Papua LNG: the State insures Exxon and Total, and calls it a win.

by PAUL L. KEBAIJA

Prime Minister James Marape directed Treasury to reconcile its Papua LNG figures with the State Negotiating Team at a meeting on Monday, 26 October. The same Monday, he announced the verdict. Treasury's internal projection of a K28 billion revenue shortfall by 2035 was wrong, he said, and he staked his name on a promise: "in 2029, there will not be a drop in PNG government revenue."

His own office had already put a number on the loss. A Prime Minister's Department release dated that same day, reporting his address to about 800 Papua LNG landowner representatives at Parliament House, says roughly K5 billion in PNG LNG petroleum tax between 2029 and 2032 would be "forgone", against depreciation that would otherwise have applied from 2033. Forgone means given up. Between Monday's two statements, the same K5 billion went from forgone, to a timing shift, to no loss at all.

The negotiators' own estimate contradicts the promise. The SNT puts the accelerated depreciation hit at K4.6 billion to K5 billion over 2029–2032, against Treasury's K16.9 billion. Accept the lower figure and the State still collects billions less from PNG LNG in the very years Marape says revenue will not fall. His answer is that construction-phase GST, company tax and income tax will fill the gap. No one has published how much, from whom, or what the project agreements exempt. A promise resting on unpublished offsets is not a forecast.

Deferrals have already cost this country. Treasury's 2025 Final Budget Outcome records that a double capital-expenditure deduction on PNG LNG cut LNG-related tax by an estimated K1.9 billion to K2.1 billion last year. High gold and copper prices covered most of it. The budget still ended K2.17 billion short of its revenue estimate, the worst miss on record, and spending was cut by K2.24 billion, mostly through withheld warrants. A timing shift on a spreadsheet is a withheld warrant in a district.

Marape's office cannot settle what the project is worth in kina. Monday's landowner release valued Papua LNG's US$14.5 billion at about K70 billion. The release rejecting Treasury values the same US$14.5 billion at about K60 billion, inside a combined K70 billion programme whose other K10 billion is never named. Capital expenditure is not revenue in any case. Much of an LNG project's spending goes offshore on equipment and foreign contractors.

"Concessions are not free," Marape says, because they are pegged to price: the developers recover below $81, the State above $83. Put plainly, ExxonMobil and TotalEnergies are protected when oil is cheap and the State is repaid only when oil is dear. In August he described the deal as one where the incentive protects the investment in bad times. PNG's LNG revenue moves with oil prices, so the State will pay out exactly when its petroleum income is falling. That is insurance written for two of the world's largest companies, priced on an oil forecast the public has not seen.

Citing Mozambique's gas to justify the concessions is the developers' argument, delivered by the Prime Minister. The Bank of Papua New Guinea warned in its March 2019 Monetary Policy Statement that broad concessions to PNG LNG had weakened tax revenue and foreign exchange inflows, and urged the negotiators to put the national interest first on Papua LNG. Seven years later, the negotiators are defending concessions against Treasury.

Treasury exists to tell government what its decisions cost. Ordering it to reconcile with the team that negotiated the deal, after declaring which side is right, turns fiscal advice into a sign-off. In the same news cycle, Marape launched a growth committee chaired by Treasurer Ian Ling-Stuckey, with its secretariat inside Treasury and its launch backed by Treasury modelling. Treasury's models are trusted when they project growth and dismissed when they project losses. TVWAN's report carries no word from the Treasurer.

Marape asks the country to hold him to his words in 2029. A national election falls in between, and the bill will land on whoever governs then. Accountability is available now. Table Treasury's K28 billion model and the SNT's rebuttal in Parliament before the 15 December FID deadline, oil-price assumptions attached, and let both be tested in public. If the Prime Minister is right, publishing costs him nothing.