Energy
From The Report: Papua New Guinea 2019
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Although Papua New Guinea relies mostly on fuel oil and diesel to generate electricity, it holds an abundance of gas, geothermal, hydro and solar energy potential. If exploited sustainably, PNG could not only meet its domestic energy requirements, but also supply reliable, cost-competitive power to its neighbours. The extractives industry is the highest consumer of energy, at 45% of the total, followed by transport (40%), and agriculture, residential and commercial activities (15%). Although crude oil production is set to decline, liquefied natural gas output is expected to double to 16m tonnes by 2024, provided the planned expansion and development projects go ahead. The temporary disruption in oil and gas production as a result of the earthquake that struck in February 2018 was offset by a rise in international oil prices over the year. The government expects oil prices to average $57-66 per barrel between 2019 and 2022, while LNG prices are to remain steady at $9 per 1000 cu feet. This chapter also contains interviews with Hiroshi Hosoi, CEO, JX Nippon Oil & Gas Exploration Corporation; Wapu Sonk, Managing Director, Kumul Petroleum; and Peter Botten, Managing Director, Oil Search.

Articles from this Chapter

Overview

Balance of power: While steady progress is made in renewables, the focus remains on hydrocarbons projects
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Although Papua New Guinea relies mostly on fuel oil and diesel to generate electricity, it holds an abundance of gas, geothermal, hydro and solar energy potential. If exploited sustainably, PNG could not only meet its domestic energy requirements, but also supply reliable, cost-competitive power to its neighbours. The extractives industry is the highest consumer of energy, at 45% of the total, followed by transport (40%), and agriculture, residential and commercial activities (15%). Structure &…

Interview

Well of appeal: Hiroshi Hosoi, CEO, JX Nippon Oil & Gas Exploration Corporation, on the next steps of domestic gas development
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Interview:Hiroshi Hosoi How do long-term supply contracts for liquefied natural gas (LNG) in the Asian market affect the energy sector in Papua New Guinea? HIROSHI HOSOI: The LNG development project in PNG includes a large number of long-term sale and purchase agreements (SPAs), which have historically been used to determine the sources of project financing. However, we recognise that the current trend is away from SPAs and towards agreements like spot sales. This new preference will cause…

Analysis

Power assist: An international partnership seeks to boost access to electricity
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The Papua New Guinea Electrification Partnership (PEP) is a $1.7bn aid programme financed and supported by Australia, Japan, New Zealand and the US that aims to connect 70% of PNG’s population to electricity by 2030. The international partnership was sealed during the November 2018 APEC Leaders’ Summit in Port Moresby, and is widely seen as an attempt by the US and its allies to counter the growing influence of China in the region. One of the early beneficiaries of the partnership is likely…

Interview

Lighting the spark: Wapu Sonk, Managing Director, Kumul Petroleum, on incentivising downstream development to diversify offerings
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Interview:Wapu Sonk How will the energy sector prepare for the growing demand for liquefied natural gas (LNG)? WAPU SONK: Papua New Guinea is well known for its extensive and profitable gas fields. While our LNG reserves are lower than those found in Qatar or Mozambique, for example, we have a significant amount of discovered gas, and that allows us to play an increasingly important role in the global LNG supply chain. Many of our offshore and onshore fields have yet to be explored, developed…

Analysis

Finding middle ground: The new government seeks to boost returns from resource projects for the broader economy
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After a series of delays and missed deadlines, the government signed a deal with France’s Total, US-headquartered ExxonMobil and Papua New Guinea-based Oil Search in April 2019 for the development of a $13bn greenfield liquefied natural gas (LNG) project known as Papua LNG. The news was welcomed by foreign investors and marked a milestone for the country ‘s energy sector. Setting the terms for the extraction of natural gas from the Elk-Antelope fields located in the Gulf Province, the deal allows…

Interview

Gains and aims: Peter Botten, Managing Director, Oil Search, on previous achievements and future opportunities
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Interview:Peter Botten What have been the most significant developments in the energy sector over the last 25 years? PETER BOTTEN: In the early 1990s Papua New Guinea was just starting to produce energy after many years of exploration. Kutubu was the first oilfield to make revenue, in 1992. At the time energy was a very young industry and almost all resources had to be flown into PNG, but it was also the start of a golden era of production, during which the country enjoyed significant exploration…

Overview

Cheaper and greener: As costs decline, renewable sources are seeing an inexorable rise, particularly among developing economies
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Although the world remains largely dependent upon fossil fuels for power generation, a gradual transition towards renewable sources has been taking place since the 1990s, underpinned by multilateral deals such as the Kyoto Protocol, the Doha Amendment and, more recently, the Paris Agreement. Investment and development in renewable technologies has historically been led by developed countries, however, in recent years the renewable energy industry has expanded in emerging markets. In 2018 these markets accounted for nearly 70% of new global investment in renewables. Taking the Lead Emerging markets exceeded developed economies in terms…

Overview

Cheaper and greener: As costs decline, renewable sources are seeing an inexorable rise, particularly among developing economies
OBG
plus

Although the world remains largely dependent upon fossil fuels for power generation, a gradual transition towards renewable sources has been taking place since the 1990s, underpinned by multilateral deals such as the Kyoto Protocol, the Doha Amendment and, more recently, the Paris Agreement. Investment and development in renewable technologies has historically been led by developed countries, however, in recent years the renewable energy industry has expanded in emerging markets. In 2018 these markets accounted for nearly 70% of new global investment in renewables. Taking the Lead Emerging markets exceeded developed economies in terms…