Kate Mackenzie How will troubled Papua New Guinea fare from its gas boom?

Arthur Chapman

Flickr: Arthur Chapman

Ghana’s newfound oil riches have created concern that the mostly peaceful and democratic West African nation will go the way of its near-neighbours such as Nigeria, where oil revenues have been monopolised by leaders, leaving the majority of the population in poverty.

What, then, does the future hold for Papua New Guinea?

The small equatorial nation, which lies just north of Australia, is about to see a boom in big natural gas production. InterOil this week announced world record gas flow rate in PNG, and ExxonMobil is set to lead a big LNG project there.

And unlike Ghana, PNG has never been known for its stability. 

Although PNG has an established oil industry, its natural gas resources are more substantial and the coming LNG boom could double its GDP.

Although Exxon and the other companies involved have not yet made the final investment decision on the project, that will come some time this month – and, given that Exxon has just agreed to sell Sinopec 2m tonnes a year for 20 years from the project, approval looks rather likely.

2m tonnes per year is in the realm of the big export deals made from Western Australia’s Gorgon project earlier this year.

The country would be coming from a small base though: the CIA World Factbook cites GDP per capita of $2,300. Seventy-five per cent of the population makes a livelihood from agricultural subsistence.

Even more striking is the political and social landscape. Life expectancy is 66 years on average; literacy is below 60 per cent, and the nation is beset by conflict arising from its  thousands of tribal communities.

Although it has an incredible natural environment, it’s not the sort of place you’d go for a holiday without some serious planning. Crime is rampant, especially in cities and towns, and expats in the capital, Port Moresby, live in high security compounds. ‘Rascal gangs’ in the highlands are notorious for murderous disputes. Westerners are warned about robberies and carjackings by machete- or gun-wielding criminals.

What this newfound gas revenue will mean for the people of PNG remains to be seen. It is certainly likely to intensify the security headaches for the oil and gas companies.

Related links:

Great expectations in Uganda over oil discovery (Guardian, 02/12/09)

The future is looking increasingly gas-intensive (FT Energy Source, 02/12/09)