Can you profit from this natural gas odd couple?

By Tyler Crowe, The Motley Fool

The strangest of partnerships can be forged in the pursuit of profits.
 Last week we saw the Papua New Guinean government up its stake in local natural gas developer InterOil (NYS: IOC) - but will it be enough support to transform the company into an Asian natural gas giant?

Feeding the Asian energy machine
With so many investors focused on the oil and gas boom in the United States, it's hard to look at an integrated company which only operates in Papua New Guinea and not say: "Who cares?" Well, the largest energy consumer in the world cares.
In 2007, China transitioned from a net producer of natural gas to a net consumer, and today it consumes 1-trillion cubic feet (Tcf) more per year than it's able to produce - and that demand is getting bigger by the day. 
The Chinese government plans to increase the share of natural gas as part of total energy consumption from 4% to 10% by 2020. 
 If it can't find adequate natural gas sources within its own borders, it will import shipments of liquid natural gas (LNG). If a country as close as Papua New Guinea could supply Chinese demand, the rewards for those supplier companies and countries could be huge.
This is where InterOil comes into play; right now it claims to have reserves of 8.59 Tcf of gas and another 0.7 Tcf in condensate form at its Antelope and Elk gas fields.
 Unfortunately, it doesn't have the drilling capacity or the infrastructure in place to transport and export the gas. 
This past summer, rumors abounded about a possible partnership with Royal Dutch Shell (NYS: RDS.B) , but when InterOil wouldn't let Shell take a look at its operations, the talks seemed to wither away.
Where companies don't want to venture, though, it appears the Papua New Guinean government will. Yesterday, the company announced that the Papua New Guinean government will take a 50% stake in both the Elk and Antelope fields. 
With government backing this venture so heavily, InterOil potentially could solve some of the headaches it has faced with drilling, building pipes, and constructing an LNG port.
 If these projects become successful, then InterOil could go head-to-head with ExxonMobil (NYS: XOM) for the title of lead producer in Papua New Guinea.

What a Fool believes
There are still a lot of "ifs" involved in the investing thesis for InterOil: If it can get its pipeline network built out; if it can build its LNG port; if the proven reserves are indeed what the reports claim to be. 
Granted, the prize of being a major supplier to the Chinese and other Asia-Pacific countries could make for some great returns, but the company has made some odd moves regarding the reporting of its proven reserves and its operations.
Investors who think LNG supplies to China will be a big driver for the oil and gas sector might consider two other country and company pairings as well. 
There are two operations in Australia: Conoco Phillips' (NYS: COP) LNG liquefaction facility in Darwin, and Chevron's (NYS: CVX) proposal to build a LNG liquefaction port on Barrow Island. Also, construction is under way to build an LNG liquefaction port in Oregon, which could be used to transport gas from the Green River Basin shale play in Wyoming. Companies like Devon Energy (NYS: DVN) and Ultra Petroleum (NYS: UPL) , which both have large gas plays in the Green River Basin area, could stand to make solid profits from exporting natural gas.
The ways to play the energy space are almost countless, but which is the right one? 
Our analysts at the Motley Fool keep a keen eye out in this space, and they've identified "The Only Energy Stock You'll Ever Need."
 We have made a special report outlying this unique opportunity within the oil and gas space. For your own free copy, click here.

The article Can You Profit From This Natural Gas Odd Couple?

Fiji Prime Minister arrives in PNG

By Vijay Narayan of fiji village

Prime Minister Commodore Voreqe Bainimarama arrived in Port Moresby last night ready for the special Pacific ACP meeting today.

 Commodore Bainimarama was received by Papua New Guinea's Foreign Affairs Minister Rimbink Pato and other government officials at Port Moresby's International Airport.

Prime Minister, Commodore Voreqe Bainimarama

 After a brief meeting Commodore Bainimarama left for the Air Ways Hotel in the vehicle that was used recently to transport the Royal Couple.

 14 Pacific Island leaders will attend the meeting.

 Fiji has not participated at the highest level of the PACP meeting since its suspension from the Pacific Islands Forum in 2009.

