Opposition Leader Does Not Understand Global Energy Markets


“The greatest threat to wellbeing and happiness in our country comes from people who try to create baseless fear and anxiety – simply for their own political gain,” the Prime Minister, Hon. Peter O’Neill CMG MP, said today following another repetitive news conference by the Opposition.

The Prime Minister raised concern at ongoing attempts to undermine the economy, harm business and destroy jobs by an Opposition with a vested interest in failure.

“At a time when the image and reputation of Papua New Guinea is improving around the world, and national pride continues to grow, there are people who will seek to rubbish the national economy for their own political gain.

“I challenge these few merchants of doom and gloom to take account of their actions and be factual in their words.

“In 2015 we need a responsible opposition that will challenge the government on policy and fact, and to have a mature discussion.”

PM O’Neill said the recent re-hashing of claims by the Leader of the Opposition in relation to the budget were simply wrong.

“The Opposition Leader has nothing new to say and keeps repeating the same baseless claims time-after-time.  His attempts to talk down the economy over the fall in oil prices is an example of irresponsible behaviour that can affect jobs and business if people were to believe him.

“While the price of oil has dropped, for the most part this will not overly affect LNG revenues as we have forward contracts in place that are set at a fixed formula.  These are 20-year contracts predominantly with customers in China and Japan.

“All commodity prices fluctuate depending on supply and demand.  Currently there is an increase in supply of oil in the market as OPEC countries are not cutting back on production.  As such there is an increase in supply against demand and consequently prices have dropped.

“When we prepare an annual budget this is prepared based on a long-term average of commodity prices as the basis for the assumptions in the budget forecast.  Therefore we believe strongly that prices will readjust as common sense in the market prevails and production is set to meet global demand.

“This really is something that a former Chairman of the IMF and World Bank Board, even though only in the job for just a few months, would have understood if they had focused on the briefings provided to him.

“Mr Polye is either confused or is deliberately misleading the market in relation to forward contacts for Papua New Guinea’s LNG sales. 

“When the LNG project came online ahead of schedule this year, only the additional gas was sold at spot prices as this could not be factored into earlier contracts.  These additional gas sales are a bonus in revenue for the nation.

“Next year only LNG that is surplus to fixed contracts will be sold at spot prices.  This is smart business for any energy producing nation.

“Despite claims by Mr Polye, forward contracts will be honoured by LNG customers as they are large and reputable international companies with long-term outlooks.  These companies lock in long-term forward contracts in order to protect themselves from future price increases – in doing so they carry the risk that energy prices will drop.  This is part of the global energy business and Mr Polye either does not understand this or is playing games with Papua New Guinea’s economy.”

The Prime Minister called on the media to be careful and check the facts so as to not be hoodwinked into publishing baseless nonsense. 

“Most media are responsible and their nation thanks them for their commitment to journalism, but there remains the odd newsperson or blogger with leave a lot to be desired when it comes to checking facts and ensuring balance.”



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