Energy project gives nation an economic jolt

Papua New Guinea looks to attract Chinese buyers with mammoth liquefied natural gas venture

Papua New Guinea has great potential to improve its socioeconomic development through its natural resources - land, cash crops, forests and fisheries.

Equally important are other areas that can contribute to economic growth and better living standards for its people, including human capital development, an improved infrastructure network and an efficient service delivery mechanism for public goods and services.

These areas underscore Papua New Guinea's development agenda in its Vision 2050.

The most lucrative infrastructure and investment project in the country's history - the Papua New Guinea liquefied natural gas project - is an integrated development plan that features an initial investment budget of nearly $20 billion that will massively boost the Pacific nation's economy and people.

Modern gas production and processing facilities in the Southern Highlands, Hela, Western, Gulf and Central provinces will utilize more than 700 kilometers of pipelines to pump more than 9 trillion cubic feet of gas to customers including China Petroleum and Chemical Corp and CPC Corp.

Spearheaded by global energy giant Exxon-Mobil, the Papua New Guinea LNG Project will bring significant benefits to the nation from sales revenues, taxes and royalties that will be invested in a sovereign fund and used to boost the country's socioeconomic development. Nearly 15,000 people are working on the initial phase of the project, of whom more than a third are Papua New Guineans.

"This project will have, and already has had, a tremendous effect on our economy," said Papua New Guinea Prime Minister Peter O'Neill. "It will almost double our GDP, which will have a profound effect on the economy.

"Because of this project, we have been able to maintain the level of fast growth that we have been experiencing. When the revenues start to come in, we will also use the money to build and invest in infrastructure.

"We are contributing to the Chinese economy as they will receive our gas as well as our minerals."

He also said the mammoth project will create a multitude of business openings.

"On the downstream side, especially with LNG, we are now in discussions with many foreign investors who are trying to get into the petrochemical business.

"We are establishing petrochemical parks for them and special economic zones for this growth.

"China has a great need for resources. We have opened the gates to them to come and establish some of the downstream business that we all want in this country.

"This is because what we really care about is employment, not just making money. People need jobs in order to put food on their tables. So we are encouraging companies to do business in Papua New Guinea so that they can employ more people and build our country at the same time."

A bright outlook

Minister of Finance James Marape said the project has secured Papua New Guinea's development path for the next 20 years.

"Our development targets will be met from the revenue that will come from the Papua New Guinea LNG project," he stated.

"Anything on top of the Papua New Guinea LNG project is a bonus for us: We can build even more roads, schools and health facilities. We are a country of only 7 million people and this means our development aspirations can be met with the revenue that flows in from this project. It could be quite a windfall and we're mindful of the fact of accessibility of liquidity in our systems. We should have enough to fund our development budget."

Papua New Guinea has always been a secure investment destination for companies who want to do honest business with the government or local enterprises, the finance minister said.

He cited the Kutubu oilfields, the country's first commercial oilfield development that began pumping oil in 1992 and has never witnessed one delayed cargo in 24 years, as evidence of this enviable track record. The project, also operated by Exxon-Mobil, has an estimated 18.7 million barrels of reserves.

"We've also had flowing oil from the Southern islands into the Gulf of Papua and a ship has come in every time, on time, picked up their cargo and left," Marape said.

"Our record as a secure exporter of products is there, and we look forward to continual expansion in businesses.

"There is always a market space for China in terms of finance, in terms of infrastructure contribution, and in terms of our own extended supply to the China economy, our raw materials.

"We know we also have a special place and relationship with the Chinese government. That, I believe, is really appreciated in the China leadership structure right now, and they know who we are in terms of our respect for them as a nation. We've also been discussing with Chinese officials the idea of them not only coming in to help with resource development, but also infrastructure support.

"It needs to be a win-win situation for both parties because our infrastructure construction will act as a stimulant for the continually exacerbated local growth taking place in the country."

InFocus provided this story.

(China Daily 06/29/2015 page15)