Earthquake to have ‘huge impact’ on Papua New Guinea economy, says Prime Minister


Last month’s earthquake in Papua New Guinea will have a ‘huge impact’ on the economy, says Prime Minister Peter O’Neill. The death toll is rising, the extent of the destruction and disruption to services and businesses is still being assessed, and the damage to the PNG LNG project is expected to affect government revenues.

Landslides happened around the epicentre of the quake in the highlands. Credit: Oil Search

ExxonMobil says it will take about eight weeks to restore production at the PNG LNG project, following the magnitude 7.5 earthquake on 26 February, in Hela and Southern Highlands provinces.

After an initial assessment, Managing Director Andrew Barry said despite the severity of the earthquake, the project as a whole remained relatively undamaged and no oil or gas leaks have been recorded, with the main pipeline intact and unaffected.

But it has declared force majeure on exports from the plant, according to Reuters newsagency, although the company would not comment.

‘Quake damage shut the region’s biggest airfield at Komo.’

The export facility near Port Moresby, where the gas is liquefied for shipment on tankers, was not damaged, Barry said in a statement.

Quake damage shut the region’s biggest airfield at Komo, built to supply remote ExxonMobil facilities.

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Oil Search stated its central processing facility is also less damaged than originally thought and can be restarted within the next two-to-three weeks.

After that, says Oil Search Managing Director Peter Botten, it will then revise its initial production guidance released earlier this year as well as the likely impact on the company’s 2018 earnings and capital.

After visiting the affected areas last week, Prime Minister Peter O’Neill said the shutdown of the gas plant would have a ‘huge impact’ on the economy.

He reportedly said while Ok Tedi copper mine in Western Province shut down for a day or so, early reports indicated that it was not substantially affected . But he said ‘it will affect our export revenue in the country. Porgera [gold mine] is also facing issues after the earthquake’.

‘Aftershocks measuring stronger than magnitude 5 were felt in the Southern Highlands.’

Guard Dog Security Services said in a report to the Lae Chamber of Commerce that roads between Hides, Nogoli, Tari and Komo are affected due to land cracks and slips. Power poles and communications repeater towers were downed, affecting power and communications networks in the Highlands’ Western End.

Of 60 Digicel towers destroyed, 40 have been restored, according to Guard Dog. Digicel has offered free calls to/from the affected areas. Guard Dog assessors warned of health hazards after reports of a polluted river system around Mendi.


Hides Gas Conditioning Plant. Credit Exxon

The death toll in Papua New Guinea could be as much as 100, and is expected to rise further, although the scale of the disaster will not be known until relief workers and authorities can complete their assessments in the area.

Aftershocks measuring stronger than magnitude 5 were felt in the Southern Highlands, the US Geological Survey reported.

A report by the World Food Program for the United Nations, compiled two days after the earthquake, estimated 465,000 people were exposed to the disaster, of which 143,000 needed urgent humanitarian assistance and 64,000 were suffering from extreme food insecurity.

The PNG government has declared a state of emergency for earthquake disaster areas in Hela, Southern Highlands, Western and Enga Provinces.

Oil Search said it would donate US$5 million for disaster relief, while ExxonMobil said it would give K3.5 million.

Santos also said it would give more than A$250,000 to aid agencies in PNG on top of a A$1.3 million donation it has already provided to Hela Provincial Hospital.

The National Government has committed K450 million towards the disaster, with K40 million spent on road infrastructure, K10 million to assist schools and education institutions buildings, another K10 million for health services, while K23 million has been set aside for transport, logistical support and other areas to provide relief assistance.

The PNG Government says the remaining K350 million will also be expended once assessment reports of the extent of the damages are completed.

The Australian Government has already promised A$200,000 for aid and has provided a first shipment of supplies—tarpaulins, water containers and purification tablets—as well as Hercules aircraft to monitor damaged areas.

New Zealand has committed an initial K1.172 million and a Hercules aircraft to deliver supplies.

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