)
FOR THE TRANSFER OF EDA OIL
LIMITED, WHICH HAS AN 11% STAKE
IN THE MORAN PROJECT (PDL 5).
PETROMIN ACQUIRED EDA OIL IN
2008 AND BEGAN PAYMENTS FROM
THAT YEAR
Petromin made its final payment to Mineral Resources Development
Company (MRDC) for the transfer of Eda Oil Limited, which has an
11 % stake in the Moran Project (PDL 5). Petromin acquired Eda Oil
Limited in 2008 and began payments from that year. Construction of
the PNG LNG Project neared its end with more than three quarters of
the project completed at the end of December 2012. The highlight of
the construction phase was achieving 100% mechanical completion
of the Offshore Pipeline (EPC3). PNG LNG is now estimated to have
“first gas” by second quarter 2014. The State awarded Petromin nine
(9) new Petroleum Prospecting Licenses (PPL) over the New Ireland
basin effective from May 2012.
Petromin’s activities continued developing at a rapid rate. Saki Prospect exploration activity is
launched, whilst InterOil successfully drills and flares the Antelope-1 well and Water quality
investigations into the Angabanga River are completed. In December, PNGLNG project was
sanctioned where Petromin was a signatory and Final Investment Decision (FID) on the project
was taken and project agreement for Elk/Antelope Project is executed between State and Liquid
Niugini Gas Ltd. The second company AGM is held in June with a first impressive dividend
payment of K5million being declared.
2010
Exploration activity commenced at the Saki Prospect and Tolukuma mine and an exploration
camp was established at Ipi River Prospect, including preparations for planned 3D IP survey.
Petromin expanded its business opportunities through the opening of a new office in Singapore
and completion of the construction of ‘Petromin Haus’, the company’s new head office in Port
Moresby. The NEC approved Petromin& Partners LNG FPSO Project and the Petromin Constitution
was amended to improve corporate transparency and accountability.
2011
Petromin’s operations expanded further through the grant of its first Petroleum Prospecting
License, PPL345 in the New Ireland basin, the signing of the Strategic Alliance Agreement with
Royal Dutch Shell and the award of PPL328 to JV Partners Twinza Oil &Petromin. Petromin also
became the State Nominee for upcoming mining projects; Frieda, Wafi-Golpu & Yanderra, and for
10 PRL’s in the Papuan Basin. Petromin Haus was officially opened on 4th March and Mr Kalinoe
renewed his contract as MD & CEO for a term of 4 years. Petromin staff numbers have grown
from 5 employees in 2007, to 675 in 2011. Papua New Guineans make up 98 % of staff numbers.
2012
Petromin is the State nominee for anticipated mining projects WafiGolpu (Newcrest Harmony), Frieda (Xstrata), Yanderra (Marengo)
and Woodlark (Kula Gold). Wafi-Golpu and Frieda River Projects
completed their Pre-Feasibility Studies (PFS) and commenced work
on their respective Definitive Feasibility Studies (DFS). Yanderra and
Woodlark completed work on their respective DFS and an application
for Mining Licences, respectively, is anticipated in 2013. Tolukuma
was also granted an ‘interim extension’ on ML104 while Petromin
prepares its submission to MRA for an extension on its existing
Mining Licence. Petromin’s Environment team successfully completed
its Environmental Annual Report for Tolukuma which was submitted
to Department of Environment and Conservation (DEC), which
was subsequently approved by the DEC. Golder’s and Associates
completed an exploration resource estimate of 40,0000 to 70,000
ounces from 47 drill holes in the first phase drilling program for Saki.
013
PETROMIN BOARD
OF DIRECTORS
SIR BROWN BAI,
KBE, CBE, CSM
CHAIRMAN
Independent Director, Sir Brown, is a
distinguished former Public Servant,
including Ambassador to Brussels and
the European Community, Secretary
for Treasury, Managing Director of PNG
Banking Corporation as well as Secretary
to the Department of Prime Minister &
NEC. Sir Brown has a Bachelor’s degree
in Economics from the University of
Papua New Guinea. He is a private
consultant and a director of Hargy Oil
Palm Limited and Goodman Fielder (PNG)
International. He is also the Chairman
of Cargill PNG Holdings Limited and
currently Company Secretary for Paracel,
a telecommunications company in PNG.
SIR PETER BARTER,
GCL, KT. OBE
SUMASY SINGIN,
OBE, LLB, LLM (MELB.)
DIRECTOR
DIRECTOR
Sir Peter is a resident independent
Director and a prominent businessman
and owner and operator of Melanesian
Tourist Services. He was twice elected
Member of Parliament and appointed
Government Minister in two successive
Somare Governments. He has previously
served as Governor of Madang Province,
Minister of Inter Government Relations
and Bougainville Affairs and Health &
HIV Minister. In 2007, he voluntarily
retired from politics. Sir Peter has served
on Boards including the Pacific Asia
Travel Association, Tourism Promotion
Authority, Madang Visitors Bureau, Mama
Graun and Nature Conservancy, Modilon
Hospital, the National Events Council
and was Chairman of the Management
Group of the PNG Incentive Fund. He is
currently the Chairman of the National
AIDS Council, Chairman of MTS Group of
Companies, Chairman of the Melanesian
Foundation and Council Member of the
Divine Word University. He voluntarily
resigned as a Director from the Board on
2nd July, 2012 for personal reasons.
Mr. Singin was born on 25 August, 1958
in Boana, Morobe Province. He is the son
of the late Singin Possom ISO, Member
for Lae-Wampar during the 1964-1968
House of Assembly. He is a former State
Solicitor and currently serves as a Lecturer
in Law at UPNG. He served as Principal
Legal Advisor to the Office of the Prime
Minister, under Sir Michael Somare, Sam
Abal and Peter O’Neill from 2002-2011.
He has also served as Director of the Law
Reform Commission, 2nd Parliamentary
Legal Counsel to the National Parliament,
First Assistant Secretary Policy and Legal,
East Sepik Provincial Government and
Director of PNG Dams Ltd. He is a former
Chairman of the Independent Public
Business Corporation (IPBC) and was
previously also Director of the Gas Project
Coordination Office. He was educated
in the United Kingdom, Canada, Malta,
India, South Korea and Australia. He is a
Police Reservist, with the rank of Sergeant
Major in the Royal Papua New Guinea
Constabulary. He is a member of the PNG
Law Society. He is currently a member of
the University of Technology Council.
2012
WILLIAM SEARSON, CBE, B.SC
DIRECTOR
Mr. Searson is a resident independent Director. He is a geology
graduate from UPNG who has worked in the development of the
country’s minerals and energy industry since early 1970’s. He was
the Secretary for the Department of Minerals and Energy from
1983 to 1990. He has contributed to the development of many
mining projects, including Ok Tedi, Misima, and Porgera. He also
promoted the Papuan Petroleum Basin around the world in 1984
and 1985 which eventually led to the commercial discovery
of oil at Kutubu. During his term as Secretary for Minerals and
Energy he served on various statutory and Government boards.
He was previously Chairman of PNG Electricity Commission from
1983 to 1990, during which Yonki Hydro Dam and Rouna 4 Hydro
Project were successfully completed. He later continued as an
independent adviser in the development of Lihir, Simberi, Ramu
and Hidden Valley mines. He is currently a director on the Board
of Mineral Resources Development Company Limited and has
served on the board since 1983.
JERRY WEMIN
DIRECTOR
Jerry Wemin was born on 17 September 1965. He is a resident
independent Director. Mr Wemin is a Founding Member of the
PNG Institute of Company Directors and Member of Australian
Institute of Company Directors. He is Fellow of the PNG Institute
of Management and Fellow of PNG HR Institute. He has a
Masters Degree in Development Management (NTU-Aust) and
a Bachelor of Arts Degree from University of PNG (UPNG). He
has International Certificates of Distinctions in Total Quality and
Human Resource (HR) Management. Mr Wemin is President of
the PNG Human Resource Institute and represents the country
on the Board of Asia Pacific Federation HRM. He serves as
Council Member of the University of PNG. He has been appointed
as Independent Audit Committee Member by the Department
of Finance and serves as Chairman of Audit Committees of the
Department of Works and University of Papua New Guinea. Mr
Wemin is a Human Resource Management (HRM) Specialist and
Management Consultant. He was employed as HR Specialist
with Air Niugini and became the Group Executive Manager HR
for the former PNG Banking Corporation (now BSP) and Finance
Pacific Group of Companies. He has served as foundation CEO of
the Institution of Engineers PNG. He is guest senior lecturer with
UPNG School of Business’ Masters programs. He is also National
Training Council accredited national trainer and conducts
professional and executive development programs. He has also
served as advisor on three AUSAID Development programs in
PNG. He has provided professional services to Government,
NGOS, Multinationals, International Aid Agencies and many
prominent PNG based companies.
015
PETROMIN BOARD OF DIRECTORS
PETER POKAWIN
RICHARD TENGDUI
MURI BIN MUHAMMAD
IAN GODDARD
DIRECTOR
Ian Goddard is a non-resident independent
Director. Mr. Goddard is a Mining Engineer
with a distinguished operational and
executive management career. He has
extensive knowledge and genuine interest
in the development of Papua New Guinea.
He was previously Managing Director and
Chief Executive Officer of Highlands Gold
Ltd for over 9 years, and was involved in
the development of the Porgera gold mine.
Director Goddard has led exploration and
pre-feasibility studies for an array of gold
and base metal projects including Frieda,
Ramu and Kainantu. He was previously
President of the PNG Chamber of Mines
and Petroleum and the PNG Employers
Federation as well as serving on various
advisory boards to PNG educational
institutions. He has held a number of
board and executive positions in various
organizations including Metallica Minerals,
Morobe Consolidated Gold Fields and the
Cooperative Research Centre for Vaccine
Technology. He is an Honorary Fellow of
the Institute of Mining and Metallurgy,
a member of the Australasian Joint Ore
Reserves Committee, a member of the
Papua New Guinea Institute of Directors
and a Fellow of the Australian Institute of
Company Directors.
DIRECTOR
Muri bin Muhammad was born on 18
August, 1942 and is a non resident
independent Director. Mr.Muri is from
Malaysia and has many years of LNG
experience at Board and managerial
level. Mr.Muri holds a Master of Science in
Biological Oceanography from Dalhousie
University, Halifax, Canada. He joined
Petronas in 1975 and after serving for
27 years in various capacities, retired
from Petronas as Vice President, Gas
Business in 2002. On his retirement, he
was appointed Advisor, Gas Business
until the end of March 2005. He has
served in various other management
positions including; Managing Director/
Chief Executive Officer of ASEAN Bintulu
Fertilizer SdnBhd and Managing Director/
Chief Executive Officer of Malaysia
LNG Sdn Bhd. He has also served on
the Board of various other Petronas
subsidiaries. In 2005, he was appointed
by the Malaysian Government as Energy
Commissioner for 4 years. He is currently
a Director of a number of gas pipeline
companies including; Australian Pipeline
Trust, a publicly listed Australian gas
pipeline company and Transportadora de
Gas del Norte and Transportadora de Gas
del Mercosur, both of Argentina.
EXTERNAL MEMBER
FINANCE, AUDIT
& COMPLIANCE
BOARD COMMITTEE
DIRECTOR
Mr. Tengdui is a resident independent
Director. He is a senior Papua New
Guinean registered public accountant,
registered company auditor, registered
liquidator and registered tax agent.
Mr.Tengdui has a Bachelor of Accountancy
degree from the PNG University of
Technology and a Post Graduate Diploma
in Accounting and Financial Management
from the University of New England, in
New South Wales, Australia. His career
as an accountant began in 1981 when
he joined Coopers and Lybrand where
he was involved in audit accounting,
liquidation and taxation matters. Later
he became Financial Controller of Timber
sales PNG Ltd in Rabaul. He is currently
the Principal of Tengdui and Associates
Certified Practicing Accountants which he
started in 1990. An active member of the
Certified Practicing Accountants of PNG,
Mr Tengdui has been past president of the
PNG Institute of Accountants (now CPA)
Lae Branch, and Mt Hagen Branch. He is
a Member of the Accountants Registration
Board of Papua New Guinea. Mr.Tengdui
has carried out several successful audits
of State owned institutions including
the Coffee Industry Corporation, the
PNG Forest Authority, the Cocoa Board
of PNG and the PNG Medical Research
Institute. In the resource industry in Papua
New Guinea, Mr.Tengdui has experience
with Hides Gas Landowner and Ok Tedi
Landowner companies.
JOSHUA KALINOE
CSM, CBE
EXECUTIVE DIRECTOR
Mr. Kalinoe was appointed Executive
Director of Petromin in 2007, and
holds a Masters Degree in Business
Administration from Bond University,
Queensland. He also holds a Bachelor
of Economics Degree as well as a
Diploma in Journalism both from the
University of Paua New Guinea. Mr.
Kalinoe was previously a Director of a
number of Boards in both public and
private sectors including; Ramu Sugar
Limited, Hargy Oil Palm Limited, Bank
of Papua New Guinea, the Investment
Promotion Authority of Papua New
Guinea, and Air Niugini. Mr. Kalinoe
resigned as CEO and Managing Director
of Petromin in the first quarter of 2013
and ceases to be an Executive Director.
Mr. Pokawin is an external member
of the Finance, Audit and Compliance
committee. He was nominated by the
Certified Practicing Accountants of PNG
to serve on the committee. Mr. Pokawin
graduated with a Bachelor of Technology
degree majoring in Accountancy from
the PNG University of Technology in
1979. In 1986 he obtained a Bachelor
of Business degree from the University
of Southern Queensland in Toowoomba,
Australia. He is a senior registered
accountant with membership of both
CPA PNG and CPA Australia. He served
as the National President of CPA PNG for
five years until 2010. Prior to becoming
a member of the Finance, Audit and
Compliance committee he had previously
served as an individual Trust Manager
of Petromin PNG Holdings Limited. He
has also served as a board member of
the Bank of Papua New Guinea during
his term as President of CPA PNG, and is
currently the Chairman of Life Insurance
Corporation and Deputy Chairman of
Water PNG Limited.
WAYNE KASOU, LLB
COMPANY SECRETARY/
MANAGER GOVERNANCE
AND BOARD AFFAIRS
Wayne Kasou commenced as Company
Secretary and Manager Governance and
Board Affairs on September 1, 2012
after serving for a short period as
Manager- Special Projects. He holds
a Bachelor of Laws Degree from the
University of PNG having graduated
in 1999 and is currently completing a
Masters Degree in Public Administration
from the Divine Word University.
Mr. Kasou commenced his professional
career with reputable commercial law firm
Posman Kua Aisi in 2001. In July 2009
he joined the National Roads Authority
as the Board Secretary for three years
before joining Petromin in August 2012.
Apart from providing the secretariat to all
subsidiary companies of Petromin, he also
ensures strict compliance on all board and
corporate governance matters. Mr. Kasou
is a registered professional member of
the PNG Institute of Directors and a board
member of the Korobosea International
School. He is a registered member of the
PNG Law Society.
017
2012 BOARD MEETINGS
PETROMIN BOARD
SIR BROWN BAI, KBE, CBE, CSM
(CHAIRMAN)
SUMASY SINGIN, OBE
JERRY WEMIN
MURI BIN MUHAMMAD
IAN GODDARD
WILLIAM SEARSON, CBE
RICHARD TENGDUI
JOSHUA KALINOE, CSM, CBE
No of meeting(s) attended
SIR PETER BARTER
(RESIGNED) ON 2 JULY 2012
No of meetings entitled to attend
1
2
3
4
FINANCE, AUDIT & COMPLIANCE COMMITTEE
RICHARD TENGDUI
[COMMITTEE CHAIRMAN]
JERRY WEMIN
SUMASY SINGIN , OBE
PETER POKAWIN
1
2
3
4
HUMAN RESOURCE & ADMINISTRATION COMMITTEE
JERRY WEMIN
[COMMITTEE CHAIRMAN]
WILLIAM SEARSON, CBE
SUMASY SINGIN, CBE
JOSHUA KALINOE, CSM, CBE
1
2
3
4
PETROMIN PROVIDES INFORMATION ON
BOARD & BOARD COMMITTEE ACTIVITY
TO ENSURE THE MANAGEMENT AND
DIRECTION OF THE COMPANY REMAIN
TRANSPARENT TO ITS SHAREHOLDERS.
019
PETROMIN
MANAGMENT
JOSHUA R. KALINOE,
CSM, CBE
MANAGING DIRECTOR AND
CHIEF EXECUTIVE OFFICER
Joshua R. Kalinoe was initially appointed
Managing Director and CEO of Petromin
in April 2007, and based on performance;
his contract was renewed in 2010. Until
his appointment Mr Kalinoe was a senior
public servant holding the position of
Chief Secretary to Government and
Secretary, Department of Prime Minister
and National Executive Council. He has
valuable managerial experience from
both the public and private sectors and
previously held senior managerial line
positions including General Manager,
Corporate and Government Affairs, PNG
Halla Cement Limited, Managing Director,
Investment Promotion Authority of PNG,
Secretary, Department of Commerce &
Industry, and Company Secretary, Stettin
Bay Lumber Company Limited.
2012
ARUNAVA BASU,
BCOM, F.C.A
CHIEF FINANCIAL OFFICER
Arunava Basu has a Bachelor Degree
in Commerce from the University
of Calcutta, India. He is a chartered
accountant and a Fellow Member of the
Institute of Chartered Accountants of
India and an Associate Member of the
Certified Public Accountants of Papua
New Guinea. Mr Basu has over 19 years
experience and in-depth knowledge of the
mining and petroleum industry operations
in PNG. He has specific experience in
project financing and taxation matters
in the industry. Prior to joining Petromin
he was formerly the General Manger
Corporate Services for Mineral Resources
Development Company Limited and prior
to that he was the Financial Controller
of Orogen Minerals Limited from its
inception until it was merged with Oil
Search Limited in 2002. He was actively
involved in financing Orogen’s acquisition
of BHP’s interest in various PNG oil
projects and co-ordinated Orogen’s
acquisition of five percent interest in the
Porgera Joint Venture in 1999.
SAM INGUBA,
QPM, DPS, CBE
GENERAL MANAGER,
CORPORATE SERVICES
Sam Inguba was previously the Manager
for Government Relations and Public
Affairs. After the Board approved the
organizational restructure in September,
Mr. Inguba was appointed General
Manager, Corporate Services. Mr. Inguba
has had a distinguished career with the
Royal PNG Constabulary and in 2002
was appointed Commissioner of Police
and Secretary of Department of Police.
He served in both of these positions
for four years. He brings to Petromin
an extensive network of contacts in all
levels of Government and society in
general. One of Mr.Inguba’s achievements
is his involvement in the coordinating
of the construction of the newly built
PetrominHaus Building in 2010.
BERNARD PAWIH,
BSC, MSC
DEPUTY GENERAL
MANAGER, PETROLEUM
Bernard Pawih has a Master of Science, Geology, from the
University of Sydney and a Bachelor of Science, Geology from
UPNG. He has 26 years experience as a geologist and in-depth
knowledge of the PNG petroleum sector. Mr Pawih was a senior
member of the State Technical Team overseeing the PNG
Gas Pipeline Project. He is an active member of the American
Association of Petroleum Geologists (AAPG) and a member of
the PNG Section of the Society of Petroleum Engineers (SPE).
He was the acting Secretary of the Department of Petroleum
and Energy. He previously served the department as both a
Deputy Secretary and Director, Petroleum Division.
DR. BRUCE J MCCONAGHY
GENERAL MANAGER, NEW VENTURES
& BUSINESS DEVELOPMENT
Dr. McConaghy has a wealth of experience in the investment
banking, mining and energy sectors. He has been an advisor
to international governments and state bodies as well as
multinational companies on a diverse range of business
investments relating to financing, infrastructure development,
risk management, strategic planning, mining and energy projects
as well as regional economic development. Dr. McConaghy
has held Board positions with a number of investment banks
in Australia, the US and Europe and international energy
trading companies and was head of energy policy for the
Queensland Government.
Prior to joining Petromin, Dr. McConaghy owned a global
resources and strategic energy advisory company based in
Houston, Texas. Corporate clients included governments in
the Middle East, Europe, North America, Australia and Africa
associated with diverse projects including uranium, copper,
nickel and gold mining, undersea gas pipelines, strategic gas
hubs, oil and gas field development, power station development
and financing, energy trading and financial engineering
(derivates design). He is a Member of the American Bankers’
Association, the Economic Society and a Director of Petromin’s
subsidiary companies.
Dr. Bruce McConaghy has a PhD in Economics. He has
also undergone further Post Graduate Studies in Applied
Mathematics, Quantum Mechanics and Corporate Management.
021
PETROMIN MANAGMENT
KARO LELAI, LLB, MBA
MANAGER – SPECIAL PROJECTS
/ACTING EXECUTIVE OFFICER
TO MD & CEO
Karo Lelai graduated from the University
of PNG with a Bachelor of Law in 1997.
She received a certificate of training from
the Legal Training Institute in 1998. Mrs
Lelai has nine years of commercial law
experience with reputable commercial
law firm Posman Kua Aisi Lawyers, prior
to joining Petromin in early 2008 and
is a graduate member of the Australian
Institute of Company Directors. She
completed a Masters in Business
Administration at the University of PNG in
2012. Mrs. Lelai is also Deputy Chairman
of the PNG Athletes Commission and
is a Board member of the PNG Sports
Federation and Olympic Committee.
She is a registered member of the PNG
Law Society. Mrs Lelai is a registered
professional member of the PNG Institute
of Directors.
ROGER AVINAGA,
BA (HONS), MSC
JACK SARI, BSC, MSC
CHIEF GEOLOGIST AND MANAGER,
MANAGER, BUSINESS
DEVELOPMENT
Roger Avinaga holds a Master of
Petroleum Finance and Taxation from
Dundee University, UK. He graduated
from UPNG with a Bachelor of Arts
(Hons) in International Relations. He
has 16 years of commercial experience
in; finance, economics, fiscal, taxation
and policy relating to the petroleum
and mineral sectors. He is skilled in
economic modelling, financial and cash
flow analysis, petroleum cost reporting,
drafting policies and business plans/
strategies. He is also knowledgeable
on; gas project and international
gas business, petroleum finance and
accounting principles, petroleum
financial management, international
petroleum marketing and petroleum
policy management. He has spent over
a decade working with the Department
of Petroleum and Energy until joining
Petromin in 2008 was the Assistant
Director for Petroleum Policy and Senior
Petroleum Economist.
MELVIN YALAPAN,
LLB, LLM
MANAGER, LEGAL
AND CONTRACTS
Melvin Yalapan has a Master of Law from
the University of Melbourne, specialising
in natural resources law and financial
transactions law and holds a Bachelor
of Law from UPNG. He has a significant
wealth of knowledge and experience in
PNG oil, gas and mining sectors, practicing
as a lawyer both in upstream and
financing of PNG resource projects. He
has practiced as a commercial lawyer for
over 20 years.
Jack Sari has a Masters of Applied
Science majoring in Geology from the
Queensland University of Technology and
a preliminary Masters in Geology from the
University of Sydney. He holds a Bachelor
of Science degree majoring in Geology
form UPNG. Mr Sari has over 30 years
experience as a Petroleum geologist in
PNG. From 2004 to 2008 he was the
General Manager and Chief Geologist of
Cheetah Oil and Gas Ltd. Before joining
Petromin he occupied senior managerial
and technical positions with resource
companies including; Technical Manager
for Oil Search Ltd, Manager Assets for
Orogen Minerals Ltd, Senior Geologist
with Oil Search Ltd and Senior Petroleum
Geologist for the Department of Mining
and Petroleum.
WILFRED LUS,
BSC (HONS), PHD
CHIEF GEOLOGIST & MANAGER
MINERAL EXPLORATION
Wilfred Lus holds a BSc (Hons, First Class)
in Geology from University of Papua
New Guinea (UPNG); a PhD in Geology
and Experimental Petrology from the
Australian National University. He was a
lecturer in Geology at UPNG from 20002005 and has published in a number
of internationally refereed geological
journals. He has over 18 years as a
field geologist in the mineral industry in
PNG and abroad with CRA Explorations,
Solomon Gold, Australian Resource
Management and Magma Mines. His
experience also included marine geology
work in Manus Basin and offshore
Aitape where he completed a number of
manned submersible dives with Japan
Marine Science and Technology Centre
(JAMSTEC). Prior to his appointment
with Petromin in 2009, he was project
manager and senior geologist with
Barrick Gold. Dr. Lus is a full member
of Australasian Institute of Mining and
Metallurgy (AusIMM).
BABANI MARAGA
MANAGER GOVERNMENT
AND PUBLIC AFFAIRS
Babani Maraga joined Petromin in July
2008 as Senior Community Affairs
Coordinator. He has a Post-graduate
Diploma in Communications Practice from
Queensland University of Technology. He
completed other work-related training
programs in his previous employment
as a public servant, diplomat, public
relations officer and journalist. Mr Maraga
is a former Acting Deputy Secretary
(Operations) of the Department of
Foreign Affairs & Immigration. He served
as PNG High Commissioner to Fiji from
1994-2003, with concurrent accreditation
as High Commissioner to Kiribati, Nauru
and Tuvalu. He has represented PNG in
many bilateral, regional and multilateral
meetings as either leader or member of
official delegations. He also voluntarily
serves on committees and boards of
community and educational organizations
in Port Moresby.
023
PETROMIN MANAGMENT
WAYNE KASOU, LLB
COMPANY SECRETARY /
MANAGER GOVERNANCE
AND BOARD AFFAIRS
LYNDAH BROWN-KOLA
MANAGER MINERAL PROJECTS
Lyndah has a bachelor of Mining
Engineering from the Papua New Guinea
University of Technology. She has over
14 years experience in the mining
industry, with a proven track record in
managing multiple projects with various
stakeholders, as well as operational,
design and construction experiences. Prior
to being appointed as Manager-mineral
projects for Petromin PNG Holdings
Limited, she worked with the Mineral
Resource Authority (MRA) as Manager
for the Technical Assessment Branch.
Her responsibilities at the time include,
planning and coordinating the operational
activities of the branch to achieve the
defined objectives defined in the Annual
Regulatory Division’s work plans required
by the Authority. Moreover, Lyndah’s
experience also comprises having being
employed by Lihir Gold Limited for the
last 9 years as Plant Metallurgist and
within the period progressed to the
position of senior projects metallurgist.
PALLI S RAO, M.TECH
MANAGER, LNG
Palli Rao holds Masters of Chemical
Engineering from the Institute IIT
Madras-India. He has over twenty
two years of experience in the oil and
gas sector handling multibillion dollar
projects. His previous roles included
Refinery Manager and Project Engineering
Manager for Indian Oil. He has also
worked in Nigeria as Engineering Manager
for a natural gas project operated by
Shell. He has held senior management
roles in the oil and gas sector including
engineering manager, project manager,
refinery manager for multi billion
dollars oil and gas projects. He has
experience in upstream, downstream
and midstream project, engineering
management, operation and construction
and international standard. Mr Rao was
appointed PNG Manager in 2011.
Wayne Kasou commenced as Company
Secretary and Manager Governance and
Board Affairs on September 1, 2012 after
serving for a short period as ManagerSpecial Projects. He holds a Bachelor of
Laws Degree from the University of PNG
having graduated in 1999 and is currently
completing a Masters Degree in Public
Administration from the Divine
Word University.
Mr.Kasou commenced his professional
career with reputable commercial law
firm PosmanKuaAisi in 2001. In July 2009
he joined the National Roads Authority
as the Board Secretary for three years
before joining Petromin in August 2012.
Apart from providing the secretariat to
all subsidiary companies of Petromin,
he also ensures strict compliance on all
board and corporate governance matters.
Mr. Kasou is a registered professional
member of the PNG Institute of Directors
and a board member of the Korobosea
International School. He is a registered
member of the PNG Law Society.
PETROMIN MANAGMENT WAS
STRENGTHENED IN 2012 WITH
THE ADDITION OF TWO
NEW MANAGERS.
025
PETROMIN MANAGMENT
DANIEL PATRICK
KATAKUMB, BBM, DLA
TOM GESA, BBM (PS)
MANAGER, HUMAN RESOURCE
& ADMINISTRATION
SAKI IPATA BCACPNGUT
MBAUPNG ACPAPNG
FINANCIAL CONTROLLER
Saki Ipata has a Bachelor of Commerce in
Accountancy from the PNG University of
Technology and MBA from the University
of Papua New Guinea. He is an Associate
Member of PNG Institute of Accountants
(CPA) and is a registered Tax Agent
of the Internal Revenue Commission.
A registered accountant, he has over
seventeen years work experience with
Accounting/Finance, Audits and Taxation.
He was previously Financial Controller of
the Coffee Industry Corporation (2005
– 2008). Prior to this he held number
of senior management positions with
the Coffee Industry Corporation Limited
(1998 – 2005), and from 1994 to 1997
he was with Price Water house Coopers
as the Accountant with Business Advisory
Services Division.
Tom Gesa is an educationist by profession
after graduating from the former UPNG
Goroka Campus in 1981. He also holds a
Bachelor Degree in Business Management
from the University of Papua New Guinea.
An education administrator cum Human
Resource practitioner, he has significant
wealth of knowledge and experience in
the PNG education system, particularly
in aspects of successful secondary
school management.
Mr Gesa has valuable experience in Public
Service Management, having served
as Director of Education Services and
Deputy City Manager, Community and
Social Services with the National Capital
District Commission. He is a Council
member of the Papua New Guinea
Human Resource Institute. Prior to being
appointed Manager Human Resources
and Administration, he was the Senior
Human Resource Officer with Petromin
PNG Holdings Limited.
MANAGER, PROPERTIES
& SECURITY
Daniel Patrick Katakumb has a Bachelor
of Business & Management (Policy) and
Diploma in Land Administration from
the University of Papua New Guinea.
He has 36 years’ experience as a Land
Administrator and in-depth knowledge
of the Papua New Guinea Land
Administration Process and Procedures.
Mr Katakumb was a senior member of
the State Technical Team overseeing
the PNG Non-Renewal, Renewable and
Infrastructure Projects. He was also a
Team Leader of State Technical Team
carrying out awareness on Voluntary
Customary Land Registration Act. He
is an active Member of the Papua
New Guinea Institute of Valuers and
Land Administrators and a Councillor/
Committee Member of the Institute.
Mr Katakumb was the Acting Deputy
Secretary, Operations; Department
of Lands and Physical Planning
(2000-2001). Before joining Petromin
in 2010 he served as Director for Land
Administration Division.
027
CORPORATE STRATEGY
Our Corporate Strategy forms the basis of the development of the Business Plan and the respective Business Unit Action Plans.
Petromin’s Vision and Mission statements are all in line with our legislative mandate and our Corporate Strategy promotes our purpose.
In 2008 the Board established the ‘Petromin Corporate Strategy’ to guide the development of business policies and plans over the next five
to ten years. The decision to adopt this Corporate Strategy was based on a detailed functional analysis that identified six key components.
STATEMENT OF PURPOSE,
This comprises our Vision, Mission, and Corporate Objectives, and compels the Board and the Executive Management Team to
achieve the shareholders’ noble aspirations.
STRATEGIC DRIVE
The Strategic Drive identifies Petromin’s competitive direction through the application of Critical Success Factors.
These factors recognize the complex nature of the business and the difficult and competitive environment in which it operates.
CORE BUSINESS FUNCTIONAL AREAS
Our Core Business Functional Areas consist of the Petroleum, Mining and New Ventures and Business Development divisions.
These business units focus on delivering the six functions core functions of the Company and ensuring Petromin’s corporate
strategy is in line with its mandate.
RESOURCE ALLOCATION & SUPPORT FUNCTIONAL AREAS
These areas of the Company comprise Corporate Services and Financial Operations, Corporate Governance and Stakeholder
Relations. These business units ensure the Core Business divisions deliver by providing business strategies, policies, systems and
administrative support.
IMPLEMENTATION STRATEGIES
These strategies are budget driven and provide the overarching priorities in terms of policies, resources and detailed business plans.
Performance Indicators and Lead Business Units are identified.
MONITORING AND REVIEW STRATEGIES
These strategies assess performance and undertake “SWOT” analysis from time to time to ascertain the need for change.
The Critical Success Factors and Corporate Values will be applied to ensure maintenance of Petromins competitive edge, good asset
growth and timely delivery of profitable returns to the shareholders, namely the people of Papua New Guinea and our business partners.
PETROMIN’S VISION AND MISSION
STATEMENTS ARE ALL IN LINE
WITH OUR LEGISLATIVE MANDATE
AND OUR CORPORATE STRATEGY
PROMOTES OUR PURPOSE.
029
GROUP PHOTO- NAMES / FROM RIGHT TO LEFT - BACK ROW
1. Mr. Andrew Waio (Security Officer) 2. Mr. Jack Denmark (Security Officer) 3. Mr. David Bepi (Security Officer) 4. Mr. Nathan Buka (Security Officer) 5. Mr. Timothy Magufi (Security Officer) 6. Mr. Mark Kalimbo (Security Officer)
7. Mr. Andaya Agiru (Security Officer) 8. Mr. Gershom Isaac (Security Officer) 9. Mr. Peter Smith Ipapuni (Accounts Payable Officer) 10. Mr. Chris Wamugl (Exploration Geologist –Minerals) 11. Dr. Wilfred Lus (Manager – Minerals
Explorations) 12. Mr. Smith Aliva (Security Officer) 13. Mr. Darren Ninkama (Legal Officer) 14. Mr. Daniel Katakumb (Manager – Properties & Security) 15. Mr. Balthazar Wally (Protocol Officer) 16. Mr. Isaac Kororo (Security Officer)
17. Mr. Rohan Bola (Program Officer – GIS) 18. Mr. Jack Sari (Manager –Petroleum Exploration) 19. Mr. Patrick Talu (Public Relation Officer) 20. Mr. Wayne Kasou (Company Secretary) 21. Mr. Charlie Paul (Handyman)
22. Mr. Dominic Sebong (Senior Business Analyst) 23. Mr. George Karingal (Graduate Trainee – NVBD) 24. Mr. James Eto Singo (Security Officer) 25. Mr. Tom Gesa (Manager – HR & Admin) 26. Mr. Moses Kami (Handyman)
27. Mr. Philip Hehonah (Graduate Trainee –Legal) 28. Mr. Aisi Hubert (Admin Driver) 29. Mr. Adrian Dentana (Graduate Trainee – Geologist-Minerals) 30. Mr. Danny Taa (Security Officer) 31. Mr. Michael Benny (Security Officer)
32. Mr. Japheth Kumo (Senior Petroleum Engineer) 33. Mr. Sam Inguba (General Manager –Corporate Services) 34. Mr. Ken Vei (Graduate Trainee – Petroleum) 35. Mr. Mathew Wrakuafie (Security Officer)
36. Mr. Igua Toua (MD’s Driver) 37. Mr. Robin Slim (Security Officer)
FROM RIGHT TO LEFT - FRONT ROW
1. Mr. Lyndsay Abal (Graduate Trainee- Accounts) 2. Mr. Collin Wasi (Security Officer) 3. Mr. Sihl Ure (Senior Marketing Officer) 4. Mr. Jimmy Miroi (Senior Community Affairs Officer) 5. Mr. Junior Koipi (Graduate Trainee –Mining
Engineer) 6. Mr. Vitus Jamba (Logistics Officer - Minerals) 7. Mr. Andy Yoro (Gardener) 8. Mr. John Mosoro (Senior Environmental Officer) 9. Mr. Saki Ipata (Financial Controller) 10. Mr. Roy Sangi (Senior IT Systems & Development
Officer) 11. Mr. Sailas Tipayamb (Graduate Trainee – Environment) 12. Mr. Bernard Pawih (DGM - Petroleum) 13. Mrs. Karo Lelai (EO-MD & Special Project Manager) 14. Ms. Darlene Savoa (Receptionist) 15. Mrs. Dago Ragen (Payroll
Officer) 16. Mrs. Margret Guina (Senior Admin Officer) 17. Ms. Lyndah Kola Brown (DGM - Minerals) 18. Ms. Cecilia Teliwa (Personal Assistant to MD) 19. Mrs. Heggar Amos (Executive Secretary -Board) 20. Ms. Mathilda Namorong
(Graduate Trainee -Legal) 21. Ms. Rita Ani (Janitor) 22. Ms. Slady Surute (Board Affairs Officer) 23. Ms. Jenifer Bernard (Security Officer) 24. Mrs. Albertina Jones (Executive Assistant –DGM –Minerals) 25. Ms. Miriam Tipanda
(Receptionist) 26. Ms. Pauline Arazi (Assistant to Manager –HR & Admin) 27. Mrs. Elmi Taman (Executive Assistant – DGM -Petroleum) 28. Mrs. Marissa Peni (Accounts Payables Officer) 29. Ms. Ware Wala (Executive Assistant
-CFO) 30. Mr. Stanley Sungi (Graduate Trainee -Accountant) 31. Mr. Raphael Apa (Exploration Geologist -Minerals) 32. Mr. Roger Avinaga (DGM - NVBD) 33. Mr. Michael Konnie (Logistics & Admin Officer – Minerals )
34. Mr. John Willie (Graduate Trainee –Mining Engineer) 35. Mr. Ryan Yerro (Senior Properties Officer) 36. Mr. Andrew Wavi (Security Officer) 37. Mr. Melvin Yalapan (Manager – Legal & Contracts)
031
CORPORATE
GOVERNANCE
PETROMIN’S MANDATE
ALLOWS IT TO
PARTICIPATE IN THE
ENTIRE VALUE CHAIN
IN THE MINING AND
PETROLEUM INDUSTRIES
FROM EXPLORATION
AND EVALUATION
TO DEVELOPMENT.
THE PETROMIN BOARD
Petromin’s mandate allows it to participate in the entire value
chain in the mining and petroleum industries from exploration
and evaluation to development.
FINANCE AUDIT AND COMPLIANCE COMMITTEE OF THE BOARD
The Board has also established the Finance Audit & Compliance Committee as a standing Committee. The Finance Audit &
Compliance Committee is primarily responsible for –
• considering and recommending to the full Board whether or not to approve draft audited financial statements;

