That is why it is our priority to actively assist the PNG government in fulfilling its timely distribution obligations of cash and in-kind revenues. Since the beginning of LNG project revenues in 2015, it has become increasingly important. These approaches aim to improve the implementation of government oil and gas revenues in terms of tangible benefits and timely improvements for the local economy, while minimizing the risk of disruption. He stressed that KPHL`s mission was to implement the UBSA agreement and to provide additional benefits to the landowners and provincial governments involved should they decide to invest in Kroton. UBSA concluded licensing benefits Sharing Agreements (LBBSA) in early December 2009. These agreements specify how landowners in each licensed territory pay their share of the project`s benefits. The agreement refers to the 22 May 2008 LNG agreement between LNG project companies and the State of Papua New Guinea, which provides commercial and tax terms for the project (preamble). The agreement lists all the oil development licences to which the agreement applies (Article 4.2). The agreement ensures a fair distribution of benefits and was negotiated and implemented in May 2009 between the PNG State, landowners and local government representatives. The national government provides all contracting parties with a set of benefits to be distributed in accordance with Article 6.1 (Article 6). The trust companies will administer the benefits of the agreement to the project area to landowners, local governments and provincial governments. Trust companies conduct an independent audit every 6 months, regularly change their directors, publish semi-annual and annual accounts, publish their investment and dividend policies, and present full annual accounts of the year`s revenues (s. 9).
The State Government, in agreement with provincial and local governments, will develop development programs and projects and will receive assistance in the development of business plans and budgets, as well as operating and maintenance costs (Article 14). All communication between the contracting parties is made in writing (Article 21). The agreement is governed by the laws of Papua New Guinea and the resulting disputes are subject to the exclusive jurisdiction of state courts (Article 22). The share acquisition option in Kumul Petroleum (Kroton No. 2) Holdings Limited is one of the benefits agreed to by the PNG government and defined in 2009 in the Umbrella Profit Sharing Agreement (UBSA) for landowners and provincial governments along the footprint of the PNGLNG project. The provinces, municipalities and landowners that are parties to this agreement receive the following benefits (s. 6.1). (a) an estimated 7% stake in the LNG project; includes: (i) an estimated 2.78% share of “cdOA equity” consisting of “free equity” and “paid equity” and (ii) an estimated 4.22% share of the the basis of a commercial option called the “equity option” for an undivided and firm 25.75% interest in the state-owned Kroton company and on Kro Equitton.