Papua New Guinea Prime Minister Peter O'Neill rebuts a report claiming PNG would have been better if an Australian-funded LNG project has never gone ahead

'Fake news': Papua New Guinea prime minister ridicules report on gas project

Peter O’Neill rejects claim PNG would have been better if an Australian-funded project had never gone ahead 

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 Peter O’Neill at the PNG-Australia Business Forum in Brisbane, where he described a report saying an LNG pipeline had not contributed to the economy as ‘utter nonsense’. Photograph: Dave Hunt/AAP

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Tue 1 May 2018 02.40pm


The Australian Associated Press has reported that Papua New Guinea Prime Minister Peter O’Neill at the PNG Australia Business Forum in Brisbane.


Papua New Guinea’s prime minister has dismissed as “fake news” a report that claims a partially Australian-funded liquefied natural gas project is failing to deliver a promised economic boom to his people.

Peter O’Neill is in Brisbane for the Australian-PNG business forum and used a keynote speech to attack a damning report by Jubilee Australia, which questioned whether projected economic benefits were flowing from the ExxonMobil-led project.

The project supplies 8m tonnes of gas a year to Japan, South Korea and China, with the flow starting in 2014.

Australia’s export credit agency, Efic, made its largest ever loan of $500m to ExxonMobil, OilSearch, Santos and the PNG government in 2009.

“The people of PNG would have been better off had the project not happened at all,” said report co-author Paul Flanagan, a former Australian Treasury official.

O’Neill characterised the report as “utter nonsense”.

“It’s quite disappointing to note that some experts, who align themselves with political groupings, continue to talk down the economy and continue to release fake news,” O’Neill told the forum.

“It’s quite unrealistic to suggest the LNG project is not contributing to the economy of the country.”

ExxonMobil has defended the project saying it had contributed $5.69bn to local businesses and the government through employment tax and royalties.

“Good governance, accountability and revenue transparency are critical to ensuring that the value unlocked from gas resources in PNG results in economic growth, increased opportunities and a better standard of living for Papua New Guineans,” a spokeswoman said.

Australia’s assistant trade minister, Mark Coulton, focused on the “game changer” upcoming Asia Pacific Economic Cooperation leaders summit in Port Moresby.

“It is an opportunity to showcase the business potential of PNG to the world – a stable, reliable democracy and an attractive commercial environment,” Coulton said.

“It is incumbent on us, during tough times, to keep making the case about the growth and competitiveness that comes from opening markets to trade and investment.”

He praised PNG’s decision to reconsider joining up to the Pacific Pacer Plus free trade agreement.

Australian companies have $18bn invested in PNG and more than 4,600 Australian businesses are exporting goods into PNG.

Despite a growing concern from citizens and Parliamentary Opposition over further international loans, Papua New Guinea government is making K1.64 billion (US$500 million) on debut of EURO-bond

FIRST EUROBOND

April 26, 2018|source: Post Courier|

PNG to launch $500 million 10-year Eurobond in 2018

BY CLEMENT KAUPA
ckaupa@spp.com.pg

Papua New Guinea will launch its first Eurobond this year.

Prime Minister Peter O’Neill (pictured) confirmed this in London, England, yesterday following a report by news agency Reuters on Tuesday.

A Eurobond is a bond denominated in a currency not native to the issuer’s home country, in this case, PNG.

They are commonly issued by governments, corporations, and international organisations because it gives issuers (PNG) the opportunity to take advantage of favourable regulatory and lending conditions in other countries and are not usually subject to taxes or regulations of any one government, which can make it cheaper to borrow in comparison to other debt markets. Borrowing in foreign currencies also present risks in addition to the standard credit risk and interest rate risks.

Eurobonds are exposed to exchange rate risk, and because exchange rates can change quickly and dramatically, the total return on a Eurobond can be affected dramatically in a very short time.

Mr O’Neill attributed the move to the appreciating energy prices and a recovery in liquefied natural gas production to pre-earthquake levels that had eased the strains on its public finances.

He reportedly told Reuters on the sidelines of an investment conference in London that LNG production would be fully restored by next month, May.

He reportedly said: “We loaded one shipment … and production will be in full swing before the end of the month.”

This announcement confirms reports from PNG LNG developer ExxonbMobil that it had resumed extraction and production of LNG.

The magnitude 7.5 earthquake that rocked Hela and Southern Highlands on February 26, killing at least 100 people, destroyed roads and disrupted LNG production, PNG’s major source of foreign revenue.

Fiscal pressures were already high as a result of the collapse in oil prices to $27 a barrel in early 2016, considering gas prices are closely linked to oil.

Crude markets have since recovered, incredibly breaking above $75 a barrel for the first time in nearly three and a half years on Tuesday. That will help make up the revenue shortfall sustained because of the devastating quake, Mr O’Neill said. “It certainly will affect the last couple of months, we received no revenue because of the earthquake,” he added.

Mr O’Neill, who stayed in London to rustle up investment following last week’s meeting of Commonwealth leaders, also said the country was preparing to launch its debut Eurobond.

“In the next few weeks we will be announcing the lead managers,” he said, adding that a shortlist had been drawn up for the planned US$500 million 10-year bond to be sold before yearend.
Papua New Guinea’s total debt stood at 31 per cent of GDP, of which almost two-thirds are domestic debt, Mr O’Neill said.

“In terms of our debt management, we are comfortable,” said Mr O’Neill, adding PNG had no plans to talk to the International Monetary Fund about assistance.

But recent pressures have cast a shadow over the economic and fiscal outlook. Earlier this year, ratings agency S&P Global lowered PNG’s credit rating to B from B+, while Moody’s downgraded its outlook to negative from stable. Both cited a deteriorating debt profile, lower economic growth and rising liquidity risk.

When production is fully restored at ExxonMobil Corp’s Papua New Guinea LNG project, Mr O’Neill said there were plans to add three LNG trains to the existing two and details would be announced before November’s Asia-Pacific Economic Cooperation Leaders’ Summit.