You always have to be prepared for surprises in PNG, but it certainly looks like the ExxonMobil-led P’nyang gas project will not proceed in its current form, following the Government’s withdrawal from negotiations over the gas agreement for the project.

Credit: Oil Search

Given the symbiosis between P’nyang and the larger U$10 billion Papua LNG project, there were concerns that a ‘no deal’ on P’nyang would mean a ‘no deal’ on Papua LNG.

Such a prospect would have been very bad news, given how quiet PNG’s economy is currently (as the Port Moresby and Lae business chambers have been telling us).

Conscious de-coupling

It now looks as though it will be possible to decouple the two projects – although, as Oil Search’s CEO Peter Botten states, ‘several engineering and commercial modifications will need to be made now that the P’nyang development is delayed’ (note the use of the word ‘delayed‘).

Based on his speech to business last week, Prime Minister James Marape certainly seems to think he has a commitment from Total to proceed on Papua LNG, regardless of the outcome of P’nyang.

‘Progress can’t come soon enough for many but patience will be needed this year.’

He also suggested he was going to cut the Gordian Knot on the Wafi-Golpu copper-gold project, by cancelling the Memorandum of Understanding signed by the previous Prime Minister around APEC in late 2018 and presumably starting again with a proper Memorandum of Agreement.

Even without P’nyang, Papua LNG and Wafi-Golpu will make an enormous difference to the economy over the next decade, as the recent ANZ Pacific Economic Outlook and Fitch reports suggest.

Eyes on government

Business will now look to the government to get things moving with these two projects, and the extension of the special mining lease for Porgera which was due last August.

Progress can’t come soon enough for many but patience will be needed this year.

The confusion over the implementation of the plastic bag ban and the recent announcement of a massive hike in the export tax levy for round logs suggest this is a government still finding its feet when it comes to communicating with business.

In the meantime, it may be a better bet to focus on the things we can control. Companies like ICTSI and Brian Bell have been quietly investing in better systems and processes in preparation for the busier times ahead.

Investment

Westpac’s Justin Smirk

Indeed, the preliminary results of our annual PNG 100 CEO Survey suggest that many of PNG’s larger businesses are still planning substantial investments this year.

I will be presenting the full results of this survey – including companies’ profit, investment and recruitment expectations for 2020 and analysis provided by Westpac’s Senior Economist Justin Smirk – at a special POMCCI Business Breakfast at the Hilton Hotel, Port Moresby on Thursday 20 February. To book, email frontdesk@pomcci.com or ring the Port Moresby Chamber on +675 7200 0000 (the cost is POMCCI members K90, non-members K100).

The breakfast, which will also feature a panel discussion on business impediments, marks the publication date of the 2020 edition of our annual business and investment guide to PNG, Business Advantage Papua New Guinea. You’ll be able to pick up your free copy of the guide at the breakfast.

I look forward to seeing you there.

Andrew Wilkins is the Publishing Director of Business Advantage International.