Interview: Andrew Barry
Where is there potential for more downstream processing in Papua New Guinea’s energy sector?
ANDREW BARRY: We are very supportive of the government’s wish to explore more downstream opportunities for locally produced gas. There is gas entering the local market, and substantial room for more. We can see the value of making reliable, cheap power available to everyone because of the multiplier effect. This is particularly evident in Port Moresby, which is already feeling the benefits of reliable power supply through the 25MW of electricity we currently supply every day from the PNG LNG plant. This is equivalent to around 20% of Port Moresby’s power demand.
Moreover, our work with the government to supply PNG LNG gas to a potential 50-MW power plant project would cover an additional 40% of Port Moresby’s demand. Small and medium-sized enterprises will benefit greatly, as one of their biggest challenges is getting reliable and affordable power to grow and expand their business operations.
Looking at how to achieve greater electrification, we believe that the independent power producer model is the way to go, and we are working out the details with all involved parties to decide how best to make use of it, not only for the initial 50-MW project, but also potential future projects in other areas.
In the quest to supply power to the whole country, smart resource management is necessary. In areas where you have gas, it makes sense to utilise and improve the entire grid. We are lucky to have been heavily involved in the design of the proposed power plant, and with our expertise we are able to help PNG Power match energy supply and demand through load management. Exploring developments in petrochemicals is a bit more complicated, because we must evaluate the opportunities in the domestic market versus export. There is less of the multiplier effect, as in electrification, but as opportunities arise, we are open to exploring and developing them where feasible. Alongside the government, we will evaluate each opportunity as it comes.
How can local companies become more involved?
BARRY: During the construction of PNG LNG we had approximately 10,000 Papua New Guineans working on the project. A lot of time and effort went into developing companies and structures to facilitate collaboration. As such, the country is now in a much better position than in 2009 when we began PNG LNG. Even though time has passed, we are confident that the companies that worked on the PNG LNG project have grown further and will be ready to work when the next phase of investment comes through.
Internally we have 2500 people working with ExxonMobil in PNG, and 80% of them are Papua New Guinean citizens. The development and growth of our PNG workforce has been outstanding. Our operations are technically complex, and a huge amount of training has gone into educating Papua New Guinean engineers on how to operate the plant. The strength of our operations shows that the quality of our workforce surpasses international standards.
Within future investment and expansion projects we are searching for more opportunities to involve local companies. We are pleased that we now have a larger and more competent base of companies to work with, but along with this comes higher expectations for a higher volume of work for the nation.
The economic impact of a project like PNG LNG is enormous, but the challenge is to pace the rollout of the projects in a more consistent way in order to eliminate, or at least reduce, the boom and bust cycle seen in a project-based economy. Inconsistency can lead to a drop-off in skills and stress smaller companies, as it overstretches them in the booming periods and stagnates them in the bust periods. Mitigating the impact of this cycle will significantly increase the operating capacity of local companies.
Read More from OBG