• approval of the Business Plan and any amendments thereto;

• considering and recommending to the full Board whether or not to approve annual budget or any variations;
• amending the Constitution;
• overseeing implementation of the Investment Guidelines, Contracts and Tender Policy and the Risk Management Policy; and
• conducting or investing in any mining or petroleum
• other duties as delegated by the Board.

Section 4(4), in particular, sets out Petromin’s principal objective
which is “to hold and develop mining and petroleum tenements
in [PNG] either alone or with others…”. To this end, Petromin may
be appointed as State Nominee to acquire and hold interests in
mining and petroleum projects in PNG on behalf of the State or
Petromin may commercially acquire such interests on its
own accord.
Schedule 1 of the Petromin Constitution specifies matters that
require shareholder resolution, in addition to the requirements
of the Companies Act and the substantive provisions of the
Constitution. These include –
exploration or development activities in any tenements
within or outside of PNG; and
• reducing or increasing share capital of the Company.

Petromin was purposely intended to operate independently of
the State (as regulator and legislator) but for the benefit of the
State (as Beneficial Shareholder). Its unique corporate structure
was put in place purposely to ensure stability at the Board and
top Management level, to facilitate achievement of its National
mandate as set out in section 4(2) of the Petromin Act.
The Petromin Constitution contains other provisions regulating
conduct of and quorum for shareholder and Board meetings,
appointment and removal of secretary, duties of Directors,
appointment and removal of Managing Director, appointment and
removal of Chairman, shareholding, audit requirements and so on.

Section 4(2) of the Petromin Act states the Company’s mandate
“to operate as a commercial enterprise at least as efficiently as
a comparable business in Papua New Guinea and to maximize
the value of the shareholder’s investment in the Company.”

Petromin was established for purposes of implementing
the Petromin PNG Holdings Limited Authorization Act 2007
(Petromin Act). Petromin is indirectly, but wholly owned, by
the Independent State of Papua New Guinea (State) through a
unique shareholding structure established under the Petromin
Trust Deed dated 6 June 2007.
All candidates for directorship are further required to satisfy
the stringent requirements of the Fit & Proper Guidelines
for Appointment of Directors which is applied by the Trustee
Shareholder prior to approving appointments or re-appointments,
as the case may be. In addition to the Companies Act and the
Petromin Constitution, the Guidelines also set out additional
grounds for removal of Directors, which grounds include breach
of the Guidelines subsequent to appointment.

Petromin PNG Holdings Limited (Petromin) was incorporated
under the Companies Act 1997 on 29 March 2007.

MANDATE
Section 109 of the Companies Act vests management of the
Company in its Board of Directors. The composition of the
Board is governed by the provisions of the Petromin Constitution,
which requires the majority of Directors to “be PNG citizens who
are independent of the State and are relevantly qualified and
experienced”. The Petromin Constitution also specifies prerequisites for all Petromin Directors, including the requirement
to be “widely considered to be of good character and repute
and of high business integrity in the PNG community and must
satisfy minimum requirements as to tertiary level education and
relevant work experience”.
OTHER BOARD COMMITTEES
Ad hoc committees are established as and when required for special purposes and then disbanded.
033
The Trust Deed also specifies that the person appointed as the
Petromin Company Secretary is also the Secretary to the Trust.
Hence, all records of the Trust are maintained, on a confidential
basis, in the office of the Petromin Company Secretary.
PETROMIN MANAGEMENT
Below the Managing Director, are two tiers of Management,
the General Managers and the line Managers. Together, they
implement Board policies, decisions and directions.
SUBSIDIARIES
Schedule 4 of the Petromin Constitution specifies a form of
constitution for all wholly owned subsidiaries, which mirrors the
provisions of the Petromin Constitution, to ensure control rests
in the hands of the Petromin Board. For example, the prescribed
form of constitution for subsidiaries also has the same list
of matters that require shareholder approval from Petromin.
Such approval is required to be given in the form of a Holding
Company Notice signed by two Petromin Directors or one
Director and the Company Secretary.
The Petromin Board has approved a policy for the management
of all wholly owned subsidiaries to be comprised of senior
members of Petromin Management. This ensures control and
consistency at this critical infancy stage of each subsidiary.
SHAREHOLDING STRUCTURE
On 6 June 2007, the Petromin Trust was launched. Under the
Petromin Trust, the Prime Minister is the legal owner of the one
issued share in Petromin (Trustee Shareholder), being the only
share on issue, holding that share on trust for the benefit of the
State as Beneficial Shareholder.
The Trustee Shareholder has all the usual powers of a
shareholder. However, the Trustee Shareholder cannot exercise
his shareholder powers independently of the Manager of the
Petromin Trust. All exercise of shareholder powers must be
done in accordance with a unanimous resolution of the Manager
of the Petromin Trust. In the event that one Individual Trust
Manager does not agree on a resolution, the casting vote will be
decided by the Trustee Shareholder.
The Petromin Trust has its own funds and bank accounts, which
are maintained separately from those of the Company and its
subsidiaries. The Trust’s operations are managed solely by the
Manager of the Petromin Trust.
The Trust Deed requires the Trust to conduct an annual audit of
its accounts by a reputable audit firm, which it has complied with
to date. The Trust pays for its own audits and annual reports
are provided to the Trustee Shareholder on the Trust’s operations
which include audited financial reports.
The Trustee Shareholder, through the Trust Manager as duly
appointed proxy, on the unanimous recommendation of the
Board and the Manager of the Petromin Trust;
• Accepted the 2011 audited financial statements of
the Company;
• Approved the appointment of Deloitte Touche Tohmatsu as
the Petromin Group’s auditors for 2012.
Following the Annual General Meeting an official announcement
was made to invited guests, including Ministers, Governors,
Members of Parliament, representatives from the public and
private sectors, in relation to the company’s performance during
the past financial year.
All the required accounting policies and procedures are in
place for Petromin and each of its operating subsidiaries.
Petromin is in full compliance with the requirements of
the Companies Act and has been up to date with statutory
reporting requirements under that Act since incorporation on
29 March 2007. Petromin’s accounts are maintained and
audited in accordance with international accounting standards.
The 2011 Annual General Meeting was held on Friday June 15,
2012. The Board, the Manager of the Petromin Trust in its own
right and as the duly appointed proxy of the Trustee Shareholder,
were all in attendance.

