Papua New Guinea: A New Energy World Unfolds

Papua New Guinea could become an energy powerhouse in the Western Pacific.

At the same time, there are many environmental concerns about the exploitation of the natural environment. This could further limit the completion of energy projects.

1. The energy world from a different angle: Why Papua New Guinea matters

Papua New Guinea has many of the best attributes one could hope for in the energy sphere. Papua New Guinea is rich in energy resources and has great potential as an energy exporter. Yet Papua New Guinea’s energy potential has never been fully realized, and for good reason. Papua New Guinea is a pristine country in large parts and the natural environment should be preserved. This brings conservation interests into conflict with the energy industry.

While the population is relatively small, it is also spread across the country. Often located between mountain ranges, the population is not only relatively close to the booming economies of Southeast Asia, but also remains isolated from it. In many cases the infrastructure is not developed and the interior of the country is isolated.  This complicates the development of energy projects. Energy companies first have to build energy infrastructure from scratch, which is very costly. This does not help many energy companies operating in Papua New Guinea, as there are significant amounts of energy resources to be found in the remote regions. 

Of particular interest are the hydrocarbon resources along the Papua New Guinea coast and inland. When analyzing costs, taking into account the long-term environmental costs of these projects and the midstream investment costs, it is often difficult to justify the development of many of these projects. 

2. The geopolitical context of energy projects in Papua New Guinea

Papua New Guinea’s geopolitical position is unique even in the context of Southeast Asia. Although further from the Strait of Malacca, Papua New Guinea is still strategically positioned in the Western Pacific and is in relative proximity to Australia. This underscores its geostrategic alignment with Pacific nations south and east of Papua New Guinea, while maintaining close ties with nations in Southeast Asia aligned with the Strait of Malacca and China.

Papua New Guinea’s rich energy resources allow it to play an important role as an energy broker in the Western Pacific region and stake out its energy interests in this region. In this way, Papua New Guinea can strengthen the Southeast Asian region and further align global energy trade with Southeast Asia and the Strait of Malacca.

Papua New Guinea’s relationships with China, Australia, Indonesia, and the United States will be particularly important as the country continues to stake out its own energy interests in the wider world. China will play a central role in Papua New Guinea’s development, as it is a major infrastructure developer and has considerable experience in developing energy projects in the Pacific. Meanwhile, China is consolidating its position as a hub for energy trade within East Asia. In the energy sector, China remains heavily involved in Southeast Asia. 

Australia is a major player that may have an interest in developing the energy sector in Papua New Guinea. Australia is geographically isolated and dependent on foreign energy imports. Papua New Guinea offers Australian energy producers an excellent opportunity to diversify their imports. Given Papua New Guinea’s geographic proximity to Australia, this would make sense.

Many thanks for the shared interest in the energy world!

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