Could the gas pipeline be against PNG�s national interest?

LAST week’s column that time was running out for the plan to pipe natural gas from Papua New Guinea was somewhat prescient. By Brian Gomez

One could now make a case that the project is probably not in PNG’s national interest, just as many ordinary Papua New Guineans have been suspecting for some time.

In the not-so-distant past, there was a strong case for the view that the pipeline was vital for its ability to develop vast gas resources and to kick-start broader economic development in PNG.

Ordinary people, in letters to the local newspapers and via other avenues, have been expressing concerns not quite relevant to this proposition and reflective of a somewhat jaundiced view of how development could or should proceed.

As business visitors to PNG would quickly discover, there is a strong belief in the importance of ownership and most Papua New Guineans are loath to see their natural resources operated as though they were owned by foreign investors.

Irrational concerns were aired. Some people suggested PNG gas piped to

Australia would be processed for re-export to China or elsewhere, an activity they preferred that was home based.

In fact, the economics of tapping natural gas from such a remote location is what has hampered development, since the idea of using this same gas in Australia for liquefaction and re-export is somewhat preposterous.

So there was little to argue against using the Australian marketplace to help launch development of PNG’s vast resources.

With the great success of coal bed methane in Queensland the likelihood of early delivery of PNG gas looks somewhat implausible and export of PNG gas to Queensland could, in fact, undermine the improved competitiveness of Papua New Guinea for various downstream activities.

In the last few days it has become clear that the Russian aluminium giant,

Rusal, is considering the possibility of using either gas-fired electricity or a vast new hydroelectric scheme for construction of a world-scale aluminium smelter.

If PNG gas was about to be piped to Queensland’s industrial city of

Gladstone, there is every likelihood it will help fire up a new smelter or pave the way for a big expansion of current capacity.

Queensland, New South Wales and Victoria are, of course, key contributors to

Australia’s role as one of the world’s worst contributors to global warming in terms of per capita emissions of carbon dioxide because of the vast quantities of coal burned for power generation.

In Victoria, Alcoa is presently seeking increased incentives to increase the capacity of its aluminium smelter at Portland, prolonging and enhancing the horrendous amounts of carbon dioxide spewed everyday from the browncoal-fired Loy Yang power stations.

To date, Australian Federal and State governments have been paying lip service to the idea of increasing the proportion of less polluting gas-fired power stations.

The big surge in Australian aluminium smelting capacity occurred mainly in the 1980s after the two oil shocks of the previous decade caused most Japanese smelters to shut down their facilities due to excessive costs.

Australia continues to burn coal and provide electricity to these smelters at costs that do not take into account the externalities of environmental impacts.

If Rusal can build a new smelter based on hydro in PNG there will be a good case for such a project to claim carbon credits, just as Lihir Gold is now doing because it is using geothermal energy rather than diesel for power generation.

And from a development perspective a vast new hydroelectric source would provide a boost to PNG’s aspirations for a brighter future and a less problematic law and order situation.

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