Papua New Guinea is a country located in the southwestern Pacific Ocean, north of Australia. The country has abundant natural resources, including natural gas, which has been a major source of revenue for the country in recent years.
The Papua LNG project is one of the largest gas projects in the country, and it is operated by a consortium of three major oil and gas companies: Total Energies, ExxonMobil, and Santos.
Production started in 2014.
Stakes: Total Energies, ExxonMobil, and Santos
According to the data provided, the Papua LNG project is valued at USD10b, and the three companies have varying stakes in the project.
Total Energies has a 40.1% stake, ExxonMobil has a 37.1% stake, and Santos has a 22.8% stake.
However, the state (PNG Government) has a back-in right of 22.5%, which means that if it exercises this right, the equity of the three companies will be diluted.
In this scenario, Total Energies will have a 31.1% stake, ExxonMobil will have a 28.8% stake, and Santos will have a 17.7% stake.
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| Image: Supplied |
Papua LNG Project Awareness
Despite the economic benefits of the Papua LNG project, many Papua New Guineans are not fully aware of the details of the project. For instance, since the project was announced in 2014, it has earned the country over USD10b in revenue.
However, this figure pales in comparison to the USD30b earned by the country's other LNG gas project, PNG LNG Gas, which started production in 2014. This highlights the need for more public education on the Papua LNG project and its potential benefits.
Papua LNG Project Benefit Negotiation
The negotiation process for the Papua LNG project was not without its challenges. In 2019, the country's then-minister for mining, Johnson Tuke, announced that the government had reached an agreement with the project's stakeholders on the terms for the development of the project.
However, the agreement was met with protests from landowners and civil society groups, who accused the government of not consulting them adequately.
The country's current prime minister, James Marape, has promised to review the country's resource laws to ensure that the country gets a fair share of the revenue from its natural resources under his motto Take Back PNG.
Challenges of the Papua LNG project
In terms of the benefits and challenges of the Papua LNG project, there are several factors to consider.
On the one hand, the project has the potential to generate significant revenue for the country, which can be used to fund social and economic development projects. Additionally, the project can create jobs and boost local businesses.
On the other hand, the project may have negative environmental impacts, such as deforestation and pollution. Additionally, there may be concerns about the equitable distribution of revenue and benefits among all stakeholders, including landowners and local communities.
SWOT analysis
A SWOT analysis of the Papua LNG and PNG LNG projects reveals the following:
Strengths:
- Both projects have the potential to generate significant revenue for the country.
- The projects can create jobs and boost local businesses.
Weaknesses:
- The projects may have negative environmental impacts.
- There may be concerns about the equitable distribution of revenue and benefits among all stakeholders.
Opportunities:
- The country can use revenue generated from the projects to fund social and economic development projects.
- The government can review its resource laws to ensure that the country gets a fair share of the revenue from its natural resources.
Threats:
- Protests from landowners and civil society groups can delay or halt the development of the projects.
- Fluctuations in the global oil and gas markets can impact the viability of the projects.
Another potential threat to the projects is political instability in the country. Papua New Guinea has a history of political instability and corruption, which can affect the smooth running of the projects.
Papua LNG and PNG LNG projects' potential
Despite these challenges, both the Papua LNG and PNG LNG projects have the potential to benefit the country significantly.
It is important, however, that the government and the project stakeholders take into account the concerns of all stakeholders and ensure that the projects are developed in a socially and environmentally responsible manner.
This includes consulting with local communities and landowners, addressing any environmental concerns, and ensuring that revenue and benefits are distributed equitably among all stakeholders.
Conclusion
The Papua LNG project is a significant development in Papua New Guinea's natural gas sector.
However, it is important that the government and the project stakeholders address concerns around environmental impacts, revenue distribution, and community consultation to ensure that the project benefits all stakeholders in the country.
Additionally, the government should continue to review its resource laws to ensure that the country gets a fair share of the revenue from its natural resources.
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