ACCOUNTING POLICIES
AND PROCEDURES
2011 ANNUAL GENERAL MEETING

Under the Trust Deed, the Petromin Trust Manager is comprised
of three Individual Trust Managers being 1. the President of the PNG Law Society or his nominee. The former
President and/or the Minister for Justice and Attorney General,
Kerenga Kua, nominated Mr. Robert Bradshaw, a senior and
well-respected legal practitioner in PNG;
2. the President of Certified Practicing Accountants (PNG) or his
nominee. Mr. Douglas Anayabere was appointed as nominee
of the then President, Mr. Peter Pokawin prior to Mr. Pokawin’s
term as President ending in late 2010. Under the Trust Deed, the
appointment of a nominee continues regardless of the appointer
ceasing as President; and
3. the State Solicitor of PNG, Mr. Daniel Rolpagarea currently
holds the position of Individual Trust Manager in his capacity
as State Solicitor.
035
PETROMIN GROUP
OF COMPANIES
Petromin PNG Holdings Limited is an Independent company created by the State
of Papua New Guinea to hold the State’s assets.
Its prime purposes are to maximise indigenous ownership and revenue gains in the mineral and petroleum sectors. It is empowered
as the vehicle to better leverage the State’s equity holdings and encourage more production and downstream processing of oil, gas
and minerals in PNG through proactive investment strategies either wholly or in partnership with other investors.
Petromin has six wholly owned operating subsidiaries as at 31st December 2012.
EDAPETROMIN
OIL LIMITED
OWNERSHIP:
Wholly owned subsidiary
Moran Petroleum Project.
PNG HOLDINGS LIMITED
PNG’s National Oil, Gas and Minerals Company
PETROMIN
TOLUKUMA GOLD
MINES LIMITED
OWNERSHIP:
Wholly owned subsidiary.
Tolukuma Gold Mine.
PETROMIN
KUMUL
LNG
LIMITED
EDA PETROMIN
LNG LIMITED
OWNERSHIP:
Elk/Antelope LNG Project.
PETROMIN
EDA MINERALS
LIMITED
OWNERSHIP:
Mineral Exploration.
OWNERSHIP:
PNG LNG Project.
PETROMIN
EDA
ENERGY
LIMITED
OWNERSHIP:
Petroleum Exploration.
037
MAJOR
ACTIVITIES
EXPLORATION
ACTIVITIES
1. MORAN OIL PROJECT
11.3%
The Moran Oil Field is located in the Southern Highlands of
Papua New Guinea. Oil Search Limited is the Operator of the
Greater Moran Unitized Field with other joint venture partners
from PDL-2, PDL-5 and PDL-6.
Petromin through Eda Oil, a 100 % wholly owned subsidiary, has
an interest of 20.5 % in PDL 5 which equates to 11.275 % in the
Greater Moran Unit.
Oil production performance in 2012 was moderate with an
actual production rate of over 10,000 barrels of oil per day
(bopd), which is slightly below forecast. The lower production
was due to tank top curtailment at the oil storage facilities
as the result of a suspected leakage at the Kumul Marine
Terminal, and for a shut-in of production facilities for the PNG
LNG project tie-in civil works. Natural decline in production,
high gas-oil-ratio, and wells shut-in for remedial work-over
and maintenance on production facilities also contributed to
the decrease. The Operator continued to maintain an effective
reservoir management practice to ensure production was up
with forecast.
A number of development wells have been matured to maximise
oil production from the Moran field. One development well (Moran
13ST1) was drilled during the 2012 fourth quarter, and initial
results are very encouraging. Further wells are planned for 2013.
PNG LNG TOTAL PROJECT PROGRESS
26.8%
Oil Search 49.5 %
CUMULATIVE
Exxon Mobil 26.8 %
100%
Eda Oil 11.3 %
Nippon Oil 8.3 %
MRDC 4.1 %
49.5%
75%
50%
PLAN
4.1%
ACTUAL
25%
8.3%
Greater Moran Unit Joint Venture Partners Equity (PDL 2, 5, 6)
REVISED TARGET: 78%
ACTUAL: 77%
0
JAN
‘10
APR
‘10
JUL
‘10
OCT
‘10
2. PNG LNG PROJECT:
2012 KUMUL LNG – ACTIVITIES SUMMARY
The execution of the PNG LNG project is currently into its third
year from commencement in March 2010. The construction
is planned to take four years before first cargo. Six major
Engineering, Procurement and Construction (EPC) contracts
have since been executed for the Project. In advance of these
major contracts, early works contracts were also awarded
in 2009 for infrastructure in the Gulf, Southern Highlands
and Central Provinces. These include; civil works at Hides
and Kutubu, upgrade and construction of roads and bridges,
training and camp facilities.
According to the Operators December 2012 monthly progress
report, overall progress is 77 % complete against a target of 78 %.
EPC2-OFFSHORE PIPELINE This construction project has
achieved 100 % Mechanical completion..
EPC3 -LNG PLANT This construction project is progressing
well, as is ahead of schedule by 5 %.
EPC4-HIDES GAS CONDITIONING PLANT (HGCP) All
foundation work is completed and piping work is in progress.
EPC5 A-ONSHORE PIPELINE The 34 inch main pipeline
welding is approximately 58 % complete and the 8 inch
condensate line welding is in progress.
EPC5B-KOMO AIRFIELD The Airfield is 80 % complete as of
December 2012, and the Operator anticipates commencement
of operation in the first quarter 2013.
OIL SEARCH LIMITED (OSL):
ASSOCIATED GAS RELATED
PROJECT / KUTUBU
PIPELINE SYSTEM
LIFE EXTENSION
Life Extension Approximately
90 % of civil works to extend
the life of the Kutubu Central
Processing Facility and the
Kutubu Pipeline System to
cater for the PNG LNG Project
was completed as of
December 2012.
JAN
‘11
APR
‘11
JUL
‘11
OCT
‘11
JAN
‘12
APR
‘12
JUL
‘12
OCT
‘12
JAN
‘13
APR
‘13
JUL
‘13
OCT
‘13
JAN
‘14
APR
‘14
ACTIVITIES
CONTRACTOR
TARGET
ACTUAL
C1: Early works infrastructure
Clough Curtain Brothers (CCJV)
100 %
99 %
EPC2: Offshore pipeline
Saipem
100 %
100 %
EPC4: Upstream facilities
CBI Clough JV
53 %
52 %
EPC5A: Onshore pipeline
Spiecapag
58 %
58 %
EPC5B: Komo Airfield
McConnel Dowel & Consolidated
Contractors (MCCJV)
100 %
80 %
EPC3: LNG Plant
Chiyoda & Japan Gas Corporation
74 %
79 %
100 %
89 %
78.0 %
77.0 %
OSL: (AGRP/KPSLE)
TOTAL PROGRESS
PNG LNG Project Cumulative Progress Summary as at end December 2012 Source: PNG LNG Quarterly Environment and Social Report [Fourth Quarter 2012]
JUL
‘14
039
33.2%
29%
Esso Highlands Ltd (33.2 %)
Oil Search (29 %)
IPBC (16.6 %)
PNG LNG LOADING
JETTY (IMAGE
COURTESY OF ESSO
HIGHLANDS LIMITED)
Santos (13.53 %)
Nippon Oil (4.67 %)
MRDC (2.8 %)
Eda Oil (0.2 %)
16.6%
0.2%
2.8%
4.7%
13.5%
PNG LNG Joint Venture Equity Partners
3. NEW IRELAND BASIN EXPLORATION
Nine new Petroleum Prospecting Licenses (PPLs) were awarded to Eda Energy Ltd, wholly owned upstream subsidiary of Petromin
PNG Holdings Ltd, in July 2012, making the company 100% owner and operator of 10 PPLs awarded over the New Ireland Basin. The
licenses cover areas over the New Ireland Province in the southeast and Manus Province to the northwest. Two other applications to
the south are pending review by the State.
Initial exploration of the New Ireland basin has focused on the southeast part of the basin. Preliminary assessment of the petroleum
potential based on old seismic and geologic data suggests the region could be prospective for hydrocarbons. New field geologic and
seismic data is required to further evaluate the potential for petroleum in the basin.
PPL411
EDA EN
PPL410
EDA EN
PPL407
EDA EN
PPL406
EDA EN
PACIFIC OCEAN
PPL408
EDA EN
PPL412
EDA EN
PPL345
EDA EN
PPL409
EDA EN
PPL346
EDA EN
PPL415
EDA EN
APPL416
EDA EN
APPL415
BISMARK OIL CO
PPL324
TESCOM
PPL352
PEAK OIL
PPL347
EDA EN
BISMARK SEA
New Ireland Basin License Map
041
SHELL-PETROMIN ALLIANCE
A major regional study of the Gulf of Papua was completed between May and September 2012 as part of the Petromin-Shell
Alliance Joint Technical Study. Geoscientists from both companies carried out the study in the Shell office in Kuala Lumpur. The study
covered the offshore area within the Western, Gulf and Central Provinces, and involved the interpretation of over 12,000km of 2D
marine seismic data, using Shell’s petroleum exploration technology.
Several reservoir distribution areas have been mapped as a result of this study which would guide further exploration of the Gulf of
Papua area.
Below : Petromin/Shell Alliance joint technical study team. From left : Sabbah Kloah, Petromin Senior Petroleum Geologist, Mark
Gerrits, Shell Exploration Manager Asia Pacific Region, Ken Vei, Petromin Geophysicist, Gerie Powel, Shell Head of Global Exploration,
Guy Loftus, Shell Vice President Asia Pacific Region, Jack Sari, Petromin Chief Petroleum Geologist and John Voon, Shell New
Ventures Exploration Manager, Asia Pacific Region.
PETROMIN IS THE STATE’S NOMINEE FOR
10 PETROLEUM RETENTION LICENSES
LOCATED WITHIN THE PAPUAN BASIN
4. PPL 328 PASCA
GAS/CONDENSATE DISCOVERY
PPL 328 over the Pasca gas discovery within the Gulf of Papua
was awarded to a joint venture comprising Twinza and Eda
Energy Ltd with effect from 31 October 2011. The Pasca gas
discovery was made in 1969 by Phillips Petroleum. In 1983 an
attempt to appraise the discovery resulted in a gas blow out.
Subject to conclusion of a Joint Venture Operating Agreement
(JVOA), Petromin will take up a 10 % equity in the license, and
Twinza will be the Operator with 90 % equity.
Twinza has progressed an initial work program comprising
studies of well, seismic and engineering data associated with
past Pasca exploration and drilling operations. Exploration and
investigation of the Pasca field over the next few years should
result in knowing how much gas was lost following the blow-out
in 1983, and the estimated remaining volume.
5. PRL 4 STANLEY
GAS/CONDENSATE FIELD UPDATE
An Application for Petroleum Development License was lodged
in August 2012 following an aggressive appraisal program
and field development planning. The planned development will
see both gas and condensate produced and sold to local and
regional markets.
Petromin is the State’s nominee for 10 Petroleum Retention
Licenses located within the Papuan Basin. Development of the
gas field within PRL 4 is the first project for Petromin to exercise
the State’s back-in right. The company is already in consultations
with the Operator of PRL 4 to ensure informed communications
and dialogue on the project leading to the company’s
participation at the award of Petroleum Development License.
6. 2012 EDA LNG – ACTIVITIES SUMMARY
InterOil has continued to appraise the Elk Antelope Field in 2012
with the drilling of Antelope 3. This brings the total number of
appraisal wells drilled to six.
Work is in progress to complete the components of the
Application for Petroleum Development License.
043
as a result of remedial measures being taken to develop and
increase the rate of mining and opening new mining areas that
were thought to have depleted. Additional ore drives and new
stopping areas were created and mined.
MINERAL AND MINING ASSETS
OPERATING EXPENSES
Direct operating cost for the second half of 2012 was at
K50,222,128 while the cost for the first half of the year was
K64,746,859. Stringent cost controls were implemented, which
saw spending in non-essential areas reduced. Spending in each
department was rationalized and committed to critical areas
and items.
TOLUKUMA GOLD MINE
The Tolukuma Gold Mine is one of Petromin’s key assets,
employing over 450 Papua New Guineans in a predominantly
underground operation. The mine is located 120km north of
Port Moresby within the Owen Stanley Range at an elevation
of 1,550 metres. It covers an area of approximately 8km² and
is situated within Petromin’s EL 580. The deposit type is an
epithermal vein that comprises of two sub-parallel structures,
connected by a series of linked structures trending generally
northwest – southeast. Individual veins average 0.2m – 2.0m
over a strike of more than 1.4km. Major zones included from the
north to south are Tolukuma, Zine, Tolimi, Tinabar and Gulbadi.
The Gulbadi zones include; Gulbadi and Gulbadi C veins and clay
zones of variable width are located in the intersections on two or
more structures.
MONTH
PHYSICAL RESULTS
JAN TO JUN
54,197
5.8
87.6
YEAR TO DATE
JUL TO DEC
74,592
6.0
87.1
ACTUAL
128,789
5.92
87.3
BUDGET
142,500
10.22
89.0
VARIANCE
-13,711
-4.29
-1.7
Mill Asset Usage ( %)
56.7
75.3
66.0
93.6
-27.6
Mill Throughput ((t/h)
21.9
22.5
22.2
17.3
4.9
Gold Produced ( ounces)
8884
12530
21,414
41,645
-20,231
Gold Sold ( ounces)
8587
12802
21,389
41,645
-20,256
19,927
27,419
47,345
64,419
-17,074
Silver Produced (ounces)
Mine production results
The overall planning strategy for 2012 and into the coming
years will focus on moving the mine to the south of ML104.
Concepts and plans are being worked on and limited to
equipment and man power. These plans were slowly being
implemented with resources on hand.
• Gulbadi Exhaust System- The system once opened will
create a huge waste dump area for the upcoming pits and
the operating pits; namely Banana, Fundoot and Tinabar.
• Volvo Decline from Gulbadi 1504 to Zine/Gulbadi 1450 level
and eventually to 1300RL.
• The construction of the straight haul road from Tolukuma
pit to Fundoot pit. The haul road will connect Milihamba
underground workings, the Fundoot pit and the Banana Open pit.
KULA GOLD PROJECT
Petromin has been nominated to acquire up to 30 % of the
Kula Gold project on behalf of the State. The Petromin team
has conducted in-house due diligence.
OPERATING REVENUE
Net revenue of K46,370,729 was made from the sale of gold
between July and December 2012. Revenue earned between
January and June 2012 was K31,197,592. Gold sales had
increased by 4.9 % in the second half of the year compared to
the first six months of 2012. This increase in gold sales was
Reconciled Gold Recovery ( %)
The next focus is to attack Fundoot and therefore the Gulbadi
1560 Return Air Drive (RAD) is a priority. Other very big Life of
Mine concepts on hand are:
Financial position at December 31 2012.
Reconciled Feed Grade (g/t Au)
Tolukuma lower levels will be mined from the Foot Wall Drive
(FWD) side, concepts have been drawn out and mining is on
track. Past experiences have shown that the current location
of the service routes and access development into accessing
the ore is very slim due to very bad ground conditions. The
new concept has proven that mining will have success and
developments are progressing well from the Tolukuma
1465 level.
The other plans achieved were the Tolukuma /Tolimi connection,
which was completed in October 2012. This will provide a
good ventilation system and thus assist in moving the concept
forward. The connection will provide easy access from Tolukuma
into Tolimi and Gulbadi respectively.

PRODUCTION
Mill production increased in the second half of 2012 as remedial
measures were taken to immediately increase production. The
major instances of unplanned downtime which prevented further
increase to production during that period were:1. 22 day shutdown in August which was caused by unavailability of
reagent lime at the mine site. This carried over into the first few
days of September.
2. 7 days shutdown in October as a result of the hydro penstock
pipe burst.
3. 4 days shutdown within the 6 months due to unavailability of ore
as a result of equipment break downs.
4. 17 days of power interruption as a result of hydro penstock pipe
repair limiting underground mining activities.
FINANCE
Tonnes Treated (t)
Mining in the second half of the year was focused on
developing new headings taking on the current ore and waste
headings. The focus was to develop the waste headings by
year’s end, which opened up new ore drives for mining in the
coming months, creating stoping blocks for mining to move
forward. This effectively adds new mining resource and
extends the current life of mine.

CASH FLOW
The increased revenue and reduced cost enabled the mine to
clear debts with suppliers which in turn enabled most of the
critical suppliers to continue supplying the mine’s needs.
MINING DEVELOPMENT UPDATE

