Interview: Carlos Pascual
In light of recent changes to its energy production profile, to what extent will the US remain engaged in frontier areas like the South-west Pacific?
CARLOS PASCUAL: Our engagements in the South-west Pacific and other parts of the world are based on a number of long-standing shared interests. US petroleum production has grown by nearly 1m barrels per day since 2012, and the country is now the world’s largest producer of natural gas. However, these energy supply increases in no way diminish the US commitment to regional peace and stability, or the security of global transit lanes, including for the Asia Pacific region.
We live in an international global economy with interdependent energy markets; energy shortages, price volatility or supply disruptions in one country can threaten overall economic growth and prosperity. The US and other countries have a deep interest in working to assure adequate supplies of energy for the world economy, even if our primary source is domestic. Moreover, the leading edge of energy demand and the engines of supply growth have shifted from developed to emerging economies, raising the importance of our engagement with regional actors on energy issues.
How can new suppliers such as Papua New Guinea contribute to stability in the global energy market?
PASCUAL: As the global need for energy continues to grow, countries such as PNG will play a critical role in meeting this demand. The Asia Pacific region will be the catalyst for increasing global energy demand, with economies like China and India driving this growth. New and reliable supply sources will be required, and this is where PNG has a role to play.
At the same time, as these countries develop their economies, which rely on developing natural resource potential, good governance will be necessary to avoid the resource curse. The fact that resource wealth has not yet been translated into development affects the Asia Pacific region’s energy security, as well as the territory of PNG. The lack of broad-based development has too often undermined effective and sustainable governance, which in turn can translate into a loss of foreign and domestic investment.
How resources are managed domestically also affects global energy markets. Managing the country’s oil and gas sector responsibly and transparently, including by implementing the Extractive Industries Transparency Initiative (EITI) Standard and seeking external advice and technical assistance, can help increase accountable and reliable management of resources. This will ultimately create a more attractive investment environment and a more reliable global supply.
To what extent has the success of PNG’s liquefied natural gas (LNG) project changed the country’s image in the global arena?
PASCUAL: PNG’s recent gas production and early delivery of LNG could increase the country’s stature in the region and make it a key part of the resource hub that is developing in this part of Asia. PNG has vastly surpassed expectations in bringing its LNG export capacity on line. Given certain infrastructure challenges in the country, the early completion of the project is a significant milestone and should help encourage subsequent investments in future projects and expansion of capacity. PNG is also expected to continue on its path of strong economic growth and development, particularly with the government’s emphasis on placing future hydrocarbons revenue into its sovereign wealth fund to benefit the country’s people.
The government has also taken a significant step in choosing to implement the EITI Standard, joining 44 other EITI countries, including the US, that are working to meet this global benchmark in natural resource extraction. Transparency in the collection and management of revenue from the LNG project, along with robust environmental standards and consistent consultation with the affected communities, will help send a signal that the project is sustainable and that the country is an attractive place for further international investment.
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