Papua New Guinea OKs vast Total gas project despite reservations

[PORT MORESBY] Papua New Guinea said Tuesday that a multi-billion dollar liquefied natural gas project led by Total would go ahead, after the government abandoned demands for the contract to be reworked to better benefit locals.

"The government has now cleared Total to proceed full steam ahead," the ministry for petroleum said in a statement following talks with the French energy giant.

The announcement comes after sometimes-acrimonious exchanges between the government and commercial partners Total, ExxonMobil and Australia's Oil Search over the terms of an already signed US$13 billion gas deal.

Prime Minister James Marape came to office in May vowing to review resource deals and "tweak" the laws that underpin them to make sure locals benefit, sparking concern among investors.

Despite his government's continued insistence that "experienced businessmen know that even signed contracts can be opened up for reconsideration", the companies led by Total appear to have offered few meaningful or binding concessions.

Total will prepare a "National Content plan" to set out local benefits from the project, build access points on the LNG pipeline and look into creating a limited joint venture with local company Kumul.

The project is expected to almost double Papua New Guinea's gas exports and make the country a significant energy player.

But there is widespread local scepticism about its impact, after a promised national windfall from a previous LNG project failed to materialise.

AFP