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Sustainable Economies

Papua New Guinea's gas addiction

Jubilee Australia's Resource Centre

The PNG LNG is a massive development project to exploit the large gas fields in the Southern Highlands of Papua New Guinea. Construction on the project started in 2010 and the gas started to flow in 2014. It was at the time the largest development project in the history of the Pacific region (in monetary terms: US$16 billion, further blowing out to US$19 billion).

The lead operator is ExxonMobil, although there is also significant involvement from the ASX-listed Oil Search. Australian gas giant Santos also has a stake in the project. In 2009, Efic – Australia’s Export Credit Agency – lent $500 million to the project. Research by Jubilee Australia found that on almost every measure of economic welfare Papua New Guinea would have been better off without the PNG LNG project. Our research also found that the project is an abject development failure as the landowners of the resource remain in conditions of dire poverty, and project-related violence increasing.  

Yet the Papua New Guinean Government wants to see the development of other gas projects in the country including the so-called Papua LNG project. If developed, this project would double Papua New Guinea’s LNG exports making PNG the world’s 6th largest LNG exporter, right behind Indonesia. Given that an over-reliance on the extractive industries links the nation’s fiscal outlook and broader economic stability to the vagaries of the gas price, and that the exchange rate impacts of the export windfalls hurt other sectors of the economy, we ask why Papua New Guinea is addicted to gas. 

 

Our reports on the PNG LNG project:

On Shaky Ground Report On Shaky Ground Report (1925 KB)
This May 2018 report examines the impacts of the PNG LNG project on the local communities. It finds undelivered development promises, a frustrated community, and increasing risks of violence. 

Double or nothing: The broken economic promises of PNG LNG, 2018 Double or nothing: The broken economic promises of PNG LNG, 2018 (878 KB)
This April 2018 Report compares the predictions about PNG LNG's impacts on the national economy with the actual economic results. It finds that PNG LNG has contributed to PNG going backward on most economic indicators.

Jubilee Australia (2012) PIPE DREAMS: The PNG LNG Project and the future hopes of a nation Jubilee Australia (2012) PIPE DREAMS: The PNG LNG Project and the future hopes of a nation (3649 KB)
This detailed 2012 report about PNG LNG predicted many of the problems that the huge gas project in the Souther Highlands region would bring to the country, and examines how the Australian government made taxpayers investors in the project.