Papua New Guinea Fortescue Future Industries has signed a deal to undertake feasibility studies for 18 green energy and hydrogen projects in Papua New Guinea. While there are no investment decisions yet, two projects are looking promising.

Fortescue Metal Group’s Dr Andrew Forrest and PNG’s Energy Minister Saki Soloma sign the agreement. Credit: FFI

Papua New Guinea Fortescue Future Industries Ltd, a subsidiary of Australian-owned Fortescue Future Industries (FFI), has signed a Master Development Agreement with the State of Papua New Guinea to undertake feasibility studies to develop up to seven hydropower projects and 11 geothermal energy projects in PNG.

The agreement is the latest in a series signed with the PNG government since September 2020.

According to a statement issued by FFI (itself a division of the Fortescue Metals Group), the intent of the projects is to ‘generate renewable electricity for the purpose of producing green hydrogen and green ammonia, creating a significant new domestic energy and export industry for PNG’.

‘These augurs well with my government’s initiative to promote green energy by 2030 and transition into a carbon neutral country by 2050 as stated in our country’s Vision 2050,’ said Prime Minister James Marape in a statement welcoming the deal, which was signed in Glasgow during the COP26 climate conference.

‘These projects will completely transform PNG to become a leader in the world’s renewable energy transition.’

‘Over and above the green energy agenda, the deal with Fortescue Futures Industries represents important investments domestically, employment for our people and taxes for the government.’

‘We share Prime Minister Marape’s vision that PNG can be at the forefront of developing hydropower and geothermal resources for the emerging global green hydrogen industry,’ said FFI’s CEO Julie Shuttleworth.

18 projects

According to FFI, the 18 projects identified in PNG could produce up to 2.3 million tonnes of green hydrogen per year once completed.

While details of all the projects have not yet been made public, potentially the largest project is the proposed US$5 billion (K17.5 billion) Purari Wabo Hydropower project in Gulf Province, which has been the subject of previous feasibility studies going back to 1977 at least.

A previous feasibility study funded a decade ago by Origin Energy and PNG Sustainable Development Program found that the project had a potential generating capacity of more than 2000 megawatts – more than double PNG’s entire existing capacity – making it suitable as a export project. Origin Energy shelved plans to develop the project in 2014, however.

FFI claims it has already ‘significant progress’ on the project, with ‘scoping studies and early-stage pre-feasibility works completed’, as is the case with a smaller geothermal project in West New Britain.

‘These projects will completely transform PNG to become a leader in the world’s renewable energy transition. We are committed to ensuring PNG’s communities benefit from growth and development through these projects, including training, employment and business development opportunities,’ said Fortescue’s Chairman, Dr Andrew Forrest.

Julie Shuttleworth said FFI would ‘undertake extensive community, landowner and stakeholder engagement to develop a detailed national content plan as part of its stakeholder investment strategy.’

Investment decisions

It is worth noting that the agreements FFI has signed with PNG Government do not green light any of the 18 projects, and there are no final investment decisions pending at this early stage.

With FFI examining many more projects around the world than it can possibly finance from its own funds, project financing is also expected to come from external sources. This week, Fortescue Metals Group’s CEO Elizabeth Gaines told The Australian newspaper that ‘all proposed projects will be developed by FFI with ownership and project finance sources to be secured separately without recourse to Fortescue.’

Should any of the projects go ahead, FFI has vouchsafed that they will be be subject to PNG’s regulations and laws, as well as be compliant with other international standards.

‘FFI’s projects will be conducted in full compliance with PNG laws and adhere to strict international best practice standards relating to the conservation and protection of the environment, biodiversity and cultural heritage, occupational health and safety, anti-bribery and corruption, anti-money laundering and eradicating modern slavery,’ said Shuttleworth.