O'Neil: Crisis Looms Over K45 Billion Papua LNG Project as Total Energy Signals Abandonment
The K45 billion Papua LNG project, once a beacon of economic promise for Papua New Guinea (PNG), now hangs in the balance following a series of decisions by Prime Minister Marape, with Total Energy indicating a halt in investment. Total Energy's announcement has sent shockwaves through the nation, raising concerns about economic stability, job opportunities, and the government's ability to repay debts.
In a grim development for Papua New Guinea's economic future, Total Energy has advised the market that the US$12 billion Papua LNG Project is on the brink of collapse. The project, which held immense potential for PNG's LNG sector, is now unlikely to reach its Final Investment Decision (FID) in 2024, as anticipated.
Five years ago, in early 2019, Total Energy, along with its partners, struck an agreement with the PNG government, laying the groundwork for the Papua LNG Project. However, Prime Minister Marape's decision to dismantle the 2019 agreement in favor of his 'Take Back PNG' rhetoric has resulted in a series of setbacks, including delays, investor frustration, and reputational damage on the international stage.
Total Energy's annual investor update on February 7, 2024, dealt a severe blow to hopes of reviving the project, as Papua LNG was notably absent from the list of expected Final Investment Decisions for the year. Moreover, reports from both local and international sources suggest that Total Energy has begun scaling back or halting spending on the project, exacerbating concerns about its viability.
The situation has been compounded by financing difficulties, with lead financier Credit Agricole allegedly refusing to support the Papua LNG project. This, coupled with broader challenges facing LNG investments amidst growing climate change concerns and uncertainties surrounding governance and security in PNG, has rendered the project increasingly untenable.
Despite mounting evidence of the project's demise, the government has remained tight-lipped, prompting accusations of deliberate concealment from both Members of Parliament and the public. The recent replacement of the petroleum minister further complicates matters, casting doubt on the government's commitment to resolving the crisis.
As the fate of the Papua LNG project hangs in the balance, questions abound regarding the economic repercussions for PNG and its citizens. With the country already burdened by significant debt, the failure of major projects like Papua LNG threatens to plunge PNG further into financial turmoil, raising serious concerns about the wisdom of Prime Minister Marape's decisions.
The looming collapse of the Papua LNG project represents a significant setback for Papua New Guinea's economy, with far-reaching implications for its citizens. As the government grapples with the fallout from Prime Minister Marape's controversial decisions, the future of LNG investments in PNG hangs in the balance, leaving stakeholders and the public anxiously awaiting a resolution to the unfolding crisis.
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