MINERALS EXPLORATION
& DEVELOPMENT
The project is currently operated by Woodlark Mining Limited
(WML),a company incorporated in PNG as a wholly-owned
subsidiary of Kula Gold Pty, a private Australian Company. The
major share holders of the projects are Pacific Road Resource
(72 %), RMB Resources (25 %) and Meratus Ltd (3 %). The
Project is located on Woodlark Island, 300km north east of
Alotau in Milne Bay Province. WML holds three exploration
licenses covering the two principal known areas
of mineralization.
BACKGROUND
Woodlark has a history of mining dating back to the 1890’s
and was the largest producer of gold prior to the discovery of
Bulolo in the early 1920’s. Historically it has produced over a
million (1000, 000) oz of gold.
PROJECT OVERVIEW
The project has completed its Definitive Feasibility Study (DFS)
in the third quarter of 2012 and has submitted all its relevant
studies and applications to respective Government Departments
and Statutory Bodies for various permits. The DFS indicated
a mine life of 9 years with an estimated gold production of
813 000 oz over this period. The Feasibility Study concluded
that there is a viable gold project based on three optimized pit
designs at a gold price of US$1600/oz from a planned 1.8Mtpa
Gravity and Carbon In Leach (CIL) plant.
The current Joint Ore Reserve Committee (JORC) is 45.1 Mt
(Measured – Indicated- Inferred) of 2.12 million ounce Au
content @ 0.5g/t low cut off grade however, for the purpose of
the DFS the Project Mineral Resources were calculated applying
a higher cut-off grade of 1g/t for 1.55 million oz gold.
Woodlark Mining is progressing well with the development of the
project, subject to the approval of relevant permits.
JETTY
KULUMADAU
WASTE DUMP
BUSAI
WASTE DUMP
BONIAVAT
MILL SITE
Location map of Main Mining Centres on Woodlark Island Project. Kulumadau,
Busai, and Boniavat
045
FRIEDA RIVER COPPER/GOLD
WAFI-GOLPU COPPER GOLD PROJECT
PROJECT OVERVIEW
The Wafi – Golpu gold – copper prospect is 60km SW of Lae.
The project area is owned by Morobe Mining Joint Venture
(MMJV) a 50:50 JV partnership between Harmony Gold
and Newcrest Mining. This mineral deposit is a complex
hydrothermal system that comprise two separate ore systems;
Wafi epithermal gold deposit and Golpu porphyry copper/gold
deposit.
The Project is rated as one of the highest grade porphyry
systems in South East Asia compared with other world
class deposits including PNG’s Ok Tedi and Panguna. The
mineralisation at the Wafi – Golpu project area is interpreted as
three distinct types. The Golpu porphyry Cu-Au system, the zone
A and B style high sulphidation epithermal system and the
Link Zone low sulphidation system.
MMJV completed a Pre-Feasibility Study (PFS) in August 2012.
The results confirmed Wafi-Golpu as a World Class deposit
with an expected mine life of 25 years. The current resource
is estimated at 28.5 million oz gold, 9.1 Mt copper and 50.6
million oz silver.
The PFS has paved the way forward for the JV partners to
conduct a Definitive Feasibility Study. Petromin is the State
nominee for the project and is working closely with MMJV and
other stakeholders.
PROJECT OVERVIEW
Frieda River Copper/Gold project is located near the border of East Sepik and Sandaun Province. The prospect is operated under EL
58, comprising an area of 149sq km enclosing the Nena, Horse-Ivaal-Trukai (HIT) and Koki deposits. The project is a joint venture
between Xstrata and Highlands Pacific.
The project is described as one of the largest undeveloped copper/gold resources in Papua New Guinea.
Xstrata Frieda River LTD completed a DFS at the end of 2012 that identified a potential operation at an estimated cost of US$5.6
billion. The study estimated a mining rate of 204,000tpa copper and 305,000 oz gold per annum for a 20 year mine life. A Bank
Feasibility Study (BFS) is likely to start soon with an aim of going into construction in 2015 and production in 2020. Petromin is
working closely with JV partners to fast track the development of the project.
NENA
nena river
PLANT BASECAMP
EKWAI
KOKI
PIT PERIMETER
EKWAI
HORSE
YANDERA COPPER
MOLYBDENUM PROJECT
PROJECT OVERVIEW
Yandera project is a copper-molybdenum
deposit located 95Km southwest of
Madang and 5 Km south of the Ramu
Nickel- Cobalt mine, Madang Province.
The project is located on EL 1335 and EL
1416 that covers 1, 200 km’s squared.
In May 2012, Marengo Mining completed
a JORC resource study on Yandera. This
comprises a Measured Resource of 248
million tonnes (Mt) @ 0.43 % copper, an
Indicated Resource of 114Mt @ 0.42 %
copper and an Inferred Resource of 218
Mt @ 0.37 % copper, based on a 0.25 %
copper cut-off. The resource estimates
incorporate all the diamond drilling up
to 2011, a total of 405 drill holes for
143,355m.
A DFS was completed in 2011 outlining
an open cut mine with 20 years mine life
processing 30mtpa to produce 90,000t
copper per annum. Petromin has an
existing Co-operation Agreement with
Marengo and is the State nominee to hold
30 % equity in the project.
IVAAL
HORSE / IVAAL / TRUKAI
TRUKAI
TUMUANOGOI
Map outlining EL 58, the Freida River deposits
YANDERA VILLAGE
GAMAGU
Aerial view of Freida River project area
SOLWARA 1
PROJECT OVERVIEW
Solwara 1 project, ML194 EL1196 is located in the Bismark
Sea between New Britain and New Ireland provinces at a
depth of 1500m.
IMBRUMINDA
DIMBI
MARENGO
BASE CAMP
GREMI
OMORA
The project is operated by Nautilus Minerals Ltd, the first
company to commercially explore for gold and copper seafloor
massive sulphide deposits. Papua New Guinea is the first
country in the world to grant exploration and mining licenses for
commercial exploitation of seafloor massive sulphide deposits.
Nautilus Minerals plans to use existing offshore technologies
along with its own patented offshore mining equipment to
extract high grade seafloor copper, gold and rich ores.
To date, an agreed commercial resolution with the State is yet to
be achieved. Petromin is the State nominee for the project.
NEW IRELAND
SOLWARA
4,6,7&8
EL 1196
EL 1374
SOLWARA 1
EL 1196
BISKMARCK SEA
EXTENT OF KNOWN
MINERALISATION
MEASURED RESOURCE
MUMNOGOI
INDICATED RESOURCE
NEW BRITAIN
INFERRED RESOURCE
LOW GRADE CORE
Location map of the main Yandera deposits
SOLWARA 5
DIRIGI
Location map of the Solwara Project
047
MINERAL EXPLORATION
The Minerals exploration division is one of Petromin’s core business areas. It works towards generating ownership and participation
in the minerals resource sector for Papua New Guineans, through the pursuit of minerals for commercialisation. The division develops
interests by actively seeking out new licenses for exploration, furthering existing prospects and developing new projects either
independently, or through partnerships.
EXPLORATION ASSETS
MINERAL EXPLORATION LICENSES:
EXPLORATION SUMMARY
Petromin subsidiary, Eda Mineral’s, core business strategy is to
explore for potential mineral deposits. In line with Petromin’s
corporate strategy, Eda Minerals Exploration has been working
on a number of priority prospects by evaluating all its current
prospects. This has occurred with the aim to delineate new
mineralisation targets within all the thirteen Exploration
Licences (ELs) which straddle an approximate total area of
35 square kilometres.
THE MINERAL EXPLORATION DIVISION WORKS
TOWARDS GENERATING OWNERSHIP AND
PARTICIPATION IN THE MINERALS RESOURCE
SECTOR FOR PAPUA NEW GUINEANS
EL1732
EL1696
EL1366
The ELs are grouped into three main categories based on their
location in relation to Tolukuma Gold Mine.
EL1271
1. Near Mine Tenements: the six ELs surrounding ML104 (Tolukuma
Gold Mine) include ELs 580, 683, 894, 1264, 1379 and 1661.
2. North East Regional Tenements: these ELs include 1271, 1297,
1327, 1366 and 1732 which are further northeast of the Near
Mine ELs.
EL1352
EL1297
3. North West Regional Tenements including ELs 1352 and 1696
which are further north northwest of the Near Mine ELs.
EL1661
Two of the ELs (1271 and 1732) are currently being operated
as joint venture with Papuan Precious Metals Limited (PPM). The
rest of the Regional ELs are 100 % owned and managed by
Eda Minerals.
EL683
TOLUKUMA

• Northwest trending Owen Stanley – Timeno Gira Fault system,

• Northeast trending Tolukuma and Yule Transfer
Structures, and

• Ring Fractures.
All of Petromin’s known mineral prospects occur along and within
the confines of the north northwest trending structures and the
reactivated north east trending transfer structures. These provide
fluid pathways for mineral emplacement, creating one of the
most highly endowed and prospective mineral districts in PNG.
KAINANTU
EL58D
WAFI
EL894
HIDDEN VALLEY
Regional geology dominantly consists of Owen Stanley
Metamorphics (Kemp Welch Beds, Emo Metamorphics and Kagi
Metamorphics, Auga Beds), Papuan Ultramafic Belt Ophiolite
(Lokanu Volcanics, suites of Gabbro), Mt. Davidson Volcanics,
Talama Volcanics, Aibala Volcanics and Holocene sediments.
Regional structural interpretations of topographic lineaments
along the Owen Stanley Range defined north-west trending
strike-slip structures as well as northeast trending deep-seated
transfer structures. The major structures comprise;
EL1327
EL1264
EL1379
TOLUKUMA
Regional geology depicting Petromin exploration licence
In Tolukuma, the mineralization is structurally controlled
epithermal (gold and silver) and closely associated with
volcanics. There are also occurrences of disseminated porphyry
copper, gold, molybdenum and skarn in places associated with
porphyry intrusions.
A summary of mineralisation styles in each of the EL’s can be
found in the table outlining mineral prospects and work status.
Most 2012 exploration activities were focused on EL 1352
drilling, simultaneously with geological mapping and sampling
programs at Ipi River. Some short follow up exploration
programs have been conducted in the near mine ELs. The follow
up exploration in EL1661 at Mt. Olom and EL894 at Etasi/
Genga, returned significantly high results which have been
recommended for further work. The aim now is to define drill
targets in these prospects to the next stage, which is exploration
drill test.
049
ELS
PROSPECTS
MINERALISATION
STATUS
580
Saki, Seriseri, Soju, Sindo
Epithermal Gold
2nd phase drilling - Completed 21 DDH{diamond drill holes}, total 2285.6m
683
Samanalan, Hoyu
Epithermal Gold
1st phase mapping / sampling completed in June, 2012
894
Etasi, GengaBadim, Hula
Epithermal Gold and Porphyry
Copper-Gold, Skarn
Detail mapping, sampling completed in December 2012
1264
Kosipe, Kailape,
Porphyry Copper, Gold
Pending work program
1271
Waria River Alluvials, Biawaria,
Epithermal Gold-Platinum, goldpaladium
PPM did follow-up sampling based on air borne magnetic survey anomalies
1661
Kone, Belavista
Massive sulphide + base metals
Followed up mapping sampling in June 2012,
1297
Milton, Sangana, Oi Creek
Gold-paladium, Gold-platinum
1327
Mt. Dye, Aikora
Gold, Gold-platinum
1352
Ipi, Bulls Eye, Varisa
Porphyry Copper-Gold
Ipi- drilling, mapping and sampling
1696
Kunimaipa
Porphyry, Epithermal veins, Skarn
1366
Eia, Tavi 1, Tavi 2
Epithermal Gold, Platinum-Gold
1379
Mt. Victoria, Iritumu
Epithermal Gold, Porphyry Copper-Gold
Reconnaissance, mapping & sampling
1732
Tubi, Waria River Alluvials
Epithermal Gold, Platinum
Group Elements
Mineral prospects and work status
Saki and Ipi River prospects are Petromin’s two major
exploration projects. In 2002, Durban Roodepoort Deep (DRD)
of South Africa conducted first phase drilling to a total depth of
2,324.25m on 28DDH. Second phase drilling was undertaken by
Petromin in 2009, subsequently nineteen (19) DDH have been
drilled to a total depth of 2,285.60 metres. To date, 47 DDH
with a total cumulative depth of 4,609.85 metres have been
drilled. A due diligence by Golders Associates in December 2011,
estimates the resource potential of Saki at a cut- off grade of
1 g/t gold to be 630,000 to 1,000,000 tonnes at a grade of
approximately 2 g/t gold for 40,000 to 70,000 oz of gold.
Ipi River prospect is a porphyry copper-gold and molybdenum
deposit. In March 2012, the first exploration drill holes, DDH001,
DDH002 and DDH003, have been drilled using Petromin owned
SC-11 drill rig. The three diamond holes have been drilled to a
total depth 1219.40m. Preliminary drilling results from
Ipi River prospect were encouraging in the initial stage; however,
high grade zones are yet to be intersected. The zone is between
100m and 400m below surface (1300m-1400m ASL). The
assay grades are reflective of typical porphyry style alteration
and mineralisation and provide impetus for further drilling to
intersect higher grade zones.
Petromin exploration employs fifteen casual employees who
are working in various fields attached as field assistants, chefs,
prospectors, camp managers, drillers, drill off-siders and field
medical officers. These casual employees work fulltime in all
exploration programs. Exploration also employs a female casual
logistics and administration officer who is based in the Port
Moresby office. All of these people have been committed to
the overall growth of Petromin since its inception and when it
commenced on its first exploration program in Saki.
ALL OF THESE PEOPLE
HAVE BEEN COMMITTED TO
THE OVERALL GROWTH OF
PETROMIN SINCE ITS INCEPTION
AND WHEN IT COMMENCED
ON ITS FIRST EXPLORATION
PROGRAM IN SAKI.
051
NEW VENTURES &
BUSINESS DEVELOPMENT
BUSINESS PLAN
The Petromin Business Plan guided the Company focus in 2012 on the prioritized
projects and budgeted resource allocation.
The Petromin Board direction instructed that the 2012 Business Plan cover a five year period from 2012 to 2017.
The Business Plan reflected the company’s goals, plans, and strategies and identified the resources available to support
business initiatives.
The Business Plan prioritised the various investment opportunities Petromin identified in the mineral and petroleum sectors by
rigorously analysing opportunities and allocating available resources accordingly.
The 2012 Business Plan had ensured that:
1. Petromin focused on projects or opportunities that it had identified, prioritized and for which it had available resources;
2. Petromin management kept track of all stages of project or opportunity development;
3. The Business Plan created benchmarks against which the management measured progress of the investment opportunities;
4. It revealed the amount of capital required to help finance the investment opportunities Petromin had identified and prioritized; and
5. Each Division and individual within Petromin is held accountable for performance.
053
RISK MANAGEMENT
APPROACH
MANAGEMENT RISK
Petromin recognises that risk management is an integral part of
mining, oil and gas business and has in place a sound system of
risk management and internal control.
Petromin ensures that its Management team adheres to
allocated budgets and do not over, or under spend, by having
strict guidelines for allocated divisional budgets. The Company’s
Financial Controller provides the Management with quarterly
reports on the status of the budget. In this way risk of
overspending is managed.
BALANCE SHEET RISK
Petromin’s corporate finance function:
• Monitors the services to the business

The Board has appointed an Audit and Compliance Committee
to specifically deal with risk management issues. The Board
approved a Risk Management Register and the management
makes quarterly reports to the Board on the status of the
implementation of the register. Given the significance of
managing risks, possible risks and ways of mitigating such risks
on priority projects are set out in the company’s business plan.
PETROMIN ENSURES THAT ITS
MANAGEMENT TEAM ADHERES TO
ALLOCATED BUDGETS AND DO NOT
OVER, OR UNDER SPEND, BY HAVING
STRICT GUIDELINES FOR ALLOCATED
DIVISIONAL BUDGETS
4. Describes the consequence of risks materialising
5. Mitigation strategies
6. Officer’s responsible
Some of the risks associated with projects vary from
transportation risk, reserve risk, environmental risk, exploration
risk, management risk, balance sheet risk and liquidity risk.
TRANSPORTATION RISK
Transporting of personnel to project sites covers all employees
and visitors being transported to the project sites, whether they
live on the camp site, or are travelling in from outside. This risk
could cause human fatalities, injuries, environmental changes,
or operational loss time. The Management ensures these risks
are mitigated through having accidental insurance, rigid safety
checks by operators and due diligence before contracting the
service provider.
ENVIRONMENTAL RISK
Petromin has a strong environmental policy that is based upon
international environmental mining, oil and gas standards. We
encourage periodical testing and public awareness. Petromin
aims at mitigating environmental risk and encouraging world
class standards for our projects.
EXPLORATION RISK
The risk is apparent when reserves are insufficient to cover the
sunk costs, which can only be recognised as capital expenditure
if the reserves are economically viable. To mitigate the effects of
this risk, Petromin conducts full appraisals, independent audits
and periodical review of exploration stages.
These risks include market risk, currency risk, fair value interest
rate risk, price risk, credit risk, cash flow interest rate risk and
liquidity risk.
• Monitors and manages the financial risks relating to the
operations of the Company.

2. Details of the risk
1. Project and type of risk
3. Provides probability weighing
• Co-ordinates access to domestic and international
financial markets

The Risk Register covers the following aspects of the company’s
activities:
055
CORPORATE
SERVICES
During the year, the company was confronted with landowner
concerns that resulted in the temporary forced closure of the
Tolukuma Gold Mine for several days. However, the swift
intervention of Petromin Managing Director & TGM Board
chairman, Mr Joshua Kalinoe, led to a smooth resolution of
issues raised by the landowners and some employees with the
re-opening of the mine after “traditional custom” ceremonies.
The TGM Memorandum of Agreement review was facilitated
by Mineral Resources Authority (MRA). The key stakeholders
Petromin Environment Section has assisted our Joint Venture
Partners with review of Environment Impact Statements (EIS)
and technical advice on the regulatory process involved in
conducting an environment impact assessment projects. The
projects for which environment reviews have been accomplished
during the year were:

• Solwara 1 EIS submitted to DEC by Nautilus Minerals
• Renewal of Environment Permits for TGM.
• Sinivit/Wild Dog Project Technical Assessment

• Environment Risk Management including use of cyanide
at TGM.
The Environment Policy Statement is a corporate initiative
that will see a paradigm shift from strictly business oriented
operations to an entity that is conscious of Corporate Social
Responsibility. The policy statement is to ensure that company
drives a policy whereby economic tools and approaches can be
applied concurrently to manage the environment sustainably
whilst maintaining economic growth. In 2012, Petromin
continued to be guided by the policy statement.

• Baseline studies on Saki and Ipi Prospects as part of the
initial environmental and geochemistry work.
INDEPENDENT STUDY
In 2012, Petromin commissioned an independent study to
review the TGM cyanide drop incident of March 2000 by an
internationally recognized expert on cyanide. The independent
study has disclosed that there is no cyanide residue in the
impact area and further downstream of the Yaloge river in the
Fane District, Central Province. The water is therefore safe for
use by local communities.
• Memorandum of Agreement meetings with State Team.
ENVIRONMENT POLICY STATEMENT
• Woodlark Island Project Environment Inception Report and
EIS by Kula Gold Limited.

In 2012, Petromin’s major environmental focus was on
addressing environmental compliance and regulation issues on
existing and new projects. Stated below are the main areas of
work that have been accomplished during the year.
• Stanley Gas Condensate Stripping Project EIS submitted
to DEC by Horizon Oil Limited

• Strategic Environment Improvement Plan for Tolukuma Gold
Mine (TGM).
Many landowner groups have been enquiring about their
interests in areas where Petromin operates or likely to
participate as State nominee, including the Elk Antelope project
in Gulf Province. Most were referred to the project developer and
relevant State authorities over issues such as social mapping,
landowner identification or related engagements.
The Petromin Corporate Business Plan requires the company
to operate in accordance with international best practice with
due consideration to national environmental laws when taking
financial investment decisions for mining and petroleum projects
around the country.
Petromin is aware of the importance of environmental priorities
and established a working relationship with the Department of
Environment and Conservation (DEC) and Minerals Resources
Authority (MRA) to ensure regulatory compliance and promote
environmental awareness in Petromin’s operations. Some of the
strategic environment assessment activities that the Company
has completed in partnership with the State include:

Similar efforts were made in the Ipi River area to ensure
continued support of landowners for the Company’s exploration
teams to carry out their drilling program.
ENVIRONMENT
REPORT 2012
STRATEGIC ENVIRONMENT ASSESSMENT ENVIRONMENT IMPACT ASSESSMENT OF
NEW PROJECTS
WITH GOVERNMENT DEPARTMENTS
The division supported the company’s Minerals Division in the
Warden Hearings conducted in various locations in Central
and Oro Provinces to promote Petromin’s exploration activities
and to secure support and confidence of landowners, including
traditional chiefs and local leaders and councillors.
In addition to Petromin Haus, the Company has purchased and
now owns a 1.4 hectare portion of land at 9 Mile outside Port
Moresby which will be utilized for future development purposes
in line with the Business Plan.

Important environment, safety and security policies have
been developed and adopted by the company in line with
international best practices.
PROPERTIES

Consultations continued towards securing the release of
Government funds under the 2012 budget for commencement
of the Tolukuma Mine Access Road Project in line with the
Government’s commitment under the TGM Memorandum of
Agreement. This is particularly important for economic growth
and other opportunities to develop for the remote communities
in the Goilala area.
In keeping with Petromin’s corporate social obligations, the
Company made donations to various church, community, sporting
and special interest groups at local, provincial and national levels.
This included support of the 2012 World Environment Day and
the 2012 Medical Symposium. Petromin staff participated in
the 2012 Soccer Charity Cup and 2012 Walk Against Corruption.
Petromin also facilitated immunization of women around the
Taurama, Korobosea, Hohola and Boroko suburbs.
Following the 2012 National Elections, relevant briefings were
provided to the Prime Minister as Trustee Shareholder and relevant
Ministers on the operations and activities of the Company.
included the Yulai Landowners Association of Tolukuma, the
Central Provincial Government, Woitape Local Level Government,
as well as Government agencies (i.e. MRA, Treasury, Justice
Department, etc.) and Tolukuma Gold Mines Ltd.

