PAPUA New Guinea is on the cusp of experiencing the biggest structural change in its economy in more than two decades, according to PNG Chamber of Mines and Petroleum executive director Greg Anderson.
With liquefied natural gas exports slated to begin before year end, 2014 is set to be a huge year in that will undoubtedly be inked in history books.
“When LNG exports commence in the second half of this year this will be the start of the most ambitious project ever undertaken in PNG,” Mr Anderson wrote in a recent newsletter.
Mr Anderson was referring to ExxonMobil’s US$19 billion PNG LNG project, which is already more than 90 per cent complete and will start exporting LNG in the second-half of 2014.
“As a single, integrated resource project, PNG LNG directly encompasses more than 70,000 landowners, five provincial governments and ten Local Level Governments, all of whom will be direct financial beneficiaries from royalties and a development levy,” Mr Anderson said.
He stated that mining and oil companies have represented the second largest contributor after agriculture to the nation’s gross domestic product.
“When LNG exports start, the resource sector will overtake agriculture’s contribution to PNG’s total economic output,” Mr Anderson said.
The resources sector’s share of PNG exports is forecast to rise from around 80% this year to 90% in 2015.
Mr Anderson compared the impact of the massive gas project to the one experienced when other big projects got underway two decades ago.
“The LNG impact will be comparable to the structural change in the early 1990s with the launch of the Hides gas to electricity project, Kutubu oil production and the Porgera gold mine,” he said.
The PNG Treasury predicts that the gas project will be a huge money maker for the nation, Mr Anderson said.
By-product condensate from the PNG LNG project will boost the country’s oil exports to 15.6 million barrels in 2015, the highest level since 2001 when 21.4 million barrels was exported, according to Treasury projections.
The PNG LNG Project is nearing mechanical completion of all key components – the Hides Gas Condensation Plant (HGCP), the gas pipelines and the LNG plant outside Port Moresby. Commissioning activities are underway at the LNG plant and at the HGCP, Mr Anderson said.
Furthermore, the onshore gas pipeline to the HGCP has been welded to the offshore section to complete the gas transmission line as well as a fibre optic cable alongside the pipeline, which will greatly enhance the nation’s information technology capacity.