Nobody needs to gloat or celebrate the misery and suffering that war visits upon any population anywhere in the world.
Our front page report last week saying that the Middle East war had helped progress the proposed Papua liquified natural gas (LNG) project might have seemed insensitive in that regard.
Partners in Papua, TotalEnergies and ExxonMobil, which are global energy giants with a lot of interest, assets and staff in the Middle East are directly affected and threatened by the conflict.
They cannot be seen to be happy or celebratory in that the conflict there might have helped push a project here over the line.
But it is a matter of fact that the spreading wider implications of the war will have profound consequences, both negative and positive upon PNG.
The effects of the Middle East war between Iran on the one side and Israel and the United States on the other side are beginning to affect the world in several ways, at once affecting the supply and price of energy but it will manifest itself in deeper economic and financial ways by and by.
PNG will not be spared because it is a small open economy that is import dependent.
Even while it is a hydrocarbon producer and has been since 1989, it still depends on imports for all its energy needs.
As of yesterday fuel prices spiked sharply as will all other products which are produced and transported by means dependent on energy. That is the down side.
On the up side, PNG stands to benefit as a producer of oil and natural gas. Higher oil and gas prices will translate to higher revenue for PNG, particularly for those cargos sold at ‘spot’ markets, outside of physical long-term contracts.
The war in the Middle East has placed the Papua LNG project in a sharper and more favorable focus because it has proven up reserves, it is in a secure location well away from the Middle East and it is closer to markets in Asia.
It is noteworthy that a lot of work has gone into progressing Papua LNG.
The war in the Middle East came around in only February 2026 but this project has been gestating for a long time.
A signed agreement in 2019 was torn up by the new government of Prime Minister James Marape with demands for a renegotiation of the terms. This nearly collapsed the project.
This action was immediately followed by the Covid 19 pandemic that hit the world with a vengeance in December of that year and any work on the project could not progress as borders and markets shut down to wait out the scourge.
The global climate change campaign kicked in and hit the project next with the result certain important bankers backed out of Papua LNG.
Of course, there has been competition for capital, contractors and markets from other proposed LNG projects around the world.
Finally, it is an acknowledged fact that PNG is not the world’s best place to do business. Lack of expertise, lack of infrastructure, lack of supply chains, a political atmosphere prone to unpredictable behavior such as happened in 2019 with the refusal to renew Porgera SML or tearing up a signed gas agreement for Papua LNG; and a unique land holding system strangest in all the world to many operators.
This last point alone can put a project in jeopardy.
For all the afore-going reasons, it is reasonable to assume that Papua LNG might have been touch and go at certain phases of the project as indeed the price tag for the project increased to US$18 billion (about K78b) from about US$12b (about K52b) in 2019.
Through very stringent controls and reviewing EPC (engineering, procurement and construction) contractors to finally engage them out of Asia has been brought back to US$14b (about K60b) and made the project viable again.
Today, Papua LNG has the backing of 30 commercial banks and seven credit agencies.
The Government is fully behind the project and the environmental plan has been completed and approve by CEPA.
TotalEnergies says project is good to go into final investment decision (FID) in just the second quarter of 2026.
One should not dismiss all the hard work that has gone into environmental and social mapping challenges or the difficulty of the terrain and the weather or managing the labyrinthine bureaucratic and political system and hang it all on the one accident of the war in the Middle East.
If anything, the Middle East conflict is merely icing on the cake.
But one thing must be said. While the Middle East crisis might not be the keystone for the Papua LNG project, it certainly has shifted the global dynamics of energy production and supply, perhaps forever.
Never again will the world so blindly keep all of its metaphoric energy eggs in one region of the world and risk it all getting broken in one conflict.
Here is where PNG stands out as an alternative and secure source of the world’s energy supply.
