3 Dec 2008

PNG govt plans to use proceeds from LNG project to help the country

7:29 pm on 3 December 2008

Papua New Guinea's Government plans to keep proceeds from its direct equity participation in the ExxonMobil-led PNG liquefied natural gas (LNG) project in a trust account outside of the budget.

The newspaper the National reports that these funds would be used on development projects in line with the Government's long-term development strategy (LTDS), which would be unveiled next February.

Speaking at the Mining and Petroleum Conference in Sydney, Australia, yesterday, National Planning Minister Paul Tiensten said acquiring the 19.4% equity in the LNG project was a key to securing PNG's future.

The Government effectively mortgaged its 17.6% shareholding in Oil Search to International Petroleum Investment Company (IPIC) to secure about US$1billion to finance its 19.4% equity participation in the massive project, electing not to sell it down.

Mr Tiensten told conference participants that as much as 3.2 billion US dollars would flow into the country from this massive project.

From its direct equity participation, the Government would get between a projected US$600 million and US$900 million per year.

The Minister says the Government is determined that these funds are spent on developments that will benefit the people, and not just sent into the Government coffers to be consumed with little return.