Low LNG prices loom

 By SHIRLEY MAULUDU

LOWER revenue from the liquefied natural gas is expected in the second half of this year, according to the Bank of Papua New Guinea (BPNG). 

BPNG Governor Loi Bakani (pictured) said this would happen as a result of drop in global oil prices as experienced in the recent months.

Bakani said he had cautioned the country not to have high expectations of higher revenue from the project.

“We are already starting to get the LNG revenue, but it is much lower,” he said.

“The second half of the year does not look promising for us unless there are some improvements in the oil price, which we think might not happen. 

“Because the second half will be the time we will receive the revenues for the exports that we are exporting this year.

“We are exporting at the first half of this year, at prices of LNG much lower than, at US$40 (K106) or even US$50 (K133) per barrel.” 

He said given high demand for foreign currency in the market, Government would need to readjust the budget. 

“The government has to adjust its budget, like the prime minister and minister responsible has announced, and will come out at a later date and make the announcement for the budget for this year.

“With the government to make adjustments on the budget, it will reduce the pressure because some of the pressure on the increase demand is coming from government. 

“Government spends a lot of money including overseas imports, which is increasing demand for foreign currency. “So the adjustment has to come from the source, and the source is the government. 

“Beyond the means when the revenue is much lower, you are asking for trouble. 

However, he said BPNG could only assist in the area of foreign exchange side, given the US$2.1 billion (K5.6bn) in reserves to have foreign exchange market back to smooth functioning. 

Meanwhile, according to ExxonMobil PNG Ltd, by end of the month, the project would complete 80 LNG cargo loadings.