6 Nov 2009

New Sinopec deal for liquefied natural gas seen as huge boost for PNG

1:24 pm on 6 November 2009

A new agreement that will see a Chinese state-owned energy company buy nearly two million tonnes of liquefied natural gas annually from Papua New Guinea's LNG project is being seen as a huge boost to investor confidence in PNG.

Sinopec, also known as China Petroleum & Chemical Corporation, says it would build a terminal in the eastern Chinese port of Qingdao to receive the gas from the Exxon Mobil-operated PNG project.

The Programme Director of the Myer Foundation on Melanesia at the Lowy Institute, Jenny Hayward-Jones, says although many foreign investors have seen PNG as a risky place to do business in, the Sinopec deal could mitigate that.

"Both the investment from Japan that we saw a couple of weeks ago and now this guarantee from China is validation of PNG's credibility as a resources-providing country, also as a relatively safe destination for certainly resources investment. So I think this is a big confidence builder for Papua New Guinea."

Jenny Hayward-Jones of the Lowy Institute