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| Komo International airport that serves the PNG LNG. Photo courtesy of Komson Roberts |
The report states that while the fall in world prices for oil has made the outlook for government revenue from the PNG LNG less attractive, PNG has little option but to continue to pursue resource development.
This is for the simple reason that resource development is a critical component of PNG’s economic growth. "The outlook for LNG is challenging. Spot prices are significantly below long term contract prices, which in turn are lower than what they were in 2014.
"In addition to low LNG prices, the industry will be burdened by excess capacity until 2020 at least. Despite the current gloom, no one seriously doubts that LNG demands will continue to grow," the report states.
It states that PNG has several highly prospective carbon areas and the country’s gas development could take several export or domestic focused directions.
FGE goes on to state that by mid-2020 or a little earlier, there would be four LNG trains in PNG, but that the limiting factor for domestic development to be the market size. It states that among the factors that make PNG well placed for LNG investment to be its close proximity to the highly priced Asian market as well as the favourable and stable fiscal regime. "Strong government support for resource development is also conducive. Not only does PNG have an appropriate resource taxation regime, the Government has a predevelopment attitude," it further states.
Meanwhile, the report states that the creation of the National Petroleum Company of PNG (NPCP) - now renamed the Kumul Petroleum- and the new legislation enshrining its role is another positive development in this industry. Post Courier