The Corporate Services Division has been advancing Petromin’s
interests through active interactions and targeted consultations
with various Government leaders, as well as senior officials at
national, provincial and local levels. This garnered continuing
support of Petromin operations and activities, including State
nomination for major petroleum and mining projects.
IMPORTANT ENVIRONMENT,
SAFETY AND SECURITY POLICIES
HAVE BEEN DEVELOPED AND
ADOPTED BY THE COMPANY IN
LINE WITH INTERNATIONAL
BEST PRACTICES.
057
HUMAN RESOURCE
AND ADMINISTRATION
PETROMIN
ORGANISATIONAL
STRUCTURE
Recruitment and retention of specialist manpower has always
been crucial and strategic to meeting the demand and outcome
of Petromin’s business. Reviews and reclassifications of position
responsibilities to meet the demand and change is ongoing.
2012 saw the recruitment of a Public Relations Officer, with the
appointment of Mr. Patrick Talu Wundai, former Business Editor
at the Post Courier and Senior Resources Journalist.
Staff turnover has been favorable, with only one resignation
for personal reasons and one with expiration of employment
contract. This represents a 2.6 % attrition rate. Staff strength
is now at 92 against an establishment of 130 as at 31st
December 2012.
Petromin continues to support up-skilling its workforce with
relevant knowledge, skills and competencies either in-house or
abroad with appropriate budgetary allocation.
Senior Legal Officer, Mr. Enoch Sihil, through Sponsorship from
the Government of the United Kingdom and Petromin’s training
support allowance, completed his Masters in Law at Dundee
University in the United Kingdom. After completion of his
Master’s Program, he will spend three months interning with
Allen and Overy Lawyers in London.
Mrs Karo Lelai, completed her Master in Business Administration
at the University of PNG.
Mr. Saki Ipata, Financial Controller, completed his Master in
Business Administration – CPA at the University of PNG.
In September 2012, under the Shell Petromin Strategic Alliance,
Chief Petroleum Exploration Geologist, Jack Sari, Senior
Petroleum Geologist, Sabbah Kloah and Geophysicist Ken Vei
completed a three month Shell-Petromin Joint Technical Studies
program in Kuala Lumpor. Petromin provided living allowances
and airfares for the three participants.
Various other training was undertaken by senior officers and
junior employees in middle management, internal auditing,
roles and duties of directorship/good governance, project
management and finance reporting. Junior petroleum engineers
97.4%
petromin remaining personnel
2.6%
COMPANY SECRETARY/
MANAGER GOVERNANCE
& BOARD AFFAIRS
MANAGING DIRECTOR
& CHIEF EXECUTIVE
OFFICER
attrition rate
also participated in the ongoing training and exposure to aspects
of sub-surface and well site engineering. The mineral geologists
continue to receive first hand practical training and exposure
under the guidance and leadership of Dr Wilfred Lus, using 3D IP
techniques (3 dimensional infrared polarization) and successfully
delivering the expected outcomes for the Ipi River minerals
exploration project.
Petromin has current and relevant Insurance covers in place
to protect the interest and assets of the Company including
its employees. These covers are varied and appropriate to the
nature of the company’s business.
Monitoring and evaluation of the human resource systems and
processes is ongoing. Applicable amendments were made to
improve our systems and processes.
The Board approved Employee Home Ownership Scheme Policy
continued to be implemented in 2012.
CHIEF FINANCIAL
OFFICER
GENERAL MANAGER
CORPORATE SERVICES
GENERAL MANAGER
NEW VENTURES
& BUSINESS
DEVELOPMENT
MANAGER PETROLEUM
MANAGER HR &
ADMINISTRATION
SENIOR
ENVIROMENT OFFICER
MANAGER LEGAL
& CONTRACTS
CHIEF GEOLOGIST & MANAGER
FINANCIAL CONTROLLER
MANAGER PROPERTIES
& SECURITY
MANAGER BUSINESS
DEVELOPMENT
MANAGER LNG OPERATIONS
& DEVELOPMENT
SENIOR IT OFFICER
MANAGER GOVERMENT
& PUBLIC AFFAIRS
GENERAL MANAGER
MINERALS
GENERAL MANAGER
PETROLEUM
DEPUTY GENERAL
MANAGER MINERALS
DEPUTY GENERAL
MANAGER
PETROLEUM
MANAGER MINERALS
CHIEF GEOLOGIST &
MANAGER MINERALS
EXPLORATION
MANAGER
ASSETS FINANCE
059
GRADUATE TRAINEE PROGRAM
As PNG’s national oil, gas and minerals company, Petromin understands that its growth and ability to remain competitive depends
on a well established management process of quality recruitment, training and development programs for our technical and
professional staff.
In 2012 Petromin had a total of eleven graduate trainees. Of the eleven, four completed their training and were offered positions
within Petromin;

• ARTLY DANIEL – PETROLEUM ENGINEER

• KEN VEI – PETROLEUM GEOPHYSICIST

• JOHN WILLIE – MINE ENGINEER

• ADRIAN DETANA – MINING GEOLOGIST
2012 NEW RECRUITS
JUNIOR KOIPI
EDUCATIONAL BACKGROUND:
Bachelor in Mineral Process Engineering (University of Technology, LAE) 2010
DIVISION:
Mineral Division
WHY DID YOU WANT TO JOIN PETROMIN?:
“I wanted to work with our nationally owned company so as to involve and participate in
developing our mineral and petroleum wealth of PNG”.
NAME
FIELD
DATE OF
INCEPTION
CURRENT EMPLOYMENT STATUS
Isaac Kone
Engineering
21/01/2008
Australia - Mining Engineer
Nelson Sukwianomb
Environmental Studies
29/01/2008
Completed and moved on
Darren Ninkama
Commercial Law
25/05/2009
Petromin –Senior Lawyer
Ken Vei
Geophysicist
02/08/2010
Petromin - Geophysicist
Roger Ralli
Geology
02/08/2010
Rio Tinto – Brisbane
Artly Daniel
Petroleum Engineer
02/08/2010
Petromin –Petroleum Engineer
Stanley Sungi
Accounting
02/08/2010
Petromin - Accountant
John Willie
Engineering
04/10/2010
Petromin – Mine Engineer
Adrian Dentana
Geology
25/10/2010
Petromin- Mining Geologist
Lyndsay Abal
Finance/Accounting
07/02/2011
Petromin – Accountant
George Karingal
Economics
21/02/2011
Petromin – Economist
Rex Duma
Economics
07/03/2011
Petromin – Economist
Mathilda Namorong
Commercial Law
12/12/2011
Petromin – GT Lawyer
Philip Hehonah
Commercial Law
05/01/2012
Petromin – GT Lawyer
Channel Kuia
Engineering
14/05/2012
Petromin – GT Petroleum Engineer
Junior Koipi
Engineering
05/06/2012
Petromin – GT Mining Engineer
Sailas Tipayamb
Environmental Studies
30/07/2012
Petromin – GT Environment Officer
PHILIP D HEHONAH
EDUCATIONAL BACKGROUND :
Bachelor of Law (University of Papua New Guinea) 2010
DIVISION :
New Ventures and Business Development
“I was interested in mining & petroleum law and Petromin provided that opportunity to
develop my career in both industries (mining & petroleum) at the same time.”
SAILAS TIPAYAMB
EDUCATIONAL BACKGROUND:
Bachelor of Science (University of Papua New Guinea) 2010
DIVISION:
Corporate Services
“I have an ambition in environment management & regulatory compliance in both
Petroleum and Mining Industries. Petromin effectively provided that opportunity for me
to develop my career in that direction.”
PETROMIN CONTINUES TO
SUPPORT UP-SKILLING ITS
WORKFORCE WITH RELEVANT
KNOWLEDGE, SKILLS AND
COMPETENCIES EITHER IN-HOUSE
OR ABROAD WITH APPROPRIATE
BUDGETARY ALLOCATION.
061
SHAREHOLDER
INFORMATION
Petromin PNG Holdings Limited has only one issued Share which is held by the
Prime Minister of the Day as the trustee shareholder. It is held on behalf of the
people of Papua New Guinea through the State as their Beneficial Shareholder.
The Trustee Shareholder’s powers are managed by the Manager of the Petromin Trust (Trust Manager) in accordance with the
Petromin Trust Deed. The Trust Manager operates independently of the Petromin Board and the Trustee Shareholder in managing the
Trustee Shareholder’s powers.
Dividends declared by Petromin are paid by the Trustee Shareholder, through the Trust Manager, to the Consolidated Revenue Fund
of the State, as the Beneficial Shareholder. Income Taxes are paid directly to the Internal Revenue Commission.
063
DIRECTORS’ REPORT
FOR YEAR ENDED 31 DECEMBER 2012
CONSOLIDATED ANNUAL
FINANCIAL STATEMENTS
The directors of Petromin PNG Holdings Limited submit herewith the annual financial report of the Company for the year ended 31
December 2012. In order to comply with the provisions of the Companies Act 1997, the directors report as follows:
The names and particulars of the directors and office holders of the Company during or since the end of the financial year are:
DIRECTORS
NAME
CONTENTS
Directors’ report
63
Directors’ declaration
65
Consolidated statement
of comprehensive income
of financial position
of changes in equity
66
67
68
of cash flow
69
Notes to financial statements
70 - 93
Audit report
94
EXECUTIVE/NON-EXECUTIVE DIRECTOR
Joshua Kalinoe, CSM, CBE
Executive Director (Reappointed 11 April 2011, Resigned 25 March 2013)
Sir Brown Bai, KBE, CBE, CSM
Non Executive/Chairman (Reappointed director on 6 June 2011. Reappointed as Chairman on 6 June 2011)
Richard Tengdui
Non Executive (Appointed 6 June 2010)
Chief Sir Peter Barter, GCL, Kt, OBE
Non Executive (Appointed on 27 July 2011, Resigned 2 July 2012)
Sumasy Singin, OBE
Non Executive (Reappointed 6 June 2011)
Jerry Wemin
Non Executive (Reappointed 6 June 2011)
Ian Goddard
Non Executive (Reappointed 4 March 2012)
Muri Bin Muhammad
Non Executive (Reappointed on 4 March 2012)
William Searson, CBE
Non Executive (Reappointed on 18 February 2011)
COMPANY SECRETARY
CHANGES IN STATE OF AFFAIRS
The Company Secretary was Karo Lelai (Appointed 8th February
2008 and ceased on 31 August 2012) and currently is Wayne
Kasou (appointed 1 September 2012).
During the financial year there was no significant change in the
principal activities or state of affairs of the Company other than
that referred to in the financial statements or notes thereto.
REVIEW OF OPERATIONS
EMPLOYEES
The Group reported a loss of K33,128,784 (2011:net income
K1,149,420) after charging income tax of K26,556,946 (2011:
K54,669,796).
As of 31 December 2012, the Company has 583 regular
employees (2011 - 691 employees). This includes casual
employees of 30 (2011 - 58 employees).
PRINCIPAL ACTIVITIES
DONATIONS & SPONSORSHIP
The Company’s principal activities are to engage in the mineral
exploration, evaluation and development and the production
and recovery of minerals and petroleum from its petroleum and
mining interests.
The Company has made donations and sponsorships of
K198,588 to various organisations in 2012 (2011: K 219.452)
as part of the Company’s social responsibility.
065
DIRECTORS’ DECLARATION
DIRECTORS’ REPORT
The directors declare that:
1. in the directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become
due and payable.
2. in the directors’ opinion, the attached financial statements and notes thereto are in accordance with the Companies Act 1997, including
compliance with accounting standards and giving a true and fair view of the financial position and performance of the Company.
DIRECTORS’ REMUNERATION
POST-EMPLOYMENT
BENEFITS
SALARY &
FEES
BONUS
NONMONETARY
SUPERANNUATION
OTHER
K
K
K
K
K
PETROMIN
SHARE-BASED PAYMENT
OTHER
LONG-TERM
EMPLOYEE
BENEFITS
TERMNATION
BENEFITS
K
K
SHORT-TERM EMPLOYEE BENEFITS
EQUITY-SETTLED
TOTAL
SHARES
& UNITS
OPTIONS
& RIGHTS
CASH
SETTLED
K
K
K
Signed in accordance with a resolution of the directors. On behalf of the Directors
K
Sir Brown Bai,
KBE, CBE, CSM –
Chairman
120,000
-
-
-
-
-
-
-
-
-
120,000
Joshua
Kalinoe,CSM,CBE
1,067,606
-
-
-
-
-
-
-
-
-
1,067,606
Ian Goddard
109,743
-
-
-
-
-
-
-
-
-
109,743
Sumasy
Singin,OBE
95,000
-
-
-
-
-
-
-
-
-
95,000
Jerry Wemin
100,000
-
-
-
-
-
-
-
-
-
100,000
Sir Peter
Barter,Kt,OBE
47,500
-
-
-
-
-
10,493
-
-
-
57,993
William Searson,
CBE
95,000
-
-
-
-
-
-
-
-
-
95,000
Muri Bin
Muhammad
109,743
-
-
-
-
-
-
-
-
-
109,743
Richard Tengdui
100,000
-
-
-
-
-
-
-
-
-
100,000
20,000
-
-
-
-
-
-
-
-
-
20,000
1,864,322
-
-
-
-
-
-
-
-
-
1,874,815
Peter Pokawin
REMUNERATION ABOVE K100,000 PER ANNUM
SUBSEQUENT EVENTS
The number of employees not being directors of the company,
whose total remuneration and the other benefits received from
Petromin PNG Holdings Limited falls within the following
bands are:
Other than the above, there or (other than disclosed in note 28)
there has not been any matter or circumstances, other than that
referred to in the financial statements in notes thereto, that has
risen since the end of the financial year, that has significantly
affected, or may significantly affect, the operation of the
company, the results of those operations, or the state of affairs
of the Group in future financial years.
2012
2011
K 100,000 – K 149,999
AMOUNT
19
14
K 150,000 – K 199,999
7
4
K 200,000 – K 299,999
3
5
K 300,000 – K 900,000
8
11
Signed in accordance with a resolution of the directors.
On behalf of the Directors
INDEPENDENT AUDIT REPORT
The financial statements have been audited by Deloitte
Touche Tohmatsu and should be read in conjunction with the
independent audit report on pages 94 to 95. Fees in respect
of audit, audit related and non audit services paid to Deloitte
Touche Tohmatsu are shown in note 5.
DIVIDENDS
During the year, an interim dividend of K450,000 was paid,
(2011: K1,950,000).
Arunava Basu
Port Moresby 31 May 2013
Chairman
Arunava Basu
Chairman
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
067
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AT 31 DECEMBER 2012
THE COMPANY
THE GROUP
THE COMPANY
THE GROUP
NOTES
NOTES
2011
K’000
K’000
K’000
K’000
Current assets
Cash and cash equivalents
14
113,183
148,552
17,201
84,715
Trade and other receivables
15
25,181
26,162
3,336
4,209
Inventories
16
28,848
30,425
-
-
Due from related parties
17
278,164
11,666
12,800
Cost of sales
4
(139,786)
(165,426)
-
-
37,884
112,738
11,666
12,800
Other income
6
Operating profit
(47,724)
(40,465)
(40,323)
(28,597)
1
-
66,802
25,000
(9,939)
72,273
38,145
9,203
Finance income
7
7
Profit/ (Loss) before tax
Income tax (expense)/credit
Profit/(Loss) after tax
Other comprehensive income
Total comprehensive income for the year
8
694
(18,903)
(1,550)
-
-
-
-
167,212
205,139
20,537
88,924
17
-
-
54,896
2,601
Total current assets
Non-current assets
Due from related parties
Finance costs
2011
K’000
2012
177,670
5
2012
K’000
2011
3
Administrative expenses
2011
K’000
2012
Revenue
Gross profit
2012
K’000
(10,031)
Oil and gas assets
9
217,618
217,515
-
-
8
7,223
4,565
-
-
11
137,051
107,807
-
-
Property, plant and equipment
13
47,739
46,461
34,114
33,311
Investment in subsidiaries
20
-
-
99,776
110,699
467
555
467
555
Total non current assets
410,098
376,903
189,253
147,166
Total assets
577,310
582,042
209,790
236,089
26,906
24,969
459
6,901
2,573
2,449
798
959
Deferred tax Asset
(6,572)
55,819
37,393
131
Deferred costs
(26,557)
(54,670)
-
-
(33,129)
1,149
37,393
131
-
-
-
-
(33,129)
1,149
37,393
131
Deposits
Current liabilities
The statement above should be read in conjunction with the Notes on pages 70 to 93.
Trade and other payables
18
Due to related parties
17
Income tax payable
Provisions
12
Borrowings
19
Total current liabilities
-
-
-
66,874
35,133
33,594
-
-
6,843
8,891
613
2,051
3,277
2,376
3,277
2,376
72,159
69,830
4,349
78,202
Non current liabilities
Other non-current liability
18
45,567
29,298
-
-
Borrowings
19
42,536
38,661
11,122
11,989
8
74,013
71,860
-
-
12
26,761
20,458
1,026
293
Deferred tax liabilities
Provisions
Total non current liabilities
188,877
160,277
12,148
12,282
Total liabilities
261,036
230,107
16,497
90,484
Net assets
316,274
351,935
193,293
145,605
Equity
Share capital
21
1
1
1
1
Retained earnings
22
316,273
351,934
193,292
145,604
316,274
351,935
193,293
145,605
Total equity
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
069
CONSOLIDATED STATEMENT OF CASH FLOW
THE COMPANY
THE GROUP
THE GROUP
NOTES
Share Capital
Retained Earnings
Total
K’000
K’000
K’000
1
352,735
352,735
Balance at 1 January 2011
Prior period adjustments
22 (i)
-
734
734
Profit for the year
22 (ii)
-
1,149
1,149
-
(1,950)
(1,950)
Dividend paid
NOTES
Receipts from customers and related parties
Payments to suppliers, employees and related parties
Cash provided by/(used in) operations
Balance at 31 December 2011
1
352,668
352,668
Profit for the year
-
(33,129)
(33,129)
Interest received
Dividends paid
-
(450)
(450)
1
316,273
316,274
2011
2012
2011
K’000
K’000
K’000
205,716
278,041
11,666
12,800
(200,806)
(206,878)
(34,136)
(39,991)
Cash flows from operating activities
Tax paid
2012
K’000
Dividend received
Interest paid
Net cash provided by (used in) operating activities
4,910
71,163
(22,470)
(27,191)
(26,268)
(27,461)
-
-
2,573
2,449
798
959
-
-
66,802
25,000
(1,510)
(1,838)
-
-
(20,295)
44,313
45,130
(1,232)
Cash flows from investing activities
THE COMPANY
Purchase of property, plant and equipment
Share Capital
Retained Earnings
Total
K’000
K’000
K’000
1
145,604
145,605
Profit for the year
-
37,393
37,393
-
10,745
10,745
Dividends paid
-
(450)
(450)
1
193,292
193,293
NOTES
Prior year adjustment
22(i)
Exploration & development expenditures/deferred costs
Investment in subsidiaries
Net cash provided by/(used in) investing activities
(6,468)
(12,412)
(2,180)
(3,035)
(27,400)
(26,378)
(240)
(12,338)
-
-
(108,006)
62,980
(54,163)
(38,790)
(110,426)
47,608
Cash flows from financing activities
Dividend paid
Borrowings
Net cash used in financing activities
Net increase in cash
(450)
(450)
(450)
(450)
19,244
42,780
(1,768)
2,655
18,794
42,330
(2,218)
2,205
(35,369)
47,853
(67,514)
48,581
148,552
100,699
84,715
36,135
113,183
148,552
17,201
84,715
Beginning of year
End of year
23
071
NOTES TO THE FINANCIAL STATEMENTS
Petromin PNG Holdings Limited (the Company) was established
for purposes of the Petromin PNG Holdings Limited Authorisation
Act (Petromin Act 2007) and was also incorporated in Papua
New Guinea under the Companies Act 1997. The Company
holds in trust, manages, nurtures and grows the assets in
petroleum and mining projects on behalf of the Government of
Papua New Guinea (“the State”) and its people. The Company
was established in order to retain legal title to assets that are
beneficially owned by the State. The Prime Minister honorable
Peter O’Neil is the registered shareholder of the Company. The
share is held on behalf of and in trust for the State subject to
the constitution of the Company and The Trust Deed of 6
June 2007.
Petromin PNG Holdings’ registered office and its principal place
of business is located at Level 3, Petromin Haus,Section 45, Lot
5,Sir Hubert Murray Highway, Port Moresby, National
Capital District.
2. ADOPTION OF NEW AND REVISED
INTERNATIONAL FINANCIAL REPORTING
STANDARDS (IFRSS)
2.1 STANDARDS AND INTERPRETATIONS AFFECTING
AMOUNTS REPORTED IN THE CURRENT PERIOD (AND/OR
PRIOR PERIODS)
The following new and revised Standards and Interpretations
have been adopted in the current period and have affected the
amounts reported in these financial statements. Details of other
Standards and Interpretations adopted in these consolidated
financial statements but that have had no impact on the
amounts reported are set out in section 2.2.
STANDARDS AFFECTING PRESENTATION & DISCLOSURE
AMENDMENTS TO IAS 1 PRESENTATION OF ITEMS OF OTHER
COMPREHENSIVE INCOME
The amendments introduce new terminology for the statement
of comprehensive income and income statement. Under
the amendments to IAS1, the ‘statement of comprehensive
income’ is renamed the ‘statement of profit or loss and other
comprehensive income’ and the income statement’ is renamed
the ‘statement of profit or loss’. The amendments to IAS 1 retain
the option to present profit or loss and other comprehensive
income in either a single statement or in two separate but
consecutive statements. However, the amendments to IAS 1
require items of other comprehensive income to be grouped
into two categories in the other comprehensive income section:
(a) items that will not be reclassified subsequently to profit or
loss and (b) items that may be reclassified subsequently to
profit or loss when specific conditions are met. Income tax on
items of other comprehensive income is required to be allocated
on the same basis – the amendments do not change the
option to present items of other comprehensive income either
before tax or net of tax. The amendments have been applied
2.3 STANDARDS AND INTERPRETATIONS IN ISSUE NOT
YET ADOPTED
The Group has not applied the following new and revised IFRSs
that have been issued but are not yet effective:
STANDARD/
INTERPRETATION
EFFECTIVE
FOR ANNUAL
REPORTING
PERIODS
BEGINNING ON
OR AFTER
EXPECTED TO
BE INITIALLY
APPLIED IN
THE FINANCIAL
YEAR ENDING
IFRS 10 Consolidated Financial
Statements
1 Jan 2013
31 Dec 2013
IFRS 11 Joint Arrangements
1 Jan 2013
31 Dec 2013
IFRS 12 Disclosure of Interests in
Other Entities
1 Jan 2013
31 Dec 2013
IAS 27 Separate Financial
Statements
1 Jan 2013
31 Dec 2013
The amendments introduce additional disclosures, designed
to allow users of financial statements to improve their
understanding of transfer transactions of financial assets (for
example, securitisations), including understanding the possible
effects of any risks that may remain with the entity that
transferred the assets. The amendments also require additional
disclosures if a disproportionate amount of transfer transactions
are undertaken around the end of a reporting period.
IAS 28 Investments in Associates
and Joint Ventures
1 Jan 2013
31 Dec 2013
IFRS 13 Fair Value Measurement
1 Jan 2013
31 Dec 2013
IAS 19 Employee Benefits
1 Jan 2013
31 Dec 2013
Amendments to IFRS10, IFRS 11
and IFRS 12 Consolidated Financial
Statements, Joint Arrangements
and Disclosure of Interests in Other
Entities: Transition Guidance
1 Jan 2013
31 Dec 2013
AMENDMENTS TO IAS 12 DEFERRED TAX: RECOVERY OF UNDERLYING ASSETS
Amendments to IFRSs (Annual
Improvements 2009-2011 Cycle)
1 Jan 2013
31 Dec 2013
Disclosures – Offsetting Financial
Assets and Financial Liabilities
(Amendments to IFRS 7)
1 Jan 2013
31 Dec 2013
Offsetting Financial Assets and
Financial Liabilities (Amendments
to IAS 32)
1 Jan 2014
31 Dec 2014
IFRS 9 Financial Instruments
1 Jan 2015
31 Dec 2015
2.2 STANDARDS AND INTERPRETATIONS ADOPTED WITH
NO EFFECT ON FINANCIAL STATEMENTS
The following new and revised Standards and Interpretations
have also been adopted in these consolidated financial
statements. Their adoption has not had any significant impact
on the amounts reported in these financial statements but may
impact the accounting for future transactions or arrangements.
AMENDMENTS TO IFRS 7 FINANCIAL INSTRUMENTS: DISCLOSURES
Under the amendments, investment properties that are
measured using the fair value model in accordance with IAS
40 Investment Property are presumed to be recovered entirely
through sale for the purposes of measuring deferred taxes
unless the presumption is rebutted.
As a result of the amendments, SIC-21 Income Taxes - Recovery
of Revalued Non-Depreciable Assets would no longer apply to
investment properties carried at fair value. The amendments
also incorporate into IAS 12 the remaining guidance previously
contained in SIC-21, which is accordingly withdrawn.
dividend income generally recognised in profit or loss.
• with regard to the measurement of financial liabilities
designated as at fair value through profit or loss, IFRS 9
requires that the amount of change in the fair value of the
financial liability, that is attributable to changes in the credit
risk of that liability is recognised in other comprehensive
income, unless the recognition of the effects of changes in
the liability’s credit risk in other comprehensive income would
create or enlarge an accounting mismatch in profit or loss.
Changes in fair value attributable to a financial liability’s
credit risk are not subsequently reclassified to profit or loss.
Previously, under IAS 39, the entire amount of the change in
the fair value of the financial liability designated as at fair
value through profit or loss was recognised in profit or loss.

