Anti poverty group warns Canberra to stay out of a huge LNG project in Papua New Guinea

Posted at 04:18 on 20 October, 2009 UTC

The biggest business investment in the history of the Pacific, the multi billion dollar liquid natural gas project in Papua New Guinea, is under fire from a leading Australian anti-poverty organisation.

The Australian newspaper reports Luke Fletcher, the policy co-ordinator of Jubilee Australia, saying its very likely the revenues will fall into a black hole of corruption unless the PNG government signs up to the World Bank-associated Extractive Industries Transparency Initiative.

He says Australias Export Finance Insurance Corporation is set to provide hundreds of millions of dollars in support for the project, but he is urging the Government to reconsider this because corruption could undermine the long-term economic benefits.

Mr Fletcher says there will also be environmental and social impacts.

The economic impact study for the project estimated very significant benefits but Jubilee says the extent to which this windfall will be distributed among the people is questionable.

Mr Fletcher says for years the PNG economy has been dominated by large-scale extractive industry projects, and yet the country has seen very little genuine improvement in its standard of living.

He says of the 7500 estimated jobs only one fifth are likely to be filled by local PNG workers.

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However - the investors are happy to put money into Oilsearch.

Oil Search share offer snapped up
October 20, 2009 - 1:54PM

Institutional investors have snapped up shares in Oil Searchs $895 million capital raising ahead of a final investment decision on the Papua New Guinea gas project.

The oil and gas company on Tuesday came out of a trading halt after completing a discounted institutional placement of 151.7 million new ordinary shares at $5.90 per share.

The stock fell 49 cents to close 7.26 per cent lower at $6.26, after the raising closed oversubscribed.

The placement was materially oversubscribed and will be issued to a wide range of institutional and sophisticated investors who participated in the capital raising, the company told the Australian stock exchange.

Oil Search is also offering a share purchase plan with a maximum $15,000 in shares per eligible shareholder.

Oil Search was forced to conduct the raising to help the company pay its remaining equity funding requirement for its share of the Papua New Guinea Liquefied Natural Gas (PNG LNG) joint venture deal.

The oil and gas company had planned to raise funds buy selling a 3.5 per cent stake in the PNG LNG joint venture to International Petroleum Investment Corporation (IPIC), an Abu Dabhi sovereign wealth fund.

But the deal fell over because of time constraints, after the Australian Securities Exchange told Oil Search it would require shareholder approval - which could not be organised before the PNG LNG final investment decision due by December 8.

Oil Search chief executive Peter Botten said support had been strong with a very high participation from the existing shareholder base.

The company can now focus on moving the PNG LNG project forward to a timely sanction decision, Mr Botten said in a statement.

AAP