Land of plentiful, yet poor

OIL in commercially recoverable quantities was discovered at Kutubu in the Iagifu sandstone structure in 1986.
In the years leading up to the commencement of production in June 1992, there was furious debate about possible onshore refining of PNG’s first oil.
Eventually, the promoters of the idea were beaten into submission by hard facts provided by the industry and by those supporters of the industry in executive government and in the public service.
A local refinery was not feasible. It was too expensive. Basically, the argument was: It is too hard, too difficult, take the easy way out – sell it crude.
At the time, the recoverable oil reserves were estimated at 170 million barrels. As at Dec 31 last year, Kubutu had produced 325.1 million barrels, almost double the amount estimated. There is now estimated to be only 32 million barrels remaining but exploration continues.
When the oil refinery idea was dropped, a group of politicians and innovative thinking Papua New Guineans proposed separate ownership of the 265km export pipeline to the coast and the marine loading terminal in the Gulf of Papua.
They suggested that any future discoveries of oil would be piped down the same pipeline and that national ownership of the well would ensure there was greater participation by Papua New Guinean entities in the oil business.
That was, of course, before the discovery of oil at the Usano and Agogo fields when Moran and Gobe were added to the list of oil producing fields. Active exploration continues.
One proponent of the pipeline idea went so far as to suggest a joint venture in the oil tanker business.
Of course, all came to nought.
It is useless now to discuss what could have been. The mathematics and circumstances might have been different then.
All we do know is that a PNG refinery has happened in-country by an off-shore company. It is importing oil to refine and has an exclusive business of supplying PNG’s local diesel and fuel needs.
We also do know that even though oil production is dwindling, there is active exploration and more fields have been added to Kutubu.
PNG has moved on in the hydrocarbon business. It now stands on the threshold of a multi-billion kina liquefied natural gas business.
Yet we also sense that the same old arguments have been raised and are being shelved now as before. The same old arguments that they might not be feasible or that PNG does not have the financial or technical capacity or for whatever else, so much is being made to by-pass PNG again. 
It is time PNG took a lesson from its own history if not from others.
Should PNG not be thinking about a petrochemical industry that involves processing onshore? What about the shipping or the tanker business? Once PNG might not have had the financial weight – perhaps it does now? Why not revisit or rethink the pipeline ownership issue?
Just how many jobs are we exporting to overseas destination along with the continued shipment of oil and gas in their raw form? These are Papua New Guinean jobs we are talking about. These are many billions of kina worth of income we are talking about.
Even if all of that were not important, and they are, think about the energy needs of PNG.
PNG exports crude oil but imports diesel and petrol for its energy needs.
Now it is about to export gas but gas as a energy source has already been proven in PNG. The first petroleum development licence (PDL1) went to Hides to produce electricity using natural occurring gas to supply power to the Porgera gold mine.
That was way before the Kutubu oil fields. Yet, while the evidence has been staring at PNG for decades, nothing has been done about developing that potential further. Millions of kina has been spent on imported diesel fuels to power our old diesel generators throughout PNG while this God-given resource has remained in the ground and is now being proposed for overseas export.
There will come a time in the not-too-distant future when somebody else will come into PNG and develop PNG’s energy resources and sell them back to us.
We can export oil and gas in a land starved of energy.
Just, recently, there was reported a proposition that it is quite feasible to pipe PNG water across the Torres Strait into Australia.
Water to irrigate and feed thirsty Australians – man, animal and plants.