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ExxonMobil’s project in Papua New Guinea is an economic parasite
“Exxon’s Liquefied Natural Gas (LNG) project in the highlands of Papua New Guinea provides a distressing case study of large-scale economic parasitism.”
(ExxonMobil PNG)
That is the view of a former Australia senator and columnist for The Guardian, who wrote on a project the oil major embarked on in Papua New Guinea, with the help of a loan from the Australian Government.
A 2018 report by the Jubilee Australia Research Centre titled “Double or Nothing: The Broken Economic Promises of PNG LNG” reveals how the results the LNG project produced for the Independent State of Papua New Guinea fell way below expectations, with one author positing that the country would have been better off if the project didn’t happen at all.
Before then, it was introduced as one that would transform the country’s economy, with claims that the economy would be doubled.
Between 2014 and the time of the publication of the report, an Exxon-led consortium had already shipped about 7.9 million tonnes of natural gas per year from the gas fields of PNG’s Hela region, the report notes.
But that did not transform the country in the way the people were told it would. The actual results are daunting.
“Despite predictions of a doubling in the size of the economy, the outcome was a gain of only 10 percent and all of this focused on the largely foreign-owned resource sector itself.”
“Despite predictions of an 84 percent increase in household incomes, the outcome was a fall of six percent.”
“Despite predictions of a 42 percent increase in employment, the outcome was a fall of 27 percent.”
“Despite predictions of an 85 percent increase in Government expenditure to support better education, health, law and order, and infrastructure, the outcome was a fall of 32 percent.”
“Despite predictions of a 58 percent increase in imports, the outcome was a fall of 73 percent.”
It is stated that the results only exceeded the projection in one area: the export sector. While the prediction was a 106 percent increase, the outcome was 114 percent, the report noted.
“This reflects the technical success of the project – starting earlier than expected and producing at above design specifications.”
Yet, with this success, the authors held that the shortfall in the other economic predictions is even more remarkable.
It went on to add that the extremely low revenues got by the government could not be attributed to low gas prices because the actual revenues collected by the government were one-third of the projections of low gas prices.
Furthermore, it is stated that the project has had a negative impact on the country’s budget, and that that is not likely to change until 2024.
And what’s worse is that Jubilee Australia’s study states that the total net revenues covering the 30-year life of the project is estimated by the advocacy body to be a quarter of the scenario sold to the people with a low oil price scenario.
Why is it that the Exxon PNG LNG project failed to deliver on the results the people thought it would?
Read the upcoming Kaieteur News Sunday Edition to find out why.
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