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Gold/Mining/Energy : Lundin Oil (LOILY, LOILB Sweden) -- Ignore unavailable to you. Want to Upgrade?

To: Tomas who wrote (1407)	11/30/1999 9:56:00 PM
From: Tomas	Read Replies (1) \| Respond to of 2742

Gas project can have great impact on Papua New Guinea The National, December 1 By BRIAN GOMEZ SYDNEY: Two major industry studies have suggested that economic growth in Papua New Guinea could rocket ahead at an almost unimaginable rate if the US$3.5 billion (K10 billion) PNG to Queensland gas project could be simultaneously developed with significant gas-based industries in PNG. Paul Balfe, director of ACIL Consulting Pty Ltd, which has done extensive studies on the impact of the project on the PNG economy, said the gas export component alone would enable the economy to grow by 13 per cent annually in the 10 years to 2012. But the adoption of an ambitious program of gas-based industrialisation in PNG could see annual economic growth rocket ahead by a massive 38 per cent a year in the same period. ACIL's findings were generally in line with a similar study undertaken at the Australian National University in Canberra with the use of a sophisticated computer model of the PNG economy. Under the export-only scenario, employment would peak during construction in 2001 at 1,050 with another peak in 2006/07 when the Hides field is brought on-stream. Under the maximum domestic usage scenario, employment reaches 5,000 in 2014. The permanent work force in the former case would be between 600 and 700 jobs compared with 2,600 to 2,800 in the latter case. Mr Balfe suggested a two-stage development commencing with gas exports to Australia with simultaneous promotion of LPG exports and in-country use aimed at promoting growth of local LPGT markets. This, he said, should be followed by other in-country gas-based industries based on piped natural gas as markets and commercial considerations permit. Mr Balfe later told The National that he agreed with technical experts from Chevron, the operator of the proposed gas project, that a gas pipeline from Kerema to Port Moresby was not viable under the present circumstances. But he said construction of a single gas-based fertiliser plant producing up to 1,650 tonnes a day of urea and requiring 16 petajoules of gas a year would make the pipeline to Port Moresby feasible. He told the 5th PNG Mining and Petroleum Investment Conference of the likely impacts of four different gas development scenarios: Under the first, without the gas project going ahead, the country's current oil reserves were anticipated to be totally depleted by 2012. GDP was forecast to decline by three per cent a year till 2003 and then decline by 0.7 per cent annually; The second scenario based purely on gas exports, would see GDP and exports increase by 13 per cent a year with government revenue rising 10.5 per cent annually; The third involved gas exports and limited in-country use, inclusive of a 1,650-tonnes/day fertiliser plant, a 70-megawatt gas-fired power plant and small industrial users in Port Moresby. Under this scenario GDP would increase by 15 per cent annually and exports by 14 per cent annually with government revenue up 12.3 per cent a year; and The fourth scenario would see an even greater build up of in-country usage of gas through production of ammonia/urea, power generation, industrial and commercial reticulation in Port Moresby, methanol, petrochemical and an LNG plant. This would result in GDP increasing by 38 per cent a year with exports up 29 per cent annually. Mr Balfe said a similar outcome has been predicted in a separate study carried out by Theo Levantis and Tony Lawson of the Centre for Development Studies at the Australian National University. This study utilised a complex model of the PNG economy to simulate economy-wide impacts of the gas project. The ANU study showed that the overall economic welfare of the people of PNG would increase by seven per cent, or about K175 per person a year, under the export-only scenario. Economic welfare was estimated to increase by 25 per cent a year in the maximum export and domestic usage case. This study suggested the gas project would result in a strong exchange rate appreciation that would adversely affect competitiveness of some traded goods, such as tree crops. But there was adequate scope for the government to design policies to offset these impacts. Mr Balfe said Mr Levantis and Mr Lawson had also pointed to the prospect of "substantial intangible benefits through the demonstration effects of the project - it would send a strong signal to other investors both inside and outside PNG and help to renew confidence in the economy. "This could bring with it further capital investment, creating new job opportunities in the formal labour market and additional contributions to economic performance." wr.com.au