PAPUA NEW GUINEA’s environmental and economic woes linked to its reliance on the extractive sector dominated yesterday’s first day of proceedings at the PNG Mining and Petroleum Investment Conference in Sydney.
As prime minister Peter O’Neill opened the conference, his Treasurer Patrick Pruaitch was telling Reuters that the government was “desperate”.
"I'm desperate to ensure that every available revenue [source] that I can use to fund this year's budget, I will put my hands on," Pruaitch said.
O’Neill tried to rally investor confidence by reassuring the conference that the nation’s economic woes were short term.
“While we face challenges in the short term, the economic future of Papua New Guinea is looking bright and remains a sound investment destination,” he said.
O’Neill and his Treasurer were speaking to a Sydney audience who are probably aware of ABC News reports that quoted ex PNG and Australia treasury official Paul Flanagan who described PNG’s 2017 budget as “fiscally fraudulent”.
With the current downturn currently having a negative impact on PNG’s economy, another negative legacy of the industry was brought to the forefront.
Coffey International’s Daniel Moriarty highlighted at the conference that “environmental management in the resource sector has a chequered past in PNG.”
Moriarty attributed this to a “relative lack of formal guidance regarding the requirements for environmental performance for existing and proposed projects.
“Existing guidelines – where they exist – are generally outdated,” he said, “and compliance with the requirements of these guidelines does not always ensure the adequate protection of the environment.
“Perhaps the most obvious example of this are PNG’s ambient and drinking water quality standards, which are based on information now more than 30 years old and which contain thresholds well above what is now understood to cause environmental harm.
“In other aspects such as air and noise, or hazardous materials, guidelines are absent,” Moriarty stated.
Perhaps a silver lining on the first day was the announcement by Exxon Mobil that it expects PNG LNG project to deliver 7.9 million tonnes of gas this year which is 14% higher than originally forecast.
This however was soured by Total’s announcement that it would be spending a lot of time working out how to deal with acid gas in its fields, building ties with local communities, and looking for ways to cut costs before it goes ahead with its Papua LNG project.
The sad state of affairs was best summarised by Newcrest’s presentation which noted that, with PNG being “already a hard sell with some financiers”, there are concerns that “proposed changes to mining and tax legislation will deter foreign investors.”