retrospectively and hence the presentation of items of other
comprehensive income has been modified to reflect the changes.
Other than the above mentioned presentation changes, the
application of the amendments to IAS 1 does not result in any
impact on profit or loss, other comprehensive income and total
comprehensive income.
The directors anticipate that the application of IFRS 9 in the
future may have a significant impact on amounts reported in
respect of the Groups’ financial assets and financial liabilities.
However, it is not practicable to provide a reasonable estimate
of that effect until a detailed review has been completed.
NEW AND REVISED STANDARDS ON CONSOLIDATION,
JOINT ARRANGEMENTS, ASSOCIATES AND DISCLOSURES
In May 2011, a package of five Standards on consolidation, joint
arrangements, associates and disclosures was issued, including
IFRS 10, IFRS 11, IFRS 12, IAS 27 (as revised in 2011) and IAS
28 (as revised in 2011).
KEY REQUIREMENTS OF THESE FIVE STANDARDS ARE DESCRIBED BELOW.
IFRS 9 FINANCIAL INSTRUMENTS
IFRS 9, issued in November 2009, introduced new requirements
for the classification and measurement of financial assets. IFRS
9 was amended in October 2010 to include the requirements for
the classification and measurement of financial liabilities and
for derecognition.
KEY REQUIREMENTS OF IFRS 9:
• all recognised financial assets that are within the scope of
IAS 39 Financial Instruments: Recognition and Measurement
to be subsequently measured at amortised cost or fair value.
Specifically, debt investments that are held within a business
model whose objective is to collect the contractual cash
flows, and that have contractual cash flows that are solely
payments of principal and interest on the principal outstanding
are generally measured at amortised cost at the end of
subsequent accounting periods. All other debt investments and
equity investments are measured at their fair values at the end
of subsequent accounting periods. In addition, under IFRS 9,
entities may make irrevocable election to present subsequent
changes in the fair value of an equity investment (that is not
held for trading) in other comprehensive income, with only

1. GENERAL INFORMATION
IFRS 10 replaces the parts of IAS 27 Consolidated and
Separate Financial Statements that deal with consolidated
financial statements. SIC 12 Consolidation - Special Purpose
Entities will be withdrawn upon the effective date of IFRS 10.
Under IFRS 10, there is only one basis for consolidation, that is,
control. In addition, IFRS 10 includes a new definition of control
that contains three elements: (a) power over an investee, (b)
exposure, or rights, to variable returns from its involvement
with the investee, and (c) the ability to use its power over the
investee to affect the amount of the investor’s returns. Extensive
guidance has been added in IFRS 10 to deal with
complex scenarios.
IFRS 11 replaces IAS 31 Interests in Joint Ventures. IFRS 11
deals with how a joint arrangement of which two or more parties
have joint control should be classified. SIC 13 Jointly Controlled
Entities - Non-monetary Contributions by Venturers’ will be
withdrawn upon the effective date of IFRS 11. Under IFRS 11,
joint arrangements are classified as joint operations or joint
ventures, depending on the rights and obligations of the parties
to the arrangements. In contrast, under IAS 31, there are three
types of joint arrangements: jointly controlled entities, jointly
controlled assets and jointly controlled operations. In addition,
joint ventures under IFRS 11 are required to be accounted
for using the equity method of accounting, whereas jointly
controlled entities under IAS 31 can be accounted for using the
equity method of accounting or proportionate consolidation.
073
IFRS 13 establishes a single source of guidance for fair value
measurements and disclosures about fair value measurements.
The Standard defines fair value, establishes a framework for
measuring fair value, and requires disclosures about fair value
measurements. The scope of IFRS 13 is broad; it applies to both
financial instrument items and non-financial instrument items
for which other International Accounting Standards require or
permit fair value measurements and disclosures about fair value
measurements, except in specified circumstances. In general,
the disclosure requirements in IFRS 13 are more extensive
than those required in the current standards. For example,
quantitative and qualitative disclosures based on the three-level
fair value hierarchy currently required for financial instruments
only under IFRS 7 Financial Instruments: Disclosures will be
extended by IFRS 13 to cover all assets and liabilities within
its scope.
IFRS 13 is effective for annual periods beginning on or after 1
January 2013, with earlier application permitted.
The directors anticipate that the application of the new standard
may affect certain amounts reported in the financial statements
and result in more extensive disclosures in the
financial statements.
AMENDMENTS TO IFRS 7 AND IAS 32 OFFSETTING
FINANCIAL ASSETS AND FINANCIAL LIABILITIES AND
THE RELATED DISCLOSURES
The amendments to IAS 32 clarify existing application issues
relating to the offset of financial assets and financial liabilities
requirements. Specifically, the amendments clarify the meaning
The principal accounting policies applied in the preparation of
these consolidated financial statements are set out below. These
policies have been consistently applied to all years presented,
unless otherwise stated.
The amendments to IFRS 7 are effective for annual periods
beginning on or after 1 January 2013 and interim periods
within those annual periods. The disclosures should be provided
retrospectively for all comparative periods. However, the
amendments to IAS 32 are not effective until annual periods
beginning on or after 1 January 2014, with retrospective
application required.
The directors anticipate that the application of these
amendments to IAS 32 and IFRS 7may result in more disclosure
being made with regard to offsetting financial assets and
financial liabilities
in the future.
ANNUAL IMPROVEMENTS TO IFRSS 2009 – 2011 CYCLE
ISSUED IN MAY 2012
2.1 BASIS OF PREPARATION
The consolidated financial statements of Petromin PNG Holdings
Limited (the Company) has been prepared in accordance with
the Papua New Guinea Companies Act 1997 and comply with
International Financial Reporting Standards (IFRS), including
International Financial Reporting Interpretations Committee
(IFRIC) interpretations, and other generally accepted accounting
practices in Papua New Guinea.
The function currency used is Papaua New Guinea kina (PGK)
and figures rounded off to the rearest thousands.
The financial statements have been prepared under the historical
cost convention.
• amendments to IAS 16 Property, Plant and Equipment; and
The preparation of the financial statements in conformity with
IFRS requires the use of certain critical accounting estimates.
It also requires management to exercise its judgment in the
process of applying the Company’s accounting policies. The
areas involving higher degrees of judgment or complexity, or
areas where assumptions and estimates are significant to the
financial statements are disclosed in Note 2.28.
• amendments to IAS 32 Financial Instruments:
Presentation.
2.2 BASIS OF CONSOLIDATION
The Annual Improvements to IFRSs 2009 – 2011 Cycle include
a number of amendments to various IFRSs. The amendments
are effective for annual periods beginning on or after 1 January
2013. Amendments to IFRSs include:
AMENDMENTS TO IAS 16
The amendments to IAS 16 clarify that spare parts, stand-by
equipment and servicing equipment should be classified as
property, plant and equipment when they meet the definition
of property, plant and equipment in IAS 16 and as inventory
otherwise. The directors do not anticipate that the amendments
to IAS 16 will have a significant effect on the Group’s
consolidated financial statements.
AMENDMENTS TO IAS 32
The amendments to IAS 32 clarify that income tax relating
to distributions to holders of an equity instrument and to
transaction costs of an equity transaction should be accounted
for in accordance with IAS 12 Income Taxes. The directors
anticipate that the amendments to IAS 32 will have no effects
on the Group’s consolidated financial statements.
Other than as noted above, the adoption of the various
International Accounting Standards and Interpretations in issue
but not yet effective will not impact the group’s accounting
policies. However, the pronouncements will result in changes to
information currently disclosed in the financial statements. The
group does not intend to adopt any of these pronouncements
before their effective dates.
Subsidiaries are all entities (including special purpose entities)
over which the Group has the power to govern the financial
and operating policies generally accompanying a shareholding
of more than one-half of the voting rights. The existence and
effect of potential voting rights that are currently exercisable or
convertible are considered when assessing whether the Group
controls another entity. Subsidiaries are fully consolidated from
the date on which control is transferred to the Group. They
are de-consolidated from the date on which control ceases.
The purchase method of accounting is used to account for
the acquisition of subsidiaries by the Group. The cost of an
acquisition is measured as the fair value of the assets given,
equity instruments issued or liabilities incurred or assumed at
the date of exchange, plus costs directly attributable to the
acquisition. Identifiable assets acquired and liabilities assumed
in a business combination are measured initially at their fair
values on the date of acquisition, irrespective of the extent of
any minority interest. The exces of the cost of adquisition over
the fair value of the Group’s share of the identificable net assets
adquired is recorded as part of retained earnings. If the cost of
the acquisition is less than fair value of the net assets for the
subsidiary acquired, the difference is recognised directly in the
statement of comprehensive income.
Inter-company transactions, balances and unrealised gains
on transactions between group companies are eliminated.
2.3 SEGMENT REPORTING
Operating segments are reported in a manner consistent with
the internal reporting provided to the chief operating decisionmaker. The chief operating decision-maker, who is responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the steering committee that
makes strategic decisions.
2.4 FOREIGN CURRENCY
• Functional and presentation currency:
Items included in these consolidated financial statements of
each of the Group’s entities are measured using the currency
of the primary economic environment in which the entity
operates (‘the functional currency’).These consolidated financial
statements are presented in Papua New Guinea Kina (Kina),
which is the Group’s functional and presentation currency.

IFRS 13 FAIR VALUE MEASUREMENT
The amendments to IFRS 7 require entities to disclose
information about rights of offset and related arrangements
(such as collateral posting requirements) for financial
instruments under an enforceable master netting agreement or
similar arrangement.
Unrealised losses are also eliminated unless the transaction
provided evidence of an impairment of the asset transferred.
The results of subsidiaries acquired or disposed off during
the year are included in the consolidated statement of
comprehensive income from the effective date of acquisition or
up to the effective date of disposal, as appropriate. Subsidiaries’
accounting policies have been changed where necessary to
ensure consistency.with the policies adopted by the Group.
The consolidated financial statements include the financial
statements of the Company and its subsidiaries controlled by
the Company. Subsidiaries are consolidated from the date
on which every effective control is obtained and are no longer
consolidated from the date of disposal.
• Transactions and balances:
In preparing the financial statements of the individual entities,
foreign currency transactions are translated into Kina using
the exchange rates in effect at the dates of the transactions.
Outstanding foreign currency denominated monetary assets
and liabilities are restated at the year-end exchange rate.
Foreign exchange gains and losses resulting from the settlement
of such transactions and from the translation at year end
exchange rates of monetary assets and liabilities denominated
in foreign currencies are recognised in the statement of
comprehensive income. Non-monetary items measured at cost
in foreign currencies are translated using the historical exchange
rates at the date when the costs are determined.

These five standards together with the amendments regarding
the transition guidance are effective for annual periods
beginning on or after 1 January 2013, with earlier application
permitted provided all of these standards are applied at the
same time. The directors anticipate that the application of these
five standards will not have significant impact on amounts
reported in the consolidated financial statements although the
application of IFRS 11 may result in changes in the accounting
of the Group’s jointly controlled entity that is currently accounted
for using proportionate consolidation. Under IFRS 11, a jointly
controlled entity may be classified as a joint operation or joint
venture, depending on the rights and obligations of the parties
to the joint arrangement. However, the directors have not yet
performed a detailed analysis of the impact of the application
of these Standards and hence have not yet quantified the extent
of the impact.
2. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES

In June 2012, the amendments to IFRS 10, IFRS 11 and IFRS
12 were issued to clarify certain transitional guidance on the
application of these IFRSs for the first time.
of ‘currently has a legally enforceable right of set-off’ and
‘simultaneous realisation and settlement’.

IFRS 12 is a disclosure standard and is applicable to entities that
have interests in subsidiaries, joint arrangements, associates
and/or unconsolidated structured entities. In general, the
disclosure requirements in IFRS 12 are more extensive than
those in the current standards.
2.5 CASH AND CASH EQUIVALENTS
Cash and cash equivalents are short-term, highly liquid
investments that are readily convertible to known amounts
of cash with original maturities of three or less from dates of
acquisition and that are subject to an insignificant risk of change
in value. Bank overdrafts are shown within borrowings in current
liabilities in the balance sheet. Short term investments are short
term placements with local banks with original maturities of
more than three months.
075
A. MINING
Exploration and evaluation expenditure is carried forward in the
financial statements, in respect of areas of interest for which
rights of tenure are current and where:
• such costs are expected to be recouped through successful
development and exploitation of area of interest, or
• exploration activities in the area of interest have not yet
reached a stage which permits a reasonable assessment of the
existence or otherwise of recoverable mineral resources, and
active and significant operations in relations to the area are
continuing.

• materials, which include drilling and maintenance stocks, are
valued at the cost of acquisition; and

• petroleum products, comprising extracted crude oil and
condensate stored in tanks and pipeline systems, are valued
using the full absorption cost method.

• Inventories of broken ore, concentrate, work in process and
metal comprises direct material, labour and transportation
expenditure in bringing such inventories to their existing
location and condition, together with an appropriate portion
of fixed and variable overhead expenditure, based on
weighted average costs incurred during the year in which such
inventories were produced.
Net relisable value is the estimated selling price in the ordinary
course of business, less applicable variable selling expenses.
Low value by-products which are obtained as a result of the
production process for a primary product are valued at net
realisable value with that value being offset against the cost of
producing the main products. Inventories of consumable supplies
and spare parts expected to be used in production are valued at
weighted average cost. Obsolete or damaged inventories of such
items are valued at net realisable value. A regular and ongoing
review is undertaken to establish the extent of surplus items,
and a provision is made for any potential loss on their disposal.
Replacement and capital (or circulating) spare parts are
capitalised, and depreciated over the same remaining life as the
equipment with which they are associated.
2.8 OIL AND GAS ASSETS
The cost of oil and gas assets in production are separately
accounted for and include past exploration and evaluation costs,
past development costs and on-going costs of continuing to
develop reserves for production and to expand or replace plant
and equipment and any associated land and building.
B. OIL AND GAS
Exploration and evaluation expenditures are accounted for under
the successful efforts method. Exploration licence acquisition
costs for established areas are initially capitalised except for
new unexplored areas which are expensed as incurred. For
exploration wells, costs directly associated with the drilling of
wells are initially capitalised pending evaluation of whether
potentially economic reserves of hydrocarbons have been
discovered. Costs are expensed where the well does not result in
the successful discovery of potentially economically recoverable
hydrocarbons, unless the well is to be used in the recovery of
economically recoverable hydrocarbons.
2.10 PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost less
accumulated depreciation and allowance for impairment, if any.
Historical cost includes expenditures that is directly attributable
to the acquisitions of the items.
Subsequent costs are included in the asset’s carrying amount or
recognized as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item
will flow to the group and the cost of the item can be measured
reliably. All other repairs and maintenance are charged to the
statement of comprehensive income during the financial year in
which they are incurred.
Land is not depreciated. Depreciation on other assets is
calculated using the straight-line method to allocate the cost of
each asset less residual value over its estimated useful life
as follows:
Buildings
20 %
Plant and equipment
20 %
Office equipment
10 % - 20 %
Furniture and Fittings
7.5 %
Motor Vehicles
20 %
2.11 IMPAIRMENT OF NON-FINANCIAL ASSET
Assets that have an indefinite useful life are not subject to
amortisation and are tested annually for impairment. Assets
that are subject to amortization are reviewed for impairment
wherever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is
recognised for the amount by which the asset’s carrying amount
exceeds its recoverable amount. The recoverable amount is the
higher of an asset’s fair value less costs to sell and value in use.
For the purposes of assessing impairment, assets are grouped at
the lowest levels for which there are separately identifiable cash
inflows which are largely independent of the cash inflows from
other assets or groups of assets (cash generating units). Value in
use requires entities to make estimates of future cash flows to
be derived from the particular asset, and discount them using a
pre-tax market rate that reflects current assessments of the time
value of money and the risks specific to the asset. Non-financial
assets that suffer impairment are reviewed for possible reversal
of the impairment at each reporting date.
2.12 FINANCIAL ASSETS
The Group classifies its financial assets in the following
categories: (a) at fair value through profit or loss; (b) loans and
receivables; (c) held-to-maturity investments; and (d) availablefor-sale financial assets. The classification depends on the
purpose for which the investments were acquired. Management
determines the classification of its investments at initial
recognition and re-evaluates this designation at every reporting
date. At balance date the Group did not have financial assets in
categories (a) and (c).
a. Classification
• Loans and receivables
Loans and receivables are non-derivative financial assets
with fixed or determinable payments that are not quoted in
an active market and where management has no intention
of trading. They are included in current assets, except for
maturities greater than 12 months after the balance sheet date
which are classified as non-current assets. The Group’s loans
and receivables consist of trade and other receivables and
cash and cash equivalents.

Inventories are valued at the lower of cost and net realisable
value. Cost is determined as follows:
An assets carrying amount is writeen down immediately to its
recoverable amount if the asset’s carrying amount is greater
than its estimated recoverable amount (note 2.12).
• Available-for-sale financial assets
Available-for-sale financial assets are non-derivatives that are
either designated in this category or not classified in any of the
other categories. They are included in non-current assets unless
management intends to dispose of the investment within 12
months from the balance sheet date. The Group’s investments
in deferred restotration expenditure, LNG FEED, antelope
project and precious metal exploration are classified under this
category (Note 11).
b. Initial recognition and derecognition
Regular purchases and sales of investments are recognized on
trade-date - the date on which the Group commits to purchase
or sell the asset. Investments are initially recognized at fair
value plus transaction costs for all financial assets not carried
at fair value through profit or loss. Financial assets carried at
fair value through profit or loss are initially recognized at fair
value and transaction costs are expensed in the statements of
income. Financial assets are derecognized when the rights to
receive cash flows from the investments have expired or have
been transferred and the Company has transferred substantially
all risks and rewards of ownership
c. Subsequent measurement
Available-for-sale financial assets and financial assets at fair
value through profit or loss are subsequently carried at fair
value. Loans and receivables and held-to-maturity investments
are carried at amortized cost using the effective interest method.
Gains or losses arising from changes in the fair value of the
‘financial assets at fair value through profit or loss’ category,
including interest and dividend income, are presented in the
statements of income within ‘other operating income’ in the
period in which they arise. Dividend income from financial
assets at fair value through profit and loss is recognized in
the statements of income as part of other income when the
Company’s right to receive payment is established.
Changes in the fair value of monetary securities denominated
in a foreign currency and classified as available-for-sale are
analyzed between translation differences resulting from changes
in amortized cost of the security and other changes in the
carrying amount of the security. The translation differences
are recognized in profit or loss, and other changes in carrying
amount are recognized in equity. Changes in the fair value
of monetary securities classified as available-for-sale and
non-monetary securities classified as available-for-sale are
recognized
in equity.
d. Determination of fair value
The fair values of quoted investments are based on current bid
prices. If the market for a financial asset is not active (and for
unlisted securities), the Group establishes fair value by using
valuation techniques. These include the use of recent arm’s
length transactions, reference to other instruments that are
substantially the same and discounted cash flow analysis refined
to reflect the issuer’s specific circumstances.
e. Impairment

2.7 INVENTORIES
The assets residual values and useful lives are reviewed, and
adjusted if appropriate, at the end of each reporting period.
Gains and losses on disposals are determined by comparing the
proceeds with the carrying amount and are recognized within
other income.
2.9 DEFERRED COSTS

Trade receivables are recognised initially at fair value and
subsequently measured at amortised cost, less provision for
impairment. A provision for impairment of trade and other
receivables is established when there is objective evidence that
the Group will not be able to collect all amounts due according
to the original terms of the receivables. Significant financial
difficulties of the debtor and default or delinquency in payments
are considered indicators that the trade and other receivables
are impaired. The amount of the provision recognized in the
statement of comprehensive income is the difference between
the asset’s carrying amount and the present value of estimated
future cash flows, discounted at the effective interest rate. The
carrying amount of the asset is reduced through the use of an
allowance account.
Costs in relation to producing areas are amortized on a production
output basis. In relation to the Moran fields, exploration and
development costs, along with any future expenditure necessary
to develop the assumed reserves, are amortized over the
remaining estimated economic life of the fields.

