Two weeks ago a leaked briefing document from Duma's department outlined a proposed $US1 billion (K2.68 billion) termination penalty that joint venture partners must accept if they decide to terminate a gas agreement, regardless of any reason.
Under the penalty scheme, the partners must also agree to the immediate termination of all related licences.
The briefing document leaked to the Post-Courier newspaper also revealed the PNG Government lost more than K126 million on the PNG Gas pipeline project, abandoned by Oil Search last year, with the company now part of an ExxonMobil-led consortium to use the gas reserves in the PNG Liquefied Natural Gas project.
Talking to Reuters, Duma said the government may consider imposing a penalty for developers who abandon major gas projects to prevent oil and gas firms from sitting on leases over resource-rich acreage.
Duma said his government was considering penalties as it did not want companies holding onto retention leases without developing the fields.
"We are sick and tired of developers that sit on reserves and don't do anything," he said.
"There are things that a government can do and we haven't ruled out imposing penalties."
Duma did not name firms, but said the government had warned several companies that have sat idle on the licences.
Duma said the situation had changed since last year and the government had enough money built up from a tax windfall to fund its own stake in the PNG LNG project that could make up over half of its economy.
"Unlike before, the government now has a lot of money and we have enough money to fund our equity in these LNG projects," he said. "But if we need some more [money], we can then look at bonds as the last resort. But it will be for minor sums."
The PNG government will be taking a 22.5% stake in all LNG projects which should force other LNG project stakeholders to proportionally reduce their current equity standings.
PNG LNG is currently the most advanced of the future LNG projects. The government recently agreed to fiscal terms with operator ExxonMobil, but ExxonMobil spokesperson Anna Schulze has told PNGIndustryNews.net that the company had not agreed to a termination penalty.
Duma said the US supermajor had agreed to pay 30% corporate tax and the gas agreement was expected to be ratified by mid-May.
"We are now negotiating on the technical terms such as the downstream process, government participation and how much gas to set aside for the domestic market," he said.
Meanwhile, the government is meeting with Liquid Niugini Gas officials to discuss fiscal and technical terms.
Duma said the parties were "halfway through the process", but the government did not yet have information on the gas reserves and was still waiting for the company to provide drilling results from its Elk and Antelope fields.
The PNG LNG project partners are ExxonMobil (41.6%), Oil Search (34.1%), Santos (17.7%), AGL Energy (3.6%), and Nippon Oil (1.8%). Landowner interests hold the remaining 1.2%. PNG LNG is targeting first cargoes in 2013.
Liquid Niugini Gas is backed by InterOil, Merrill Lynch and Clarion Finanz AG affiliate Pacific LNG operations. It is aiming for LNG production in 2012 from natural gas sourced from InterOil's Elk-Antelope structure.
