Oil Search Limited ventures into Electricity

Access to power is one of PNG’s most significant development challenges.

Oil Search’s recent focus on the electricity sector in PNG is a strategic response to this challenge.

With its new power business the company aims to deliver financially sustainable power solutions that will strengthen and build the capacity of providers, promote greater energy reliability for industries and deliver cleaner and affordable electricity.

Speaking at the inaugural PNG Energy and Petroleum Summit 2017, general manager for business development with Oil Search Power Holdings, Michael Uiari said it is logical for the company to offer its in-country project management and operating expertise to help find solutions for the government to improve access to electricity.

Mr Uiari said this is complementary to their export business which helps power Asian countries through the country’s sales of liquefied natural gas (LNG) and it was now venturing into the domestic power sector.

"Oil Search can’t generate top quartile returns for our shareholders with an export business in one hand and ignore the challenges in our backyard and at our doorstep in the other,’’ Mr Uiari said.

"As a PNG Company, it’s the right thing to do, to assist government with providing access to power for the people and the growth of the country’s industry, as well as contributing to our company’s profitability.’’

In PNG, government policy has turned to the private sector for power generation, hence the introduction of independent power producers (IPP), which marks the start of further liberalisation and subsequent privatisation of electricity.

Mr Uiari told the summit that Oil Search’s entry into the business is through proposals for generation and use of domestically sourced fuels through its Highlands and Morobe Province generation projects.

Oil Search is also working with PNG Power to understand the costs and issues associated with trying to connect people in remote locations.

Even for those who currently have access to electricity, Mr Uiari said that access to power in PNG is very expensive.

The high price of electricity results from a blend of fuel prices, combined with a very low user base,high system and logistics costs, and a significant proportion of electricity that does not derive revenue. Photo: Electricity line /Simon Anakapu