 The one day meeting will try to resolve once and for all Fiji's participation in the crucial ACP and EU negotiations.

 At the recent Forum Leaders meeting in Cook Islands, PACP Leaders could not agree on allowing Fiji back to their meeting because of the decision by Leaders in 2009 to suspend Fiji.

 Papua New Guinea offered to host a special session outside the Forum process before the end of the year to discuss Fiji's involvement in purely PACP related activities.

 An invitation to the Port Moresby meeting was conveyed to Fiji's Prime Minister last month when Papua New Guinea Prime Minister, Peter O'Neill made an official visit to Suva.

Explore Papua New Guinea through the lens of a photographer

by Jessica Marati (RSS feed) 

Looking to improve your photography skills while exploring one of the world's most beautiful countries?
Asia Transpacific Journeys recently launched a new photo excursion tour of Papua New Guinea, led by renowned photographer Michele Westmoreland. Called "Papua New Guinea Through The Lens," the 12-day adventure journeys from Port Moresby to Mount Hagen, Kumul, Nondugi, Karawari, Kundiman and Tufi. Highlights of the trip include a cruise along the Sepik River; sea kayaking in coastal Tufi and an excursion to the Wahgi Sing-Sing Festival, which showcases traditional cultural performances from the Wahgi Valley.
Westmoreland's tour will not just be an introduction to Papua New Guinea; it will also be an introduction to photography for both veterans and newbies, with expert advice on lighting, composition and editing.
The package costs $10,695, and the next one kicks off in June 2013. For a sample of what's in store, check out the photo gallery below.

Gallery: Papua New Guinea Through The Lens

• 
• 
• 
• 
• 
• 

[ Photo Credit: Michele Westmoreland via Asia Transpacific Journeys]

Child health is improving in PNG, and it’s all about the people

Engage

 

By Professor Trevor Duke, Centre for International Child Health, University of Melbourne

I have seen many improvements in child health in Papua New Guinea in the 15 years that I have been working with the health system there, led by committed young paediatricians who have designed and implemented a national plan for child health.

The PNG Paediatric Society, Health Department and University of PNG representatives at the review of the Child Health Plan, September 2012. Photo: Trevor Duke, Centre for International Child Health, University of Melbourne

As a member of the National Child Health Advisory Committee and the Paediatric Society, I was part of a review held in September to assess whether this plan is on track. At that meeting, leaders in child health presented strong evidence of progress in the most challenging of problems.

