By Andrew Hobbs, Group Editor
THE SHIPOUT of LNG cargos from the PNG LNG project this quarter is a cause for celebration – the latest springing from the success of the project.
Its success has positioned Papua New Guinea as a nation with serious LNG development credentials, low costs and plenty of liquids-rich gas.
It also provides a boost to the economy – with the World Bank predicting PNG’s gross domestic product would rise by at least one third in 2015.
Total, the newly appointed operator of the Elk-Antelope fields, is expected to finalise a development concept for the fields by the middle of this year, while Horizon Oil’s Stanley condensate project is also moving towards sanction.
Evidence of at least part of that is shown overleaf – with the big cheque of the National Petroleum Company of PNG detailing the first payment from the PNG LNG project brought to government coffers.
It was a range of one-off conditions that led to the initial dividend of K415 million, a figure that even those receiving it said was unlikely to be repeated in the short term – due in no small part to market conditions.
The impact of lower commodities prices on the PNG economy needs little explanation – and remains a situation which PNG Prime Minister Peter O’Neill says is being monitored.
Lower prices, as any investor will tell you, means lower dividends – which could make the government’s affinity for taking stakes in the resources projects being developed in its borders less profitable than anticipated.
While the fundamentals of these projects were sound, Mr O’Neill has suggested that it is important for the nation to lift its productivity.
The government has big plans for boosting services to its people while opening the door to foreign businesses through investments in infrastructure.
It is also true that foreign businesses are responding – with exploration continuing apace and new investments being made in forestry projects and other ventures.
In the meantime, the O’Neill government has flagged plans to take up to a 30 per cent stake in the Freida River project to working with the partners of Wafi-Golpu.
Bolstering traditional sectors such as agriculture and non-traditional areas such as tourism are also on the cards.
Despite the government’s significant investment in these areas, there is no guarantee that it will attract players in nervous commodities markets around the globe.
While it can be fairly said that PNG is no place for cowards, neither is business in general. It requires forthright action, not activities carried out by groups seeking something to hide behind.
There’s no cheque big enough to cover that.