In the second and final part of his exclusive interview with Business Advantage PNG, ExxonMobil PNG Managing Director Peter Graham considers the flow-on benefits of the PNG LNG gas project and ExxonMobil’s future in PNG. Plus, what’s going to happen to the project’s 14,700 workers?

The PNG LNG plant site. Credit: ExxonMobil/Richard Dellman

BAPNG: I’m presuming the project’s head count is starting to come down now. What will happen to those workers leaving the project?

Peter Graham: It’s starting to come down, yes. Our best estimate of the direct employment on the project once it’s operational is 1000 to 1200 people—plus contractors, supply services and so on.

We have about 14,700 people currently working on the project, of which about 5,600 are Papua New Guineans. In the first quarter of this year, we’ll see the next tranche of workers leave.

‘It would be a shame to see all the skills acquired by Papua New Guineans during the construction of PNG LNG Project progressively dissipate.’

To that end, we’re actively working with Hela Province and Central Province to get Infrastructure Development Grant (IDGs) projects under way so that, as we phase down, those same skilled people are picked up for community infrastructure work.

ExxonMobil PNG’s Peter Graham

The government has committed 120 million kina (US$51.68 million) a year for ten years for IDGs. You often hear the criticism that a certain business has been in operation for years, and that there is little evidence of improvements in infrastructure for the local communities. With so much money committed by the government to infrastructure projects under the Benefit Sharing Agreements for the PNG LNG Project, I don’t want that to be said about our project.

BAPNG: What projects are we looking at?

Peter Graham: At the LNG plant, the communities there have determined that their priority is to upgrade the roads leading to their villages from the main road we’ve built. So at least some of the infrastructure development grants we hope will be applied to that.

Our project management team and the contractors at the LNG plant are supporting the preparation of the engineering necessary to award those contracts.

In Hela Province, similar discussions are progressing.

It would be a shame to see all the skills acquired by Papua New Guineans during the construction of PNG LNG Project progressively dissipate, so we’re hopeful that people who have worked on the project will be able to work on these infrastructure projects that will benefit the community. We’ve invested so much in the development of people in PNG—two million man hours of training and counting.

BAPNG: Another way the country’s benefiting from the PNG LNG project is with the National Transmission Network, which is using your pipeline …

Peter Graham: Yes, the fibre optic cable has now been laid from the LNG plant site to Hides. As the pipeline is buried, so too is the fibre optic cable.

This is a modest investment on the part of the State to essentially open a backbone of fibre optic cable right across the country, from Port Moresby across to Gulf Province up to Hides. The government may choose to connect up the cable from Hides across to Madang and Lae, which would provide a national communications backbone.

It’s a great example of private enterprise working with government to find synergies where it’s a win/win for everyone.

BAPNG: Any other projects like that either working with provincial government or a national government?

Peter Graham: One other area we are engaged with the Government on —and it’s very early days—is the possibility of some gas for power generation. We’re currently talking with the Government, at their request, to explore options for gas-generated power, with a particular focus on Port Moresby.

We would look at selling gas or naptha (a liquid bi-product that’s produced at the LNG plant) as fuel. This would be done on a small-scale to start with.

BAPNG: Now that ExxonMobil is firmly embedded in the country, what other opportunities are there for you?

Peter Graham: We have an active exploration programme at this point in time, predominantly in the same general areas as existing oil and gas licenses. We’ve been active in working on seismic programmes with our license partners in recent past to define opportunities, and we’ll just see how that plays out.

BAPNG: What are your thoughts on the potential development of industries around gas production in PNG?

Peter Graham: Proving up new reserves is the key for that next phase of development. For any new development, proved reserves are needed for long term sales contracts to underpin major investment. Downstream development will come in time but will require the addition of uncommitted reserves – that’s time and money.

‘We cannot afford to have any interruptions to the production of LNG.’

The corridor to the LNG plant site [north-west of Port Moresby] is an ideal location for industrial development—it’s got access to a safe harbour, privately-owned port facilities and there is a ready trained workforce in the local communities. It’s also close to infrastructure in Port Moresby.

BAPNG: Speaking personally, do you stay with this project once it’s built, or do you fly away?

Peter Graham: I will stay for some time yet and am looking forward to the challenge of establishing steady-state operations on this first class facility. There’s no question we’ll see the Project’s construction management team run down fairly quickly. In the near-term we’ll certainly be keeping a core of people who’ve got experience in Papua New Guinea because obviously starting up operations is another very critical phase.

Longer term, we have firm plans to progressively nationalise our workforce and I am greatly encouraged by the demonstrated commitment and capacity of our Papua New Guinean workforce to take on expanded roles.

In operations, safe, reliable supply becomes the order of the day. We cannot afford to have any interruptions to the production of LNG. Our customers rely on that steady flow of gas being delivered to them, and certainly our reputation is on the line to be a reliable supplier which is critical for the future of the industry in Papua New Guinea.

Click here to read the first part of this interview.