PNG Gas Projects Face Uncertainty as PM Offers to Resign

Papua New Guinea (PNG) prime minister Peter O’Neill has offered to resign after a series of defections owing to various issues including dissatisfaction over a recently signed natural-gas agreement with France’s Total.

O’Neill said May 26 he would resign and Julius Chan, a two-time former premier, would take over as the government’s leader, news agency Reuters reported May 27.

According to analysts that Reuters spoke to, political turbulence will delay projects on the drawing board and put future plans under a cloud, and oil majors with interests in PNG, Total and ExxonMobil, will be watching closely.

“The resignation of Peter O’Neill will delay first gas from the LNG expansion projects until beyond 2025,” Wood Mackenzie analyst David Low told Reuters.

Last month, Total, operator of the Papua LNG project, ExxonMobil and Oil Search signed a gas agreement with the government of PNG, defining the fiscal framework for the project.

“While we still expect the project to go ahead, the political turmoil opens the door to competing projects and increases the risk of knock-on delays,” Low added.

According to Reuters, O’Neill has yet to formally resign, and has said he has filed a court challenge to a looming vote-of-no-confidence. At the same time, it is not clear if an opposition-dominated chamber would accept Chan when parliament resumes in early June.

O’Neill’s spokesman said he would not quit before his court challenge to the procedure for a no-confidence vote is heard, and there is no timetable for that, Reuters said.