Papua New Guinea: Navigating Uncertainty Despite Abundance

Unease lingers in Port Moresby, the capital of Papua New Guinea, following recent riots and protests sparked by public sector payroll issues. A 14-day State of Emergency remains in place after the unrest, which left several dead and caused significant damage to the city. While essential services and some businesses are gradually reopening, a sense of unease still hangs in the air.

Papua New Guinea is comparable in size to Germany. The eastern half of New Guinea, faces immense challenges. Boasting substantial natural gas reserves, the country has attracted major players like ExxonMobil, Chevron, and Total. However, its estimated 9.1 trillion cubic meters (Tcm) of proven reserves pale in comparison to its undiscovered potential, estimated at anywhere from 7 Tcm to 50 Tcm, potentially placing it on par with Iran.

Existing LNG projects contribute significantly to the nation's economy, but further exploration and development are hampered by limited infrastructure, persistent security concerns, and environmental considerations. Sustainable growth in the gas industry hinges on addressing these pressing issues.

With a population of nearly 10 million, Papua New Guinea is classified as a lower-middle-income country by the World Bank. Despite its resource wealth, around 40% of the population lives below the national poverty line, facing malnutrition, limited access to basic services, and inadequate infrastructure.

The recent violence and instability may deter foreign investors worried about the security of their investments and personnel. This could lead to delayed investment decisions and exacerbate the complex regulations and high levels of corruption already plaguing the country.

Currently, only China and the US have the capacity to handle major economic partnerships with Papua New Guinea. However, China stands out as the sole investor across diverse sectors. It has built major infrastructure projects like roads, bridges, and ports, facilitating connectivity and trade within the country. China also drives all major investments in power (e.g., hydropower plants) and telecommunications. Its primary goals are securing access to Papua New Guinea's vast mineral resources (e.g., copper, gold, nickel), wood, and fisheries, while also gaining strategic access to the Pacific Ocean and South Pacific region.

Predicting the future of Papua New Guinea remains complex. Several critical elements will shape the country's trajectory:

• Government response: The effectiveness of the government's actions in addressing the root causes of unrest,such as corruption, economic inequality, and social grievances, will significantly impact the situation. Strong and transparent measures promoting accountability and tackling poverty could build trust and foster stability.
• Security situation: Restoring order and maintaining a sustained decline in violence are crucial for creating a conducive environment for economic activity and attracting investment. Failure to maintain security would further harm the economy and potentially lead to renewed unrest.
• Economic performance: Papua New Guinea's economic prospects will play a role in shaping the situation.Improved resource management, attracting responsible investments, and diversifying the economy could lead to greater prosperity and reduce societal pressures.
• Regional dynamics: The political and economic situation in neighboring countries and the wider region can have an impact on Papua New Guinea. Increased regional collaboration and support for peaceful solutions could bolster stability. Conversely, regional instability or external interference could exacerbate tensions.
• Global commodity prices: Fluctuations in global prices of natural resources like gas and minerals, which are key Papua New Guinea exports, can impact the country's economic performance and potentially contribute to social unrest.

Papua New Guinea is a land of immense potential, grappling with complex challenges. Overcoming these hurdles and charting a course towards sustainable development and shared prosperity will require a concerted effort from the government, civil society, and the international community. Only then can this vibrant nation truly unlock its vast potential and build a brighter future for its people. I do hope that current situation will stop shortly.