P’nyang is marked as the rescuer of the country’s failing economy.
According to ANZ Pacific Insight over the past five years, the PNG economy has been doing it tough, absorbing the shock of falling oil and gas investment since the completion of the PNG LNG project in 2014.
It said the economy did not immediately go into recession because falling oil and gas investment was more than offset by increased gas production and exports.
However, headwinds from a shortage of foreign currency and low business confidence due to uncertainty over the next round of major resource projects weighed on private investment, a driver of PNG’s growth.
“With weak domestic demand, employment has gone backwards and growth in government revenue has been lacklustre.
We believe PNG’s economy and government revenue can recover if the government can get the next wave of resource projects over the line,” the Insight said.
“The P’nyang gas agreement is particularly important as timely completion of this agreement is needed to prevent Papua LNG and PNG LNG Expansion being indefinitely on hold.
That would be a body blow to the country and could do irreversible damage to the economy.”
The report stated at the least, it will derail the economic recovery and be a major setback for PNG because the higher standard of living that accompanies stronger economic performance will be lost.
“We understand that the government is taking a tough negotiating position with potential investors seeking to achieve larger equity, greater landowner involvement and more opportunities for SMEs and local communities.
However, mining capital is not a limitless pool, and PNG – notwithstanding its unique value proposition including rich gas – is competing against discoveries in Mozambique, Guyana, Brazil and the United States.”
It added that the government needs to strike the right balance between national interests and investor interests in negotiating the distribution of project benefits.
“The Prime Minister has said he wants to finalise all current project agreements including P’nyang, Wafi-Golpu and Porgera by 16 September 2020, which coincides with PNG’s Independence Day.
“We hope a ‘win-win’ agreements can be reached by then as that would lift business confidence and set PNG up for several years of strong GDP, employment and revenue growth,” the insight added.
Meanwhile, Minister for Petroleum Kerenga Kua said that while a written statement will be issued soon it is important to note that negotiations for all mining and petroleum projects are still ongoing with nothing stalled.