2.6 TRADE RECEIVABLES
The Group assesses at each balance sheet date whether there is
objective evidence that a financial asset or a group of financial
assets is impaired.
077
(i) Crude oil
Trade and other liabilities are recognized in the period in which
the related money, goods or services are received or when a
legally enforceable claim against the Group is established or
when the corresponding assets or expenses are recognized.
These are measured at amortised costs, normally equal to its
nominal amount.
Revenue from the sale of crude oil is recognised when all the
following conditions are satisfied:

• the Group retains neither continuing managerial involvement
to the degree usually associated with ownership nor
effective control over the crude oil sold;
2.18 COST AND EXPENSES
• it is probable that the economic benefits associated with the
transaction will flow to the entity; and
Cost and expenses are recognized when incurred.
• the costs incurred or to be incurred in respect of the
transaction can be measured reliably.
2.19 LEASES
Provisions are measured at the present value of the expenditure
required to settle the restoration obligation at the reporting date,
based on current legal and other requirements and technology.
Future restoration costs are reviewed annually and changes in
the estimate are reflected in the present value of the restoration
provision at each reporting date.
2.15 EMPLOYEE BENEFITS
A liability is recognised for benefits accruing to employees in
respect of wages and salaries, annual leave and long service
leave when it is probable that settlement will be required and
they are capable of being measured reliably.
Liabilities recognised in respect of employee benefits expected
to be settled within 12 months, are measured at their nominal
values using the remuneration rate expected to apply at the
time of settlement.
Liabilities recognised in respect of employee benefits which are
not expected to be settled within 12 months are measured as
the present value of the estimated future cash outflows to be
made by the Group in respect of services provided by employees
up to reporting date. Contributions to defined contribution
superannuation plans are expensed when incurred.

A provision for restoration and rehabilitation is recognized when
the Group has a present obligation as a result of exploration,
development and production activities undertaken, it is probable
that an outflow of economic benefits will be required to settle
the obligation, and the amount of the provision can be measured
reliably. The estimated future obligations include the costs of
removing facilities, abandoning sites/wells and restoring the
affected areas.
(ii) Gold and silver
Gold and silver revenue is recognised upon delivery which is
when the risks and benefits of ownership are transferred to the
buyer, including when title passes.
(iii) Interest revenue
Interest revenue is recognised using the effective interest
method, by reference to the principal outstanding and at the
effective interest rate applicable.
(iv) Management fees
The core responsibility of Petromin PNG Holdings Limited
(Petromin) is administration of various State owned petroleum
and minerals assets. Petromin will manage the entities and incur
related expenses. Petromin’s expenses will be funded through a
monthly management fee payable by the entities in accordance
with the respective Management Services Agreements. Revenue
is recognised on an accrual basis in accordance with the
substance of the relevant agreement.
(v) Dividends
Control of a right to receive consideration for the investment in
assets is attained, usually evidenced by approval of the dividend
at a meeting of shareholders.
2.17 GOODS AND SERVICES TAX
Revenues, expenses and assets are recognised net of the
amount of goods and services tax (GST), except:
• where the amount of GST incurred is not recoverable from
the taxation authority, it is recognised as part of the cost of
acquisition of an asset or as part of an item of expense; or

The following specific recognition criteria must be net before
revenue is cocognised;
Leases, where the lessor retains substantially all the risks
and rewards of ownership are classified as operating leases.
Payments made under operating leases are charged to
statements of income on a straight-line basis over the period of
the lease.
2.20 DIVIDEND DISTRIBUTION
2.16 REVENUE
Revenue is measured at the fair value of the consideration
received or receivable. Revenue is reduced for estimated
customer returns, stock rotation, price protection, rebates and
other similar allowances.
Cash flows are included in the cash flow statement on a gross
basis. The GST component of cash flows arising from investing
and financing activities which is recoverable from, or payable to,
the taxation authority is classified as operating cash flows.
• the amount of revenue can be measured reliably;

2.14 PROVISIONS
• the Group has transferred to the buyer the significant risks
and benefits of ownership of sale of crude oil;
• for receivables and payables which are recognised inclusive
of GST. The net amount of GST recoverable from, or payable to,
the taxation authority is included as part of receivables
or payables.

2.13 TRADE AND OTHER PAYABLES
Dividend distribution to the shareholders is recognised as a
liability in the group’s consolidated financial statements in the
year in which the dividends are approved by the directors.
2.21 CURRENT AND DEFERRED INCOME TAX
The income tax expense for the period comprises current and
deferred tax. Tax is recognized in the consolidated statement
of comprehensive income, except to the extent that it relates
to items recognized other comprehensive income or directly
in equity. In this case the tax is also recognized in other
comprehensive income or directly in equity, respectively.
The current income tax charge is calculated on the basis of the
Papua New Guinea income tax laws enacted or substantively
enacted at the balance sheet date. Management periodically
evaluates positions taken in tax returns with respect to situations
in which applicable tax regulations is subject to interpretation
and establishes provisions where appropriate on the basis of
amounts expected to be paid to the tax authorities.
Deferred income tax is recognised, using the balance sheet
method, on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in the
financial statements. Deferred income tax is determined using
tax rates (and laws) that have been enacted or substantially
enacted by the balance sheet date and are expected to apply
when the related deferred income tax asset is realised or the
deferred income tax liability is settled.
Deferred income tax liabilities are recognised to the extent that
it is probable that future taxable temporary differences exists.
The Group reassesses at each balance sheet date the need to
recognize a previously unrecognized deferred income tax liabilities.
2.22 GOVERNMENT GRANTS
Government grants are assistance by the Government in the
form of transfer of resources to the Group in return for past
or future compliance with certain conditions relating to the
operating activities of the entity. Government grants include
government assistance where there are no conditions specifically
relating to the operating activities of the Group other than the
requirement to operate in certain regions or industry sectors.
Government grants are not recognised until there is reasonable
assurance that the Group will comply with the conditions
attaching to them and the grants will be received.
Government grants whose primary condition is that the Group
should purchase, construct or otherwise acquire long-term assets
are recognised as deferred income in the balance sheet and
recognised as income on a systematic and rational basis over
the useful lives of the related assets.
Other government grants are recognised as income over the
periods necessary to match them with the related costs which
they are intended to compensate, on a systematic basis.
Government grants that are receivable as compensation for
expenses or losses already incurred or for the purpose of giving
immediate financial support to the Group with no future related
costs are recognised as income of the period in which it
becomes receivable.
2.23 BORROWINGS
Borrowing costs directly attributable to the acquisition,
construction or production of qualifying assets, which are assets
that necessarily take a substantial period of time to get ready
for their intended use or sale, are added to the cost of those
assets, until such time as the assets are substantially ready
for their intended use or sale. Investment income earned on
the temporary investment of specific borrowings pending their
expenditure on qualifying assets is deducted from the borrowing
costs eligible for capitalisation. All other borrowing costs are
recognised in profit or loss in the period in which they
are incurred.
2.24 RELATED PARTY RELATIONSHIPS & TRANSACTIONS
Related party relationships exist when one party has the
ability to control, directly, or indirectly through one or more
intermediaries, the other party or exercise significant influence
over the other party in making financial and operating decisions.
Such relationships also exist between and/or among entities
which are under common control with the reporting enterprise,
or between and/or among the reporting enterprise and its
key management personnel, directors, or its stockholder. In
considering each possible related party relationship, attention is
directed to the substance of the relationship, and not merely the
legal form.
079
2.25 JOINTLY VENTURE OPERATIONS
The group’s interests in jointly controlled entities are accounted
for by proportionate consolidation. The group combines its share
of the joint ventures’ individual income and expenses, assets
and liabilities and cash flows on a line-by-line basis with similar
items in the group’s financial statements. The group recognises
the portion of gains or losses on the sale of assets by the group
to the joint venture that is attributable to the other venturers.
The group does not recognise its share of profits or losses
from the joint venture that result from the group’s purchase
of assets from the joint venture until it re-sells the assets
to an independent party. However, a loss on the transaction
is recognised immediately if the loss provides evidence of a
reduction in the net realisable value of current assets, or an
impairment loss.
2.26 COMPARATIVES
Comparative amounts are, where appropriate, reclassified so
as to be comparable with the figure presented for the current
financial year.
2.27 EVENTS AFTER THE BALANCE SHEET DATE
Post year-end events that provide additional information about
the Group’s position at the balance sheet date (adjusting events)
are reflected in the consolidated financial statements. Post
year-end events that are not adjusting events are disclosed in
the notes to the financial statements when material.
2.28 CRITICAL ACCOUNTING ESTIMATES
In preparing the Group’s financial statements, management has
made its best estimates and judgments of certain amounts,
giving due consideration to materiality. The estimates,
assumptions and judgments used in the accompanying financial
statements are based upon management’s evaluation of
the relevant facts and circumstances as of the date of the
financial statements. The resulting accounting estimates will,
by definition, seldom equal the related actual results. These
estimates and judgments are continually evaluated and are
based on historical experience and other factors, including
expectations of future events that are believed to be reasonable
under the circumstances.
The Group believes the following represent the summary
of these significant accounting estimates, assumptions and
judgments and their related impact and associated risks on the
financial statements:
CRITICAL ACCOUNTING ESTIMATE
a. Provision for restoration and rehabilitation
As part of the Groups’s environmental and social responsibility
for mining and petroleum operations, they will incur expenses
to rehabilitate the environment operated in, so as to reduce
hazards and to the extent possible allow regrowth to occur
naturally in restoring the area back to former condition.
The level of provision is based on past spending for rehabilitated
areas and other factors such as labor and equipment usage
estimated by external consultants and contractors as quoted
to management.
b. Unit of production method
The Groups’s oil and gas assets and mine development costs
are amortized based on unit of production which the assets
is expected to be available and productive. In making this
judgment, the Group evaluates, among other factors, the recent
exploration, evaluation and development associated with the
production of proved reserves. It is possible, however, that future
results of operations could be materially affected by changes
in the expected production of proved reserves. An increase
in production of oil and gas would increase the amortization
expense and decrease the costs of oil and gas assets as shown
as non-current asset in the statement of financial position
c. Estimated useful lives
The useful life of each of the Group’s items of property and
equipment is estimated based on the period over which the
asset is expected to be available for use. Such estimation
is based on a collective assessment of practices of similar
business, internal technical evaluation and experience with
similar assets. The estimated useful life of each asset is
reviewed periodically and updated if expectations differ from
previous estimates due to physical wear and tear, technical
or commercial obsolescence and legal or other limits on the
use of the asset. It is possible, however, that future results
of operations could be materially affected by changes in the
amounts and timing of recorded expenses brought about by
changes in the factors mentioned above. A reduction in the
estimated useful life of any item of property and equipment
would increase the recorded operating expenses and decrease
non-current assets.
d. Allowance for impairment of inventories
Allowance for impairment of inventories is maintained at a level
considered adequate to provide for potential loss on inventory
items. The level of allowance is based on past experience and
other factors affecting the impairment of inventory items. An
evaluation of inventories, designed to identify potential changes
to allowance, is performed in a continuous basis throughout the
year. Management uses judgment based on the best available
facts and circumstances, including but not limited to evaluation
of individual inventory items’ future utilization. The amount
and timing of recorded expenses for any period would therefore
differ based on the judgments or estimates made. An increase
in allowance for impairment of inventories would increase the
Group’s recorded expenses and decrease current assets.
e. Foreign currency
The Group’s transactions are denominated in Kina, US Dollar
and Australian Dollar. Exploration costs are paid in Kina and US
Dollar. On a monthly basis, the Kina transactions are greater
than transactions denominated in US and Australian Dollar.
The Board of Directors considers the Kina as the currency that
most faithfully represents the economic effect of the underlying
transactions, events and conditions. The Kina is the currency of
the primary economic environment in which the Group operates.
It is the currency in which the Group measures its performance
and reports its results.
As the indicators are mixed, management has applied its
judgment in accordance with the Group accounting policy on
foreign currency translation (Note 2.5) and has chosen Kina as
the functional currency.
f. Derivative financial Instruments
The Group enters into derivative financial instruments to manage
its exposure to price risk in relation to oil sales.
Derivatives are initially recognised at fair value at the date
the derivative contracts are entered into and are subsequently
remeasured to their fair value at the end of each reporting
period. The resulting gain or loss is recognised in profit or
loss immediately. Derivatives are measured at fair value in
accordance with generally applied option and discounted cash
flow pricing models. The models use market derived inputs and
are classified as Level 2 in terms of Fair Value measurement.
081
3. REVENUE
5. ADMINISTRATIVE EXPENSES
Oil sales
Gold and silver sales
Management fees
THE GROUP
THE COMPANY
THE GROUP
THE COMPANY
2012
2011
2012
2011
2012
2011
2012
2011
K’000
K’000
K’000
K’000
K’000
K’000
K’000
K’000
100,102
146,995
-
-
Staff costs
22,297
19,840
15,919
13,977
77,568
131,169
-
-
Consultancy and professional fees(i)
4,900
4,348
2,272
4,119
-
-
11,666
12,800
Travel & accommodation
1,941
2,208
1,855
2,208
177,670
278,164
11,666
12,800
Office and property rental
1,637
697
24
175
Board expenses
1,258
1,659
1,258
1,659
Insurance cost
1,658
757
1,047
757
Utilities
2,233
2,707
854
942
4. COST OF SALES
THE COMPANY
THE GROUP
2012
2011
2012
2011
Mining levies
698
367
-
-
K’000
K’000
K’000
K’000
Bank charges
321
281
40
35
Transport and logistic cost
30,784
38,054
-
-
Sponsorships and donations
199
220
199
220
Joint venture expenses
19,999
23,762
-
-
Subscriptions
274
463
110
243
Direct mining cost
21,534
25,883
-
-
Repairs and maintenance
377
301
377
301
Mobile maintenance
13,239
17,431
-
-
Conference
357
219
321
219
9
3,285
4,260
-
-
1,999
210
199
210
12
5,403
-
-
979
33
-
-
10,503
11,657
-
-
Impairment Expenses
-
-
10,745
-
Power generation and maintenance
9,347
9,452
-
-
Other operating costs
6,596
6,155
5,103
3,532
Royalties
2,927
4,610
-
-
47,724
40,465
40,323
28,597
Development levy
2,813
1,915
-
-
Community relation expenses
1,918
1,561
-
-
Exploration costs
3,981
7,393
-
-
4,558
7,671
-
-
(674)
(1,004)
-
-
Audit fees
10,169
12,782
-
-
Taxation fees
139,786
165,426
-
-
NOTES
Amortisation of oil and gas assets
Provision for rehabilitation
Milling cost
Depreciation
Stock movement
Other operating expenses
13
Transport and fuel
Licence fees
(i) Consultancy and professional fees include auditor’s remuneration as follows:
THE GROUP
THE COMPANY
2012
2011
2012
2011
K’000
K’000
K’000
K’000
465
352
95
139
51
21
51
21
516
373
146
160
6. OTHER INCOME
THE COMPANY
THE GROUP
2012
2011
2012
2011
K’000
K’000
K’000
K’000
1
-
68,802*
25,000*
Dividend/other income
*The dividend relates to intercompany dividend paid by Eda Oil Limited.
083
7. FINANCE COSTS AND INCOME
9. OIL AND GAS ASSETS
THE COMPANY
THE GROUP
THE GROUP
2012
2011
2012
2011
2012
2011
2012
2011
K’000
K’000
K’000
K’000
K’000
K’000
K’000
K’000
363,540
354,161
-
-
3,388
9,379
-
-
366,928
363,540
-
-
146,025
141,765
-
-
3,285
4,260
-
-
At 31 December
149,310
146,025
-
-
Net book amount (Note 10)
217,618
217,515
-
-
Finance costs
Foreign exchange gains/(loss)
Interest expenses
THE COMPANY
Cost or valuation:
2,204
(17,064)
(1,550)
(10,031)
(1,510)
(1,839)
-
-
694
(18,903)
(1,550)
(10,031)
At 1 January
Additions during the period
At 31 December
Accumulated amortisation:
Finance income
Interest revenue
At 1 January
2,573
2,449
798
959
2,573
2,449
798
959
8. CURRENT AND DEFERRED TAXES
Reconciliation between the provision for income tax computed at the statutory tax rate and the actual income tax provision as shown
in the statements of income for the years ended December 31 follows:
THE COMPANY
THE GROUP
Amortisation for the period
10. JOINT VENTURE
The Group participates in various petroleum projects in the Southern Highlands Province of Papua New Guinea through joint venture
arrangements. The principal activity of the joint venture arrangements is exploration and production of hydrocarbons.
2012
2011
2012
2011
K’000
K’000
K’000
K’000
Profit/(Loss) before tax
(6,573)
55,819
48,138
131
Prima facie tax
(9,113)
16,746
14,441
39
-
-
(14,441)
(39)
31,246
37,925
-
-
4,424
-
-
-
Inventories
26,557
54,670
-
-
Other debtors and prepayments
The Group’s interests is as follows:
Petroleum Development License -Moran 20.50 % (This equates to an 11.275 % interest in PDL 5)
The Group’s share of the assets and liabilities (net of accumulated amortisation and depreciation) employed in the Moran Joint
Venture is included in the balance sheet under the following classifications:
Add (deduct): Amounts not deductible (taxable) in the calculation of taxable income:
Non-deductible items
Adjustments to ACE and AEE*
Deferred Tax Assets not recognised
Income tax expense/(income) for the year
2012
2011
K’000
K’000
1,996
1,433
-
596
Property, plant and equipment (oil & gas)
231,891
218,060
Share of assets employed in the joint ventures
233,887
220,089
16,269
2,574
Net oil & gas assets
217,618
217,515
Income
100,102
148,269
Expenses
(32,567)
(47,246)
67,535
101,023
Current assets
Non current assets
The movements in the net deferred income tax assets/(liabilities) is as follows:
Opening balance at beginning of the year
Movement during the year
(71,860)
(68,519)
-
-
(2,153)
(3,341)
-
-
(74,013)
(71,860)
-
-
Current liabilities
Trade creditors
Deferred income tax assets (liabilities), net at 31 December consist of:
Deferred tax assets
Unrealised foreign exchange loss and provisions
Deferred tax on site restoration
895
3,312
-
-
6,328
1,390
-
-
Property, plant and equipment
-
185
-
-
Carried forward losses
-
(322)
-
-
7,223
4,565
-
-
(74,013)
(71,860)
-
-
(74,013)
(71,860)
-
-
Deferred tax liabilities:
Fixed assets / Oil and gas assets
Profit before income tax
085
11. DEFERRED COSTS
13. PROPERTY, PLANT AND EQUIPMENT
THE COMPANY
THE GROUP
THE GROUP
2012
2011
2012
2011
K’000
K’000
K’000
K’000
Deferred restoration costs (i)
9,628
4,995
-
-
Investment in LNG FEED (ii)
67,134
43,897
-
-
Exploration and development costs (iii)
49,030
46,662
-
-
Precious metal exploration (iv)
11,259
12,253
-
-
137,051
107,807
-
-
(i) Provision for well site restoration of Eda oil.
(ii) Relates to exploration and feed expenses of PNG LNG through Kumul LNG Limited.
(iii) Exploration costs in Elk and Entelope operated by InterOil through Eda LNG Limited.
(iv) Relates to exploration costs of Tolukuma Gold Mines Limited and Eda Minerals Limted.
LAND &
BUILDING
AT COST
MOTOR
VEHICLES AT
COST
FURNITURE
& FITTINGS
AT COST
PLANT &
EQUIPMENT
AT COST
OFFICE
EQUIPMENT
AT COST
CAPITAL
WORK-IN
PROGRESS
AT COST
TOTAL
K’000
K’000
K’000
K’000
K’000
K’000
K’000
Cost
At 1 January 2012
41,431
1,001
1,302
102,373
2,595
4,538
153,240
Additions
1,788
120
21
4,155
362
22
6,468
Disposals
-
-
-
(20)
-
(611)
(631)
43,219
1,121
1,323
106,508
2,957
3,949
159,077
(8,029)
(591)
(111)
(96,642)
(1,372)
-
(106,779)
(900)
(138)
(100)
(3,056)
(398)
-
(4,559)
31 December 2012
(8,929)
(729)
(211)
(99,698)
(1,770)
-
(111,338)
Net book amount 2011
33,402
410
1,191
5,731
1,223
4,538
46,461
34,290
392
1,112
6,810
1,187
3,949
47,739
At 31 December 2012
Accumulated depreciation
1 January 2012
Depreciation
12. PROVISIONS
THE GROUP
THE COMPANY
2012
2011
2012
2011
K’000
K’000
K’000
K’000
Employee entitlements
1,876
2,931
613
551
Royalties
2,128
1,935
-
-
Mining levy
2,839
2,525
-
-
-
1,500
-
1,500
Cost
6,843
8,891
613
2,051
At 1 January 2012
Current
Dividend
THE COMPANY
Long service leave
Rehabilitation and restoration costs(i)
Total provisions
PROVISION FOR REHABILITATION AND RESTORATION COSTS (I)
Balance at 1 January
Provisions/(Write back)
Balance at 31 December
MOTOR VEHICLES
AT COST
FURNITURE &
FITTINGS AT
COST
OFFICE
EQUIPMENT AT
COST
TOTAL
K’000
K’000
K’000
K’000
K’000
30,242
1,001
1,302
2,595
35,140
1,788
120
21
251
2,180
32,030
1,121
1,323
2,846
37,320
At 1 January 2012
(573)
(299)
(111)
(847)
(1,831)
(802)
(138)
(100)
(336)
(1,376)
Additions
Non-current
LAND &
BUILDING AT
COST
At 31 December 2012
3,067
2,167
1,026
293
23,694
18,291
-
-
26,761
20,458
1,026
293
Charges
33,604
20,458
1,026
293
At 31 December 2012
(1,375)
(437)
(211)
(1,183)
(3,206)
29,669
702
1,191
1,748
33,311
30,655
684
1,112
1,663
34,114
2012
2011
K’000
K’000
18,291
20,739
5,403
(2,448)
23,694
18,291
Provision for restoration relates to the estimated costs associated with the restoration of sites for Tolukuma Gold mines Limited
based on a report dated 1 January 2012 by external consultants, ENV Asia Pte Limited of Singapore. The cost is capitalised and will
be amortised based on the expected life of mine. amortised using straight line method. Also included in the provision for restoration
relates to the estimated costs associated with the restoration of sites for Eda Oil Limited operations that will be incurred at the
conclusion of the economic life of the producing assets in which the company holds a participating interest. In 2012, the company
recognised additional provision due to revised estimated restoration costs by the operator
Accumulated depreciation
087
17. RELATED PARTY TRANSACTIONS AND BALANCES
14. CASH AND CASH EQUIVALENTS
• Management fees to Petromin PNG Holdings Limited from Eda Oil Limited of K6.8 million and from Tolukuma Gold Mine Limited
of K4.8 million.

