What Exxonmobil learned in Papua New Guinea
The giant Exxonmobil-led PNG LNG project has proven Papua New Guinea is a viable place to carry out major resources projects. Former Exxonmobil PNG Managing Director Peter Graham reflects on the lessons learned.
(BAPNG): What was the critical factor in getting the PNG LNG project completed on time? Peter Graham (PG): Alignment with the Government was critical, and I think the Government recognised very early on that this was a transformational project. That truly was critical from the outset.
Without their support and direction from the then-prime Minister, Sir Michael Somare, and subsequently from Peter O’neill, it would have been far more challenging to achieve what we have done. Agencies and departments across all levels of Government have stepped up and done an absolutely spectacular job.
Nothing got held up on the docks, permits and visas were processed in an extremely timely manner. That sort of achievement is world class, but the Government gave it special project status—that was critical. BAPNG: Exxonmobil was completely new to PNG when this project started. So what tips and recommendations would you pass on to newcomers? PG: I think probably number one is learning how to deal with communities. It’s just so critical in Papua New Guinea, particularly when it comes to access to land—and you can’t do anything without access to land. I think that was probably one of the earliest and toughest lessons for us to learn.
A lot of our projects elsewhere in the world are offshore, and you don’t have landowners to deal with offshore! But with an onshore project, learning how to co-exist with landowners and understanding the strong bond landowners have with their land… it took us a while to figure out how to make it work, and how to relate to those traditional landowners and find solutions that were mutually beneficial. Now, I think we have very strong relationships and a mutual understanding and respect. BAPNG: The challenge now is to make the most of the infrastructure that you built for the PNG LNG project, and the most obvious thing is to extend to a third train. What are the prospects? PG: I think the prospects are good. However, there is work that needs to be done before you can start talking seriously about the next step. The starting point for any development is accumulating proved reserves, and it’s a challenge for every development, not just us. We are on our way, though. BAPNG: What’s the latest on the prospects of using some of the gas for domestic energy? PG: We have signed an MOU with the PNG Government to supply up to 20 million cubic feet a day of natural gas for 20 years to support government plans to improve the capacity and reliability of the country’s power supply.
We think that this is a great step towards improved supply for Port Moresby, and will be working with PNG Power and doing our best to support them so they can quickly access the power.
We’ve also had a longstanding commitment under the Gas Agreement to supply four million cubic feet a day in the Highlands for power generation, and we stand ready to deliver that as well.