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PNG LNG: What could Papua New Guinea's pipeline project bring?

The exploitation of natural gas resources looks set to transform Papua New Guinea’s wealth profile and social structure. The downside is the possibility that its undeveloped infrastructure and institutions will be unable to cope with rapid change. Chris Wright reports.

Papua New Guinea’s pipeline to change

OCTOBER WILL BE be a big month for Papua New Guinea. It doesn’t sound much on paper: it’s the deadline for the final investment decision on a liquefied natural gas and pipeline project. But it’s a project that will change the country dramatically – economically and socially. In fact, it’s hard to think of another example anywhere in the world where so much, good and bad, might depend on a single investment decision.

The project is known as PNG LNG, and it is an attempt to commercialize undeveloped petroleum and gas resources in the highlands and western provinces of Papua New Guinea. The gas has to pass through a 470-kilometre pipeline across rugged terrain to a liquefied natural gas facility 20 kilometres outside Port Moresby, the capital, for liquefaction. Once there, about 6.3 million tonnes of LNG product a year will be loaded into tankers to be shipped to gas markets worldwide. ExxonMobil, with its Esso Highlands subsidiary as operator, is the driver of the project with a 41.5% interest; also in there are Australia’s Oil Search (34%) and Santos (17.7%) and Japan’s Nippon Oil (5.4%) among others, with the PNG state expected to join as an equity participant at a later date.

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