Papua New Guinea has faced ongoing fuel supply challenges since August 2023, as a result of issues related to its largest fuel importer, Puma Energy. Islands Petroleum is one of a number of fuel companies that have ramped up capacity to help meet demand. Chief Executive Nathan Bluett says the company is now looking to grow further.

Islands Petroleum storage tanks in Rabaul, East New Britain Province. Credit: Islands Petroleum

More than one year after PNG’s government declared a temporary state of emergency over fuel shortages, Islands Petroleum’s CEO Nathan Bluett believes the worst of the crisis is over.

“We still see some ups and downs in the market, but, in every metro area and the regional areas which we service, there are service stations open with petrol and diesel,” he says.

Stepping up

The crisis was precipitated when Puma Energy, PNG’s largest fuel supplier, introduced fuel rationing in late 2023, in the face of what it claimed was lack of access to foreign exchange and local banking services. Acute shortages followed, especially of aviation fuel.

Puma’s challenges led PNG’s other fuel companies to step up. Ok Tedi Mining and Air Niugini moved to secure their own supplies, ExxonMobil PNG brought in additional fuel shipments, while Kumul Petroleum started creating its own fuel storage and distribution infrastructure.

“We see gaps in the market for a reliable supplier.”

Meanwhile, Islands Petroleum, an independently owned fuel and lubricants distributor and the exclusive distributor of Mobil lubricants in PNG leveraged its commercial relationships to help restore supply to the market.

“ExxonMobil and its global resources were very quick to respond [when the crisis began]. They ramped up supply, and we were able to respond quickly in collaboration with them,” Bluett tells Business Advantage PNG.

Islands heritage

Founded in Rabaul in East New Britain Province in 1980 as a small customs agency, Islands Petroleum now has depots and offices throughout PNG’s islands and mainland.

And, with fuel shortages threatening to stall PNG’s economic growth, Bluett says government agencies are starting to recognise the importance of the private sector in “keeping the wheels turning.”

The company has increased its capacity by 10 million litres in the past year, with the commissioning of a 5 million litre tank in Rabaul and an additional 5 million litre tank in Lae.

“And we have further plans for more,” Bluett says. “We see gaps in the market for a reliable supplier, and our supply chain means we can be flexible with where the product comes from.

“It has been very strong with ExxonMobil, which helped us through the crisis.”

PNG’s fuel market is complex because of its small, regional centres that are not serviced by roads, Bluett explains.

For this reason, Islands’ next focus is to improve its shipping capacity.

“After the fuel crisis, we are the sole supplier in several places now and we take that responsibility to the community very seriously.”

Supporting the extractive industries

Looking further afield, Bluett sees potential for “sensible market growth within our capacity,” especially if major extractives projects such as Papua LNG and Wafi-Golpu go ahead.

“All these operations are in remote locations, requiring their fuel to be on time and on call all the time. If you are supporting the extractive industries, they want reliability, and that is what Islands Petroleum has always delivered,” he says.

This article first appeared in the Business Advantage PNG Mining & Energy Special Edition 2024/25, published this month.