PERTH (miningweekly.com) – ASX-listed Oil Search has maintained that the Papua New Guinea liquefied natural gas (PNG LNG) project has been beneficial to the region, despite reports suggesting otherwise.

Social justice advocate Jubilee Australia has claimed that the PNG LNG project has caused increased violence in PNG as a result of ‘development failure’, as the majority of the promised infrastructure and services related to the project had not been delivered.

Jubilee also said that despite warnings around the dangers of starting production before the completion of landowner identification and vetting, the PNG LNG project partners proceeded into the project’s production phase before this was complete.

In a previous report, Jubilee claimed that the project had actually hurt the PNG economy and had resulted in a 6% fall in household incomes, a 27% fall in employment, and a 73% fall in imports.

PNG Prime Minister Peter O’Neill at the start of May this year rubbished the initial report, telling the Australian-PNG business forum in Brisbane that the report was ‘fake news’.

"It's quite disappointing to note that some of our experts, who align themselves with political interests, continue to try and talk down the economy, and continue to release fake news," O'Neill said.

"And in one particular comment recently, they said - and I quote - currently on almost every measure of economic welfare in 2016 PNG would have been better off without the PNG LNG project. Now that kind of assessment is just an utter nonsense."

O’Neill added that it was unrealistic to suggest that the LNG project was not contributing to the economy of the country.

Oil Search chairperson Richard Lee told shareholders at the company’s annual meeting on Friday that some $4.3-billion has been contributed to the PNG government and local businesses through employment taxes, project equity cash distributions, development levies, royalties and licence maintenance fees.

“Of this, more than $1.1-billion has been spent with landowner companies. In addition, some 10 000 Papua New Guineans were employed and trained in the construction period, many of whom continue to benefit from employment today, based on the skills they have learned.”

Lee said that nearly 2 600 employees and contractors were directly engaged in PNG LNG production operations, and more than 80% of the PNG LNG workforce was Papua New Guinean.

Lee said that the project partners have made all the payments due to the PNG government and stakeholders, but acknowledged that the benefits flowing from the project had not yet reached all project landowners.

The ExxonMobil-led project currently produces around eight-million tonnes of LNG a year, which is exported to Japan, South Korea and China. The project partners, which also include Australian major Santos, were currently considering adding a further eight-million tonnes a year of installed LNG capacity at the existing plant.

A front-end engineering design decision is expected in the second half of 2018.