LNG, forex and the fuel supply remain in focus, while new listings and privatisation are on the agenda. Business Advantage PNG looks to the year ahead and considers what Papua New Guinea-focused businesses can expect in the coming 12 months.

A view of Portside Gardens in downtown Port Moresby, where land is currently being prepared for subdivision and sale by Kumul Consolidated Holdings. Credit: BAI

Papua New Guinea’s economy is expected to grow by 4.7 per cent in 2025, with non-resources growth at 5.2 per cent, according to the National Budget delivered last December. By comparison, the International Monetary Fund (IMF) and the Asian Development Bank, both of which have ongoing support programs in PNG, are projecting growth of 4.6 per cent this year.

Inflation is expected to run at 4.5 per cent during 2025.

Fuel and forex

While much work has been done to secure greater stability of fuel supply, PNG still has a fuel supply problem, especially with aviation fuel and in its regions. The challenges faced by PNG’s major fuel importer Puma Energy do not appear to have been resolved.

This month, Prime Minister James Marape flagged that an “alternate fuel storage and supply system” to effectively remove Puma Energy’s monopoly on aviation fuel is expected to be completed around September.

One of the underlying causes of PNG’s fuel supply crisis is the ongoing shortage of foreign exchange, which is acting as a brake on capital expenditure, payments to overseas suppliers and repatriation of profits. While greater supply of forex has been facilitated by PNG’s central bank and may increase this year with IMF support, PNG’s bankers are telling Business Advantage PNG that no quick fix to the forex situation is expected in 2025.

A reduction in the red tape associated with forex orders might make things a little easier for affected businesses in the meantime.

PNG’s kina fell by over 7 per cent in value against the US dollar during 2024, but held reasonably steady against the euro and Australian dollar. The prevailing view is that the kina remains overvalued.

Social and political stability

Twelve months on from the January 10 riots in Port Moresby, many businesses are still recovering from its impact, especially in retail. Meanwhile, social unrest also affected the return to full production of the Porgera gold mine in Enga Province last year.

While law and order issues are part and parcel of operating in PNG, business will be hoping that increased expenditure on the law and justice sector in the past two national budgets and stronger community leadership will start to translate into greater social stability this year.

In September 2024, Prime Minister James Marape survived a vote of no confidence in Parliament. Such votes are currently permissible under PNG’s constitution until 12 months before the next national elections, due in June 2027. As such, we can reasonably expect more such moves this year. Given their impact on government operations and decision-making, however, business will be hoping that any political disruptions won’t be too much of a distraction for the business of government.

Finally, PNG will turn 50 on 16 September this year – a momentous date in the country’s history and one likely to be attended by celebrations, significant expressions of national pride and a short term boost to the local economy. The birthday is also likely to be reported on internationally (there is talk of US broadcaster CBS flying in), hopefully giving an opportunity for PNG to provide some positive, good news stories to the international media.

Petroleum and gas

It looks like a busy year for PNG’s petroleum sector.

While early works stalled in the second half of 2024, a final investment decision (FID) on the US$10 billion Total Energies-led Papua LNG project is still expected to come by the end of this year, according to the local head of the French super-major.

Meanwhile, ExxonMobil’s announcement in December 2024 that its P’nyang project would go into pre-FEED (front end engineering and design) in the second quarter this year took some by surprise and raises the question of how the two major gas projects – initially intended to be run one after the other – might be developed at the same time.

Work towards a final investment decision on connecting Santos’ Agogo gas field to the ExxonMobil-led PNG LNG project is also expected to continue this year. According to Santos’ CEO Kevin Gallagher, FID could come as early as 2026.

We should also start to see some movement on PNG’s first offshore gas project this year, following the completion of a gas agreement for Twinza and MRDC’s Pasca A project just before Christmas. With Kumul Petroleum and TotalEnergies also exploring offshore, the Gulf of Papua is a place to watch.

Finally, while the major gas projects above will occur under PNG’s current regulatory regime, Petroleum Minister Jimmy Maladina has signalled that a new production-sharing regime is on its way. Consultations with industry are expected to start this month, with a notional implementation deadline of Independence Day.

Mining activity

For several years now, expectations of a mine development contract for the Wafi-Golpu project in Morobe Province have lifted at year-end, perhaps in anticipation of an announcement at the annual PNG mining and petroleum event in December. Last year was no different but no announcement was forthcoming, even though Business Advantage PNG understands progress has been made in the negotiations.

While the Porgera gold mine has reopened, a landslide and subsequent social unrest have slowed its return to full production, which was already expected to continue up to 2028 and beyond.

While new projects get the headlines, it is worth noting that all of PNG’s operational mines are currently embarking on significant investments, aimed at securing more reserves and longer-term productivity.

Commodity prices

In its 2025 National Budget forecasts, PNG’s Department of Treasury is expecting LNG prices to fall from an average of US$14.8 per million British thermal units (MMBtu) last year to US$14.2 per MMBtu this year. It expects average oil prices to fall from US$80 per barrel to US$76.

In metals, average prices for both copper and gold prices are expected to increase this year, with Treasury projecting copper averaging US$10,028 a tonne (compared to US$9441 per tonne last year), and gold averaging US$2540 per ounce (compared to US$2325 last year).

Higher cocoa and coffee prices due to global shortfalls last year contributed significantly to PNG’s agricultural sector. This year, the Department of Treasury expects coffee prices to remain high, while palm oil, cocoa and copra oil prices will stabilise.

Infrastructure

Last December, PNG’s National Executive Council approved the partial privatisation of state utility PNG Power. State-owned telco Telikom PNG remains on the market.

Exactly how these privatisations will take place is as yet unclear; PNG Power still owes private power producers arrears of close to K1 billion, according to industry body IP3, and work to stabilise its power grids and improve billings and collections is ongoing, according to Kumul Consolidated Holdings’ Managing Director David Kavanamur.

In technology, there are hopes that the judicial review in PNG’s National Court that has so far prevented global satellite internet provider Starlink from entering PNG’s market may be resolved.

The Asian Development Bank’s Civil Aviation Development Investment Program (CADIP), which is upgrading the country’s airports, is being extended. With national carrier Air Niugini expecting state-of-the-art new Airbus planes (featuring Starlink) in the second half of the year as part of its fleet upgrade program, CADIP will continue to be critical.

Meanwhile, in Morobe Province, progress on the highway connecting the city to the state-of-the-art Lae Nadzab Tomodachi International Airport is continuing well, according to John Byrne, President of the Lae Chamber of Commerce. Like many in Lae’s business community, Byrne is looking forward to news of international flights coming to PNG’s second city.

Sundry items

Last year, we suggested we should also expect to see more details on the expected new Income Tax Act, as well as the government’s arrangements for its flagged Special Economic Zones under its recently created SEZ Authority. This expectation has moved to this year.

On PNG’s stock market, PNGX, there is talk of new listings for the Pacific Balanced Fund and National Banking Corporation, and even the issuing of PNG’s first corporate bond in 2025. In 2024, PNGX saw a 47 per cent increase in the number of trades and a 37 per cent increase in the value of shares traded – a very encouraging result.

According to Labour and Employment Minister Kessy Sawang, a decision of a new national minimum wage will come this year after consultations by the Minimum Wages Board last year. An increase of the K3.50 hourly rate, which has been with us since 2014, is broadly considered well overdue.

Finally, we will see at least one more international brand enter PNG’s hotel market this year, with the rebranding of the Stanley Hotel as a Sheraton. This follows the appearance of Hilton, Radisson and Marriott in PNG in the past few years.