LNG revenue by 2019

Business

By GEDION TIMOTHY
ECONOMIST Paul Barker says the Government is expected to receive revenue from the PNG LNG project by at least 2019 if the oil prices, which have somewhat improved, do not fall again.
He said the Government had been banking on the proceeds from the PNG LNG project through its 19 per cent stake and through taxes.
But thing went bad when the international market experienced a drastic decline in oil price “which shadows LNG price movements – due to an increase in supply”.
“Consequently the country had been hard-hit by this global market trend with the oil price going far below US$30 (K93.30) per barrel at US$26 (K80.86) at some point earlier this year.
This contributed to a depleting foreign exchange and government income – and subsequent increase in borrowing. “Obviously, if the LNG prices had been better over the past two years, the debt would have come down soon and the government could have seen some tax revenue and dividends kick in earlier,” Barker told The National yesterday.
Barker said the PNG LNG project was also operating under an approved accelerated depreciation arrangement.
“With some 250 shipments of LNG to Japan and other destinations so far, and the first sold (ahead of schedule) at good prices on the spot market before the 2014 oil/gas price drop kicked in.
“The debt level will have reduced, although to the level envisaged at this stage of the project’s life, when 2017 was the year revenue had been expected to start clicking in significantly,” he said.

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