Commentary: PNG Govt. ceases negotiations with Exxon Mobil over P'nyang project for allegedly acting in bad faith

Author: Bal Kama, Lowy Institute, Published on: 22 February 2020

"PNG: Booting Exxon gives Marape a boost – for now", 19 February 2020

The recent announcement of the Papua New Guinea (PNG) Government to cease all negotiations with one of the United States' largest oil and gas companies, Exxon Mobil, over the P'nyang LNG project, a new gas field in PNG, has broader implications for the US and Papua New Guinea.

[...]

...Exxon's alleged conduct, criticised by the PNG government as being "exploitative", undermines US efforts in the Pacific region as a force for good.

...PNG government's initial agreement for Exxon to operate the PNG LNG project...was thought...[to]...have a transformational impact on PNG's economy....

....Instead, there were a series of negative outcomes... – national debts grew, and unfavourable benefit-sharing arrangements and royalties led to conflict among traditional resource landowners....

[...]

...Marape noted...that new "reasonable terms" should be considered for the P'nyang project.

The terms proposed by the PNG government are not publicly available, but they appear to include giving no fiscal concessions in P'nyang, treating it as separate project from the current LNG projects and increasing domestic market obligations, local content participation, and landowner's royalties from the current rate of two percent....

[...]

The PNG government is likely to reconsider its current position if Exxon responds positively to its terms. Unless that happens, however, there appears to be a general distrust for Exxon among the people of PNG.... The distrust for Exxon has broader implications when one considers Exxon not only represents US economic prestige in the Pacific, but a society whose business ideals are expected to reflect the democratic values of fairness and just outcomes....

[...]

Read the full post here

Related companies: ExxonMobil