Oil Search setting the pace for PNG


ECONOMIC forecasts for Papua New Guinea have been upbeat following three straight years of murky predictions and negative actual out-turns.
Last month, the World Bank released an economic update on the state of PNG’s economy, urging quality human capital investment in better health and education services and strengthening the business environment to spur private sector development in order to facilitate its aim of broad-based and inclusive growth.
Such a focus would also reduce the ‘vulnerability of the economy to natural disasters and commodity price, according to Patricia Veevers-Carter, the bank’s country manager.
The World Bank suggested that preliminary estimates available to it suggest real GDP growth slowed from 2.8 per cent in 2017 to 0.3 per cent in 2018, following a contraction in the extractive sector due to the February 2018 earthquake.
Despite the reduction, the bank predicts real GDP growth to rebound to 5.1 per cent in 2019, primarily driven by an expected return to full annual production in the extractives sector. The government has made a similar upbeat forecast as has accounting firm KPMG. In the end, the proof of the pudding is in the eating, as the saying goes. Plans and policy pronouncements of the government must be pursued and implemented. An example is that of PNG’s own oil and gas multinational, Oil Search Limited, recently posted glowing figures of its operations in 2018. The company announced a net profit, after tax, increase of US$341 million (K1.1 billion), up 13 per cent from 2017, according to the 2018 full-year results.
Another significant outcome is Oil Search’s outstanding safety records. Evidence of this is that there were no injuries reported during the earthquake.
There are some powerful lessons in Oil Search’s performance that has wider applications in PNG. Its ability to bounce back from a devastating natural disaster with its balance sheet in the black, its staff safe and sound, and its future looking bright is an excellent case in point. Oil Search continues to provide long-term recovery assistance to the communities in Hela, Southern Highlands and Western impacted by the disaster. This is exemplary. It is evidence that the company had contingency plans that it was able to put into operation at very short notice to respond to a disaster of this magnitude. PNG is still reeling from the effects of the Bougainville crisis, the Rabaul twin volcano eruptions, the impact of Cyclone Guba in Northern and the earthquake spoken of here.
While the scale of a national emergency response and a company response might not be equal, the planning, the management and execution of emergency response are no different. The same can be applied to economic management as well. Following the tabling of the 2019 budget, accounting firm KPMG pointed to the Government’s focus on private sector involvement and its commitment to addressing the foreign exchange imbalance as pivotal to delivering growth. The government has promised to provide stimulus for the non-mining sectors of agriculture, forestry, fisheries, tourism and small-to-medium enterprises (SME). The trick now is to stick to the plan and deliver on it. Both the World Bank and KPMG agree that these are steps are in the right direction. We are certain there are many more.
This seems to be what our own multinational, Oil Search, headed by the internationally recognised CEO Peter Botten, seem to have done at the tail end of a devastating earthquake. It would be good for the National Government and for individual and corporate citizens to take a leaf from Oil Search’s book as a guide.