PNG capable of meeting region’s LNG demand

By PETER ESILA
THE country has demonstrated with the PNG LNG project its capacity to supply competitively, and its accessibility to the East and South East Asian markets, an economist says.
Institute of National Affairs director Paul Barker said the Papua LNG and P’nyang projects could meet the LNG demand window in 2027.
“PNG has greater geo-political stability than prevalent in much of the Middle-East, with the high cost incurred and significant lead in time, both to establish the extraction and processing capacity in PNG, but also the necessary depot and degasifying facilities to handle LNG in the recipient countries,” he said.
He said a higher level of prior market commitment was required then, say for oil production, “so the issue of the market slot remains important, even though the market is growing and new outlets materialising, as in India and Myanmar”.
He said newly-developed PNG gas fields could meet market demand for 2027, but only if agreements and financing were progressed promptly.
“In the case of Papua LNG, the agreement is already in place, albeit that the developers are reluctant to proceed without the associated P’nyang project also gaining the go-ahead,” he said.
“The companies are applying leverage on Government, while Western province sees the P’nyang project as a vehicle to provide leverage to embrace the various stranded Western province fields.
“The early development of these fields would certainly provide a useful economic, employment even temporary fiscal kick-start for a rather moribund PNG economy.”
He said compromises must always be able to be reached between the different players over major projects, “albeit that the government and companies each have some negotiating leverage, such as with other potential project opportunities that the major firms have elsewhere”.
He said it was important all parties including landowners not to bypass critical preparatory processes.