Cash at bank
Petty cash
Short term deposits
2012
2011
2012
2011
K’000
K’000
K’000
K’000
57,988
44,676
2,449
(309)
3
22
3
2
55,192
103,854
14,749
85,022
113,183
148,552
17,201
84,715
The group in its regular conduct of its business has entered into transactions with its subsidiaries consisting of cash advances and
reimbursements of expenses and managements. Balances arising from these transactions outstanding at the reporting date are
as follows:
2012
2011
2012
2011
K’000
K’000
K’000
K’000
Tolukuma Gold Mine Limited
-
-
34,042
2,510
Eda Oil Limited
-
-
172
-
Eda Minerals Limited
-
-
2,104
12
Kumul LNG Limited
-
-
2,212
79
Eda LNG Limited
-
-
2,407
-
Eda Kopa Limited
-
-
10,604
-
Eda LNG ( Stanley) Limtied
-
-
168
-
Eda Energy Limited
-
-
1,321
-
Petromin Energy Limited
-
-
1,865
-
-
-
54,896
2,601
-
-
-
66,874
Non-current
15. TRADE AND OTHER RECEIVABLES
Due from subsidiaries
THE GROUP
THE COMPANY
2012
2011
2012
2011
K’000
K’000
K’000
K’000
Trade receivables
17,701
18,266
-
-
Prepaid expenses
198
97
198
97
Other receivables
7,282
7,799
3,138
4,112
25,181
26,162
3,336
4,209
16. INVENTORIES
THE COMPANY
THE GROUP
2012
2011
2012
2011
K’000
K’000
K’000
K’000
13,205
12,829
-
-
Due to subsidiaries
845
512
-
-
Eda Oil Limited
Consumable stock
20,639
22,925
-
-
Less: Provision for inventory obsolescence
(5,841)
(5,841)
-
-
28,848
30,425
-
-
Gold in circuit
Oil stock
THE COMPANY
THE GROUP
Current
KEY MANAGEMENT COMPENSATION
Key management personnel comprises of the Petromin PNG Holdings Limited Board of Directors and Petromin Executive
management team.
THE COMPANY
THE GROUP
Salaries and wages
Other short term benefits
2012
2011
2012
2011
K’000
K’000
K’000
K’000
4,192
3,831
4,192
3,831
-
-
-
-
4,192
3,831
4,192
3,831
During the financial year, the following transactions occurred between related parties:
THE COMPANY
THE GROUP
089
18. TRADE AND OTHER PAYABLES
20. INVESTMENT IN SUBSIDIARIES
2012
2011
2012
2011
2012
2011
2012
2011
K’000
K’000
K’000
K’000
K’000
K’000
K’000
K’000
Eda Oil Limited
-
-
40,030
40,030
-
-
13,048
12,507
Current
Trade payables
Amounts due to MRDC
Other creditors
11,792
12,284
-
-
-
5,077
-
5,000
Eda LNG Limited
-
-
46,691
46,690
15,114
7,608
459
1,901
Eda Kopa
-
-
100
4,753
26,906
24,969
459
6,901
Eda Energy
-
-
1
255
Petromin Energy
-
-
7,335
3,040
Tolukuma Gold Mines Limited
-
-
-
3,369
-
-
99,776
110,644
Non-current
Amounts due to Gloco
45,567
29,298
-
-
Papua New Guinea Liquefied Natural Gas Global Company LDC, a limited duration company incorporated under the laws of the
Commonwealth of the Bahamas (the “Borrower”) was organised to conduct certain activities of the Project outside of PNG, including
the borrowing and on-lending to the Participants of Senior Debt, and the purchase and re-sale of Project LNG and Project Liquids.
The Borrower is owned by each Participant in a percentage equal to its Project Interest.The aggregate carrying amount of trade and
other payables approximate their fair values.
19. BORROWINGS
THE COMPANY
THE GROUP
2012
2011
2012
2011
K’000
K’000
K’000
K’000
2,376
2,376
2,376
2,376
901
-
901
-
3,277
2,376
3,277
2,376
Current
Bank Loan – ANZ (i)/BNP Paribas (ii)
Westpac Lease
Non-current
Bank Loan – ANZ/BNP Paribas
Westpac Lease
THE COMPANY
THE GROUP
THE COMPANY
THE GROUP
The group has the following subsidiaries at 31 December 2012:
NAME OF SUBSIDIARY
38,661
11,122
11,989
-
-
-
-
42,536
38,661
11,122
11,989
100 %
PNG
31 December
100 %
PNG
31 December
Eda LNG Limited
100 %
PNG
31 December
Eda Kopa
100 %
PNG
31 December
Eda Energy
100 %
PNG
31 December
Petromin Energy
100 %
PNG
31 December
Tolukuma Gold Mines Limited
100 %
PNG
31 December
On performance of impairment analysis by the Management, an impairment of K10.75million was identified and processed in relation
to Tolukuma Gold Mines Limited. This investment has been provided for in full as there was no active market or alternative impartial
valuation method available.
21. SHARE CAPITAL
THE COMPANY
THE GROUP
2012
2011
2012
2011
K’000
K’000
K’000
K’000
1
1
1
1
22. RETAINED EARNINGS
THE COMPANY
THE GROUP
(i)The ANZ Fully Drawn Loan (FDL) is the Petromin office building and the Westpac Lease is for the equipment purchase through
the existing lease facility for Tolukuma Gold Mines Limited. The borrowing costs on the office building have been capitalised.
(ii) The BNP Paribas bank facility is a rolling corporate facility organized through securitizing the Eda Oil assets oil based on
production in 2012. The interest rate is at a margin of 5 % repayable every quarter. The first drawdown of USD12.1million in
December 2011. This was fully repaid in 2012. The current balance represents a new pre-export finance facilty with ANZ bank
entered into late Decmber 2012 for USD30 million at interest rate of 4.5 % (interest plus LIBOR) for 3 years.
REPORTING DATE
Eda Oil Limited
1 fully paid ordinary share @ K1.00
42,536
COUNTRY OF
INCORPORATION
SHAREHOLDING
Balance at the beginning of the year
Prior period adjustments – other (i)
Profit for the year/period –
Dividends paid
2012
2011
2012
2011
K’000
K’000
K’000
K’000
351,934
352,735
145,604
147,135
(2,082)
-
10,745
289
(33,129)
1,149
37,393
130
(450)
(1,950)
(450)
(1,950)
316,273
351,934
193,292
145,604
(i) The prior period adjustment relates shares of Tolukuma Gold Mines Limited, Eda Kopa, Petromin Energy, Eda Energy and Eda LNG
(Stanley) transferred from intercompany to Shares and vice versa for prior years taken up appropriately in respective accounts.
091
23. RECONCILIATION OF CASH AND CASH EQUIVALENTS
The sensitivity analysis includes only outstanding foreign
currency denominated monetary items and adjusts their
translation at the period according to computed percentage
based on average movement of exchange rates during the year.
THE COMPANY
THE GROUP
2012
2011
2012
2011
K’000
K’000
K’000
K’000
Cash and cash equivalents, net of bank overdrafts
57,992
44,698
2,452
(306)
Short term deposits
55,192
103,854
14,749
85,021
113,184
148,552
17,201
84,715
24. COMMITMENTS FOR EXPENDITURE
A. CAPITAL EXPENDITURE
Capital commitments outstanding as at 31 December 2012
is K34,386,519 being Eda LNG’s share of cost in relation to
capital expenditure. Kumul LNG has capital commitments of
K45,567,425 as at end of 31 December 2012.
B. CANCELLABLE COMMITMENTS
The Group has significant commitments in respect of its interest
in PDL 5 through Eda Oil Limited and the Elk, Antelope project
with InterOil Corporation. These commitments are considered
voluntary and non binding thus the directors believe additional
disclosure of these amounts is not warranted.
25. FINANCIAL RISK MANAGEMENT
25.1 FINANCIAL RISK FACTORS
The Group’s activities expose it to a variety of financial risks:
market risk (including foreign exchange risk, fair value interest
rate risk, cash flow interest rate and commodity price risk) ex,
credit risk, liquidity risk and capital risk. The Group’s overall
risk management program focuses on the unpredictability of
financial markets and seeks to minimise potential adverse
effects on the Group’s financial performance.
Risk management is carried out by management under the
direction of the Board of Directors (BOD). Management identifies
and evaluates financial risks in close cooperation with the
Group’s local management.
The Group’s financial assets and liabilities comprise of cash
and cash equivalents, trade and other receivables, provisions
and trade and other payables which arise directly from its
operations.
A. MARKET RISK The Group’s activities expose it primarily
to the financial risks of changes in foreign exchange rates and
interest rates and oil prices.
The Group measures the market risk exposures by cash flow
forecasting. There has been no change from the prior year to the
types of market risks the consolidated entity is exposed to.
I. Foreign currency risk
The Group operates internationally and is exposed to foreign
exchange risk arising from various exposures primarily with
respect to the US Dollar for oil sales and Australian Dollar
for gold sales. Foreign exchange risk arises when recognized
assets and liabilities and future commercial transactions are
denominated in a currency that is not an entity’s functional
currency.
The Group’s significant foreign currency denominated monetary
assets and liabilities as of 31 December are as follows:
IN US DOLLARS
2012
2011
K’000
K’000
Current assets
Cash
32,348
49,751
7,168
4,379
Net foreign currency denominated assets
39,516
54,130
Year-end exchange rate
0.4775
0.4690
Kina equivalent
82,756
115,416
Trade receivables
IN AUSTRALIAN DOLLARS
2012
2011
K’000
K’000
Current liabilities
5,327
Net foreign currency denominated liabilities
4,764
5,327
4,764
Year-end exchange rate
0.4709
0.4628
Kina equivalent
11,312
10,294
FOREIGN CURRENCY SENSITIVITY ANALYSIS
The effect on profit (loss) for the period on reasonably possible
changes in exchange rates are as follows:
NET FOREIGN
CURRENCY
DENOMINATED
ASSETS
(LIABILITIES)
CHANGES
IN FOREIGN
EXCHANGE
RATES
ii. Interest rate risk
As the group has significant interest-bearing deposits, the
group’s income and operating cash flows are substantially
dependent on the changes in market
interest rates.
iii Price risk
The group is exposed to crude oil price and gold price
fluctuations and it is not the group policy to hedge this exposure.
A 10 % increase/decrease in the gold price, with all other
variables held constant would have resulted in an increase/
decrease in post-tax profit for the year of K17 million (2011 –
K16 million).
A 10 % increase/decrease in the oil price, with all other variables
held constant would have resulted in an increase/decrease in
post-tax profit for the year of K11 million (2011 – K12 million).
B. CREDIT RISK The group uses an agent to ensure sales
transactions are undertaken only with major oil companies.
Payment terms are maintained at 30 days, in accordance with
standard oil industry practice.
Gold sales are made direct to AGR Matthey Refinery. Payment
terms are in accordance with standard industry practice.
The aging of the Company’s financial assets at 31 December
that are subject to credit risk are as follows:
CARRYING
AMOUNT (K’000)
NEITHER PAST DUE NOR
IMPAIRED (K’000)
113,183
148,552
25,181
26,162
At 31 Dec 2012
Cash and cash
equivalents
At 31 Dec 2012
US Dollars
US$7,186
+/- 10 %
+/-K1.4
AU Dollars
(AU$5,327)
+/- 10 %
+/-K1.1
Trade receivables
Deposits
At 31 Dec 2011
US Dollars
US$115,416
+/- 10 %
+/-K49
AU Dollars
(AU$10,293)
+/- 10 %
+/-K4
The sensitivity rates used represent the rates of exchange
between the foreign currency exchange rate at 31 December
2012 and 2011 and the use of hypothetical foreign currency
exchange rates determined 30 days from the reporting date,
during which management is expected to receive or settle the
Group’s most significant financial assets or liabilities.
467
555
138,831
175,269
113,183
148,552
25,181
26,162
At 31 Dec 2011
Cash and cash
equivalents
Trade receivables
Deposits
i. Cash and cash equivalents
To minimize credit risk exposure from its cash, the Company’s
cash in banks and short-term deposits are deposited in banks
that normally have good credit ratings.
ii. Trade receivables
Interest earned from term deposit for 2012 was K2.6 million
(2011: K 2.4 million) at an average interest rate of 4.8 % (2011:
5 %). A 100 basis point increase/decrease in the interest rate
with all other variables held constant would have resulted in
an increase/decrease of post-tax profit for the year of K0.343
million (2011 - K 0.260 million).
EFFECT ON
PROFIT (LOSS)
IN KINA (‘000)
Neither past due nor impaired
467
555
138,831
175,269
The credit quality of receivables can be assessed by reference to
past experience with the customer and its counterparty default
rates. The customer has no significant credit andhistory of
default risk. The account is fully collectible and no provision for
allowance for doubtul was provided as of 31 December 2012
and not impaired) (Note 15).
iii. Other receivables
Other receivables consist of prepayments and goods and services
tax and are deemed collectible by company management.
iv. Deposits
This account consist of term deposits with commercial banks in
Papua New Guinea and Australia.
C. LIQUIDITY RISK The Company aims to prudently manage
liquidity risk by maintaining sufficient cash and other liquid
assets or the availability of funding through uncommitted
credit facilities. Liquidity is not considered a significant risk to
the Company as all its funds are held as cash in the bank. At
31 December 2012, the Company had K113.2 million in cash
and cash equivalents (2011 – K148.6 million). The Company’s
financial liabilities are trade payables, other payables and
current income tax set out in the balance sheet. These financial
liabilities are expected to be settled within 12 months from the
balance date.
Prudent liquidity risk management implies maintaining sufficient
cash and funds. The Group aims to prudently manage liquidity
risk by maintaining sufficient cash and other liquid assets or the
availability of funding through uncommitted credit facilities.
Liquidity is not considered a significant risk to the Group as all its
funds are held as cash in the bank. The Group only places funds
in short-term placements which exceed the Company’s cash
requirements. Placements are made based on cash planning
assumptions and covers only a short period of time.
The Company’s current liabilities amounting to K74 million as of
31 December 2012 (2011 – K69 million) comprise of trade and
other payables, current income tax payable and provisions. On
the other hand, current assets amounting to K167 million as of
31 December 2012 (2011 – K205 million) comprise of cash and
cash equivalents, trade and other receivables, inventories and
income tax receivable. The Company aims to maintain flexibility
in funding its operations through efficient collection strategies
and maintaining sufficient and available cash.
093
The table below analyzes the Company’s financial liabilities into relevant maturity groupings based on the remaining period at the
statement of financial position to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted
cash flows. Balances equal their carrying balances, as the impact of discounting is not significant.
1 YEAR LESS THAN 1 YEAR
K’000
AND 2 YEARS BETWEEN 1
AND 2 YEARS K’000
AND5 YEARS BETWEEN 2
AND 5 YEARS K’000
5 YEARS OVER 5 YEARS
K’000
At 31 Dec 2012
26,906
-
-
-
Provisions
33,604
-
-
-
3,277
42,536
-
-
63,787
42,536
-
-
48,762
-
-
-
Provisions
29,349
-
-
-
Other payables
5,077
-
-
-
Bank Ioan-FDL
2,376
38,661
-
-
85,564
38,661
-
-
Bank Ioan-FDL
In 31 December 2012, the group had contingent liabilities in
respect of legal claims arising in the ordinary course of business.
The group has disclaimed liability in all cases and is vigorously
defending these actions. It is not practical to estimate the
potential effect of these claims but legal advice indicates that
any liability that may arise in the unlikely event these claims
are successful will not be significant. No provisions have been
recorded in respect of these items in the consolidated financial
statements for the year ended 31 December 2012.
28. SUBSEQUENT EVENTS
The National Government through the National Executive Council
(NEC) has made a policy decision in March 2013 to re-structure
the Company. As per the Policy Decision Number 67/2013,
approved to dismantle Petromin through:
1. A transfer of assignment of its Petroleum assets/interest and
attaching liabilities (including relevant employees to “ Kumul
Petroleum Holding Limited”,
2. A transfer of its Mining assets/interests and assignment of
attaching liabilities including relevant employees to “Kumul
Mining Holding Limited’’,
3. Winding up of the company; and
4. Repeal of the Petromin Act.
25.2 CAPITAL RISK MANAGEMENT
The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern in order to
provide returns to shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost
of capital.
In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return
capital to shareholders, obtain borrowings from banks or related parties and issue new shares or sell assets to reduce its debt.
At 31 Dec 2011
27. CONTINGENT LIABILITIES
The management considers the business from a product perspective since these are operated in one geographic location.
The business are segregated into investment, hydrocarbons & minerals.
The Board consider this to be a restructure. The restructure
is to separate the mineral assets from petroleum and place
these assets into different entities for prudent management
of the state’s interest in all current and future projects. The
actual implementation of the NEC decision and the financial
implications are yet to be assessed and quantified.
The segment information provided to the strategic steering committee for the reportable segments for the period ended 31
December 2012 is as follows:
Agreement in principal but is not likely to have an impact on the
current financial position of the entity.
26. SEGMENT REPORTING
Management has determined the operating segments based on the reports reviewed by the Finance Department with the
cooperation of the Board of Directors that are used to make strategic decisions.
INVESTMENT
HYDRO CARBONS
MINERALS
TOTAL
Revenue
-
100,102
77,568
177,670
Cost of sales
-
(32,580)
(107,196)
(139,786)
Gross profit
-
67,522
(29,628)
37,884
(29,618)
(3,799)
(14,308)
(47,724)
-
-
1
1
(29,617)
63,723
(43,935)
(9,839)
(1,510)
3,063
(860)
694
798
1,763
11
2,573
(30,330)
68,549
(44,784)
6,572
-
(22,133)
(4,424)
(26,557)
(30,330)
46,416
(49,207)
(33,129)
Administrative expenses
Other income
Operating profit/(loss)
Finance cost
Finance income
Profit (loss) before tax
Income tax credit/(expense)
Profit (loss) for the period
095
AUDIT REPORT
DELOITTE TOUCHE TOHMATSU
DELOITTE TOWER, LEVEL 12
DOUGLAS STREET
PORT MORESBY
PO BOX 1275 PORT MORESBY
NATIONAL CAPITAL DISTRICT
PAPUA NEW GUINEA
TEL: +675 308 7000
FAX: +675 308 7001
WWW.DELOITTE.COM/PG
INDEPENDENT AUDIT REPORT TO THE MEMBERS OF PETROMIN PNG HOLDINGS LIMITED AND SUBSIDIARIES
AUDIT OPINION
We have audited the accompanying consolidated financial statements of Petromin PNG Holdings Limited and Subsidiaries comprises
the consolidated statement of comprehensive income as at 31 December 2012, the consolidated statement of financial position,
consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, a summary of
significant accounting policies and other explanatory notes.
In our opinion,
DIRECTORS’ RESPONSIBILITY FOR THE FINANCIAL STATEMENTS
2. proper accounting records have been kept by the Company.
The Directors of Petromin PNG Holdings Limited and Subsidiaries are responsible for the preparation and true and fair presentation
of the consolidated financial statements in accordance with the International Financial Reporting Standards and the Companies Act
1997 and for such internal controls as the directors determine is necessary to enable the preparation of the consolidated financial
statements that are free from material misstatements, whether due to fraud or error.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
1. the consolidated financial statements of Petromin PNG Holdings Limited and Subsidiaries give a true and fair view of the Group’s
consolidated financial position as at December 2012 and of the results of its operations and its cash flows for the year then ended in
accordance with International Financial Reporting Standards; and comply with the Companies Act 1997
The financial report of Petromin PNG Holdings Limited and its Subsidiaries is in accordance with the Companies Act 1997 and proper
accounting records have been kept by the Company. During the year ended 31 December 2012 we also provided Petromin PNG
Holdings Limited with tax agency and corporate finance advisory services.
AUDITORS’ RESPONSIBILITY
Our responsibility is to express an opinion on the consolidated financial statements based on our audit. We conducted our audit
in accordance with International Standards on Auditing. These Auditing Standards require that we comply with relevant ethical
requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial
statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material
misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers
internal control relevant to the Company’s preparation and fair presentation of the consolidated financial statements in order
to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company’s internal control. An audit also includes evaluating the appropriateness of accounting estimates
made by the directors, as well as evaluating the overall presentation of the consolidated financial statements.
By: Suzaan Theron / Partner / Registered under the Accountants Act 1996
Dated this 31st day of May 2013.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
DELOITTE TOUCHE TOHMATSU
This annual report has been printed on 100 %,
chlorine free, carbon neutral stock that passes the
ISO 14001 environmental management standard

Petromin Annual Report 2012 - Petromin PNG Holdings Limited

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