Australia Loans US$500 Million to Papua New Guinea LNG Project

Strategic Insights -

The Australian government has agreed to loan US$500 million to support the development of a US$15 billion liquefied natural gas (LNG) project in Papua New Guinea. The project, led by Esso Highlands Ltd, a subsidiary of energy giant ExxonMobil, is a joint venture with Australian listed companies Oil Search Ltd and Santos Ltd, as well as Japan's Nippon Oil, the PNG government's Eda Oil, and a trustee representing landowners. The loan will be provided through Australia's export credit agency, the Export Finance and Insurance Corporation (EFIC), and will help the PNG government set up a fund modelled on Australia's sovereign Future Fund to manage project revenue.

Key Takeaways:

  • The Australian government has loaned US$500 million to support the US$15 billion LNG project in Papua New Guinea.
  • The project is a joint venture led by Esso Highlands Ltd, a subsidiary of ExxonMobil, with Australian listed companies Oil Search Ltd and Santos Ltd, Japan's Nippon Oil, the PNG government's Eda Oil, and a trustee representing landowners.
  • The loan will be provided through EFIC's commercial account and National Interest Account, with US$100 million from the commercial account and US$400 million from the National Interest Account.
  • Debt financing for the project is being provided by export credit agencies from the United States, Japan, China, and Italy, in addition to Australia's loan.
  • The project is expected to provide a boost to Papua New Guinea and the region, with the Australian trade minister stating that it will "provide a boost to PNG, the region and Australia."
  • The Australian government has agreed to work with the PNG government to monitor the implementation of a joint understanding on the effective and transparent governance of LNG project revenue.

Statistics:

  • US$15 billion: the estimated cost of the LNG project in Papua New Guinea.
  • US$500 million: the amount loaned by the Australian government to support the project.
  • 40%: the percentage of the project held by Australian listed companies Oil Search Ltd and Santos Ltd.
  • 2 entities: the Australian and PNG governments have agreed to work together to monitor the implementation of a joint understanding on the effective and transparent governance of LNG project revenue.
  • 4 countries: the United States, Japan, China, and Italy, whose export credit agencies are providing debt financing for the project.
  • US$100 million: the amount being provided by EFIC's commercial account.
  • US$400 million: the amount being provided by EFIC's National Interest Account.

Sources:

  • Asia Pulse, "Australia loans US$500 million for PNG LNG project" (no date given)
  • AAP (no date given)