A Delay in Jet Fuel Supply in Papua New Guinea, March 2005

Papua New Guinea (PNG), which obtained independence from Australia in 1975, has significant hydrocarbon reserves and there is exploration activity there, primarily by the Canadian company InterOil who also have downstream activity in PNG*. In fact InterOil pioneered, as recently as 2004, oil refining in PNG: their refinery is at Nappa Nappa and its production exceeds domestic requirements therefore there is a surplus for export. Previously all petroleum products for PNG had been imported in refined form from places including Singapore. At that time Shell had liquid fuel distribution and storage facilities in PNG, which were bought by InterOil and then leased back to Shell. Under such an arrangement Shell has responsibility for the quality of fuels supplied at the outlets it once owned and now leases.

In March 2005 there was a difficulty when, under the arrangements described above, jet fuel for the international airport at Port Moresby, the national capital, was received at the Shell terminal in Idubada (a district of Port Moresby). Jet fuel from Nappa Nappa was not accepted by Shell at Idubada after its freeze point measurement was found to be outside specification. This was picked up during routine acceptance tests and confirmed by work at two other laboratories of Shell where contaminants in the fuel which might have caused it not to conform in terms of freeze point were traced. InterOil issued a press release which stated that a freeze point measurement on fuel had been performed according to a recognised and approved standard. Moreover, the press release asserts, fuel from the same shipment as that delivered to Idubada had been shown to be within spec. in terms of its freeze point. PNG is not an advanced country and there are times when its aviation fuels reserves are too low for flight schedules to be maintained, so an incident like that discussed can have knock-on effects.

InterOil, who have acquired distribution and storage assets not only from Shell but also from BP, have so to speak moved further downstream than refining. Their first service station in PNG was recently opened. Photos of this event, which was obviously accompanied by much community interest locally, can be seen on the company’s web site. InterOil’s exploration activity in PNG has continued apace and in mid 2006 it announced discovery of a very promising condensate field.

*An earlier mini essay described oil supply from the Dutch East Indies prior to its becoming Indonesia. In fact the one part of the Dutch East Indies which did not become part of Indonesia is now part of PNG.

by Dr. Clifford Jones, University of Aberdeen, UK j.c.jones@eng.abdn.ac.uk