Oil Search has announced in a recent strategy update that it will continue to reduce costs and pull back on exploration. However, the company says it intends to make the Papua LNG project a priority.
PNG LNG
The Papua New Guinea government’s proposal to move to production sharing agreements in resource projects may not solve the government’s financial problems and there is a risk it will harm the country’s reputation for being a good place to invest, according to the industry itself.
Papua New Guinea’s Prime Minister, James Marape, has insisted that the country’s proposed LNG projects, Papua LNG and P’nyang, will be dealt with as separate projects.
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Prime Minister James Marape has introduced changes to Papua New Guinea’s oil and gas law, claiming it will benefit the country’s ‘national interest’. The changes may well represent a major shift in the way projects are developed in the future.
Papua New Guinea’s largest company, Oil Search, is proposing to raise US$700 million (K2.4 billion) to strengthen its balance sheet in response to declining oil prices. The company’s stake in the PNG LNG project may also eventually be on the table.
The year 2020 looks like being a watershed year for Papua New Guinea, with a number of transformative projects awaiting the green light and a new government seeking to implement an ambitious agenda.
The departing Oil Search Managing Director tells Business Advantage PNG he remains positive about Papua New Guinea’s economic future, saying that LNG investment can help fund a stronger, more diversified economy. And he has some parting advice.
The lack of foreign exchange is having a deep impact on Papua New Guinea’s financial system. A new World Bank report shows that mining is the biggest generator of foreign exchange in PNG, but what about LNG projects?
The suspension, at least for now, of negotiations over the P’nyang LNG project, has raised issues about the investment environment in Papua New Guinea and the issue of risk, according to analysts.