Where the good PNG gas goes

WHY is it that the Papua New Guinean government has control of one of the largest gas reserves in the world and its people are living through blackouts?

Perhaps it is the naivety of a journalist to ask why the gas is going to China or Japan when it could be used to keep the local community out of the dark.

It is safe to say ExxonMobil and its joint venture partners are sitting on a gold mine in the gas fields of the PNG Highlands.
And yet PNG Power is struggling to keep up with the demands of local businesses and communities.
Of course, one could argue for the same market principles that exist in Australia.
Our LNG producers are allowed to ship their LNG off to China, so why shouldn’t those operating in PNG do the same?
Surely the answer is simple – because in Australia, we are not living in the dark.
A spokeswoman for Esso Highlands – the operator of the PNG LNG project – told PNGIndustryNews.net there was an agreement between Esso and the PNG government that gave the government the right to reserve some of the gas for domestic use.
However, it is unclear whether this gas is being used to power the homes of PNG residents or is being used by businesses operating mining projects in the country.
The spokeswoman said the gas was being supplied to the Porgera gold mine (operated by TSX-listed Barrick Gold) and to a supplier in the Highlands.
Oxfam Australia mining advocacy coordinator Christina Hill said it was the curse of the resource-rich developing country.
“The question that keeps coming up is how do we benefit?” she told PNGIndustryNews.net.
“Unless people receive a benefit and believe that’s a good benefit there is a serious risk of conflict.”
Hill works in Australia but is often at Oxfam’s PNG office and has seen the effects of the project on the local community, both good and bad.
“Certainly whenever I’m in PNG the power goes out in the office, so it’s incredibly frustrating. If you actually live there it’s appalling,” she said.
“The short answer is yes, as a citizen who is seeing their natural resources being shipped overseas naturally they want a piece of that.
“It’s actually the role of government to provide that, so it’s not actually Exxon’s role.”
However, Hill makes the case that because of the potential risk of working in a country like PNG, Exxon does have a role.
“What we would argue is that what Exxon can do is actually put pressure on the government to do just that. I mean they’ve got a role, they’re obviously very influential.
“There’s a business case for them to ensure that there is no conflict around their assets.”
The Esso Highlands spokeswoman said it was up to the government where the gas would be allocated.
Hill said there was a sort of unspoken sense among locals that the PNG government and Exxon have become one and the same.
“I’ve heard from colleagues that in the highlands particularly people see the provincial government and possibly also the national government and Exxon as being one and the same.
“So that’s problematic.”
The project has four offtake partners that were contracted early on in the project. None of them are supplying gas to PNG communities.
For the full report on the use of gas from the PNG LNG project and the benefits of the project for the local community, read the December issue of the PNG Report.

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