Immunisation is one of the most cost-effective ways to save lives. For vaccines to reach every district, the Health Department has identified the 20 lowest-performing and most isolated areas and completed a stocktake of childhood immunisations, services and vaccine supplies. AusAID has provided $1 million to implement the Reaching Every District initiative in concert with support from WHO and UNICEF. The Health Department is also partnering with AusAID, WHO and UNICEF to provide mass vaccination across the whole country, against measles and polio. With revitalised services for the hardest to reach, this is already making a difference.
The Haemophilus influenzae vaccine against pneumonia and meningitis was introduced successfully in 2008, and the pneumococcal vaccine is to be introduced in 2014. The Health Department is also active in prevention of pneumonia through improving nutrition (including breastfeeding), reducing indoor air pollution, encouraging hand-washing and early treatment. Treatment programs that introduced oxygen therapy have seen a 35 per cent reduction in death from pneumonia. Pneumonia, diarrhoea and neonatal conditions are the major causes of hospitalisation and child deaths in PNG.
Neonatal health is a continuing priority; while child and infant mortality has fallen in the last decade, neonatal mortality remains static at 28-30 per 1000 live births. As part of an effort to implement better standards of neonatal care, the health department has assessed five hospitals in the Highlands district and established a model for quality district-level services.
Malaria is no longer one of the top three causes of hospital admission for children due to the widespread use of insecticide-treated bed nets. The health department acknowledges that maintaining this program beyond the Global Fund to Fight AIDS, Tuberculosis and Malaria will be a challenge.
With support from the Clinton Health Access Initiative, rural clinics are now HIV testing, counselling and treatment centres. Effective programs to prevent transmission of HIV from parents to children have seen the rate of infection to newborns from mothers who have HIV falling from 30 per cent in 2007 to 15 per cent in 2012, meaning many fewer children are born with HIV.
Tuberculosis treatment through a fixed-dose combination of medications has been introduced nationally; however, access to medication in health centres is currently inadequate. Major policy changes were recommended from this meeting.
Information about common causes of hospital admissions and deaths has improved over the last three years with the introduction of a new reporting system. During this period, 36,000 admissions from 15 hospitals have been documented in detail. This information will assist the Health Department to prioritise clinical and public health programs and to track future progress in child health.
A dedicated and trained health workforce has achieved improvements in child health but more training facilities for child health nurses and community health workers are needed to provide sufficient numbers. AusAID is helping to develop a skilled health workforce. They have provided invaluable support to the University of PNG School of Medicine and Health Sciences for a decade, and are providing scholarships to support the training of nurses, midwives and community health workers.
Many challenges need to be addressed in the coming years. Long-term development depends on national coordination of programs and services for child health, implementing programs and services in all provinces, a good understanding by provincial health officials, and monitoring the scale and quality of implementation. Maternal health is a large determinant of child survival, and there is much to do to reduce maternal deaths and improve family planning. Increased investment in maternal and child health, matching the growing wealth of the country, is an urgent priority. Factors outside the health sector, particularly education, agriculture and environmental health will be major determinants of long-term progress.
Child health in PNG is in good hands. We hope the economic opportunities of the next decade will put much greater resources into improving children’s health, and that a more equitable spread of opportunity will enable parents to better care for their children.

About the author: Professor Trevor Duke
Professor Trevor Duke is the Director of the Centre for International Child Health, University of Melbourne, and Adjunct Professor of Child Health, School of Medicine & Health Sciences, University of PNG.
The Centre for International Child Health receives funding from AusAID through Compass: Women’s and Children’s Health Knowledge Hub.  Compass is a partnership between the Burnet Institute, Menzies School of Health Research and the Centre for International Child Health, University of Melbourne.

Reports regarding deep sea mining campaign in PNG released

 Sub Sea World News

During the past months several reports regarding the deep sea mining campaign in Papua New Guinea were released, Swakopmund Matters informed.
The campaign coordinator for the Australian-based organization “Deep Sea Mining”, Dr. Helen Rosenbaum, has authored a significant report on marine mining in Papua New Guinea’s coastal waters entitled “Out of our Depth – Mining the Ocean Floor in Papua New Guinea”.
In her well researched report she made the following conclusions:
• The mining company cannot be considered to have achieved a social license to operate until the information gaps on environmental and socio-economic impacts are filled and independently endorsed mitigation strategies are developed. In addition, due to the lack of good governance and accountability demonstrated to date, independent monitoring by a team of experts and civil society representatives should continue throughout the life of the project and any subsequent projects.
• Due to the high level of uncertainty associated with deep sea mining (DSM), it is not possible to predict the impacts of any individual DSM project, let alone the cumulative impacts of the many potential DSM projects.
• It is particularly of concern in national waters where governments do not have environmental regulatory systems specific to DSM, or the capacity to enforce regulations and conduct independent monitoring. In international waters, no authority is empowered to ensure the protection and conservation of the biological resources of the seabed.
Another significant report related to DSM in Papua New Guinea was released in November 2012, entitled “Physical Oceanographic Assessment of the Nautilus EIS for the Solwara 1 Project”.
It is authored by an oceanographic expert, Dr. John Luick who has over twenty years of experience in projects related to ocean monitoring, tidal analysis, and hydrodynamic modelling. He has numerous publications and technical reports as well as a wide experience in teaching, consulting, and shipboard observations. Most of his work has been in “marginal seas” similar to the Bismarck Sea, as well as in the deep Pacific Ocean and on the shallower waters of the continental shelf.
The report draws the attention because of the issued fact that “… much of