Report

Double or nothing: the broken economic promises of PNG LNG

29 Apr 2018
Description

The Exxon-led PNG LNG project has, since 2014, shipped about 7.9 million tonnes of natural gas per year from the gasfields of PNG’s Hela region. The gas is liquefied at a plant near Port Moresby and then shipped to buyers in Asia.

The proponents positioned it as a major transformational project for the PNG economy, based around the central claim of a doubling of GDP.

The upbeat figures found their way into the political discourse of PNG. Caveats around assumptions were lost and the forecasts moved into convenient promises for the project partners both in the lead-up to the approval of the project in 2009 and onwards into the 2011/12 election campaign.

Now that some time has passed, there is an opportunity to measure the economic predictions for the project against the realities. This is what this report seeks to do.

There are two key messages from this report.

First, the flawed 2008 ACIL-Tasman/PNGGEM modelling was extraordinarily over-optimistic – the “broken promises gap”. Such upbeat predictions were never likely.

Second, there is a “resource curse gap”. The temptations of such large and easy economic gains have returned PNG to poor policies typical of a resource curse. These poor policies have pushed PNG below its underlying growth path. In this sense, the PNG LNG project to date has been bad for the economy and the people of PNG. Currently, on almost every measure of economic welfare in 2016, PNG would have been better off without the PNG LNG project.

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2018
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