PNG LNG Miilestone - Holistic Growth??

Yet another historic milestone in PNG’s development was reached early this week with the Financial Close announcement by ExxonMobil, Esso Highlands & the PNG Government. The PNG LNG Project is the largest project by far that ExxonMobil, the world’s biggest oil and gas company, has undertaken as project operator. It also involves the largest ever project loan raised worldwide for any oil or gas project. This is an event that certainly puts PNG on the world map.

Those of you who have followed this project will appreciate that with financial close we now have certainty that the co-venturers in this project will be spending the equivalent of the PNG annual budget every year between now and project start up in 2014. This translates to an average daily expenditure of US$10 million. Local expenditures will rise to a peak of US$35 million a day at the height of project construction.

ExxonMobil anticipates that about 5,000 Papua New Guineaneans will be employed during the construction phase. Recruitment of these individuals has already commenced. In addition new training facilities are being completed at the Port Moresby Technical College along with a new facility at June, near the Hides gas-field in Southern Highlands. Both these institutions will train about 1,000 people annually to Australian standards.

Holistic Growth

But has anyone done a study on holistic growth for the people and infrastructure of this country??

The lessons learnt from other countries such as Nauru, where one upon a time it had the highest per capita income in the world and now is no longer a force in the South Pacific, are important. Also consider the case with our own Bougainville.

There is so much hype about the project and the danger is that it may lead to accumulation of high expectations all around. What appear to be the main challenges for the project operator are:

     National Content maximisation in the broad areas covering - who, how, what and where. Even though the project operator has National Content on its agenda, I hear this is not clear and to some extent confusing, to some interested parties.  

• The exports trade they have secured so far by the project operators exceeds US$140billion in China, Japan & Taiwan for 30 years LNG supply.  There are also the non-cash benefits which are alluded to but not detailed eg the investment credits, tax benefits, carbon credits etc -   these can have a very positive benefit but can also create businesses that are not truly commercial.

• The most critical is the social impact of the project and the overall leadership at all levels, national, provincial, local, villages, clans/tribes; and their ability to address the social issues.

• There are also concerns about the environmental impacts as very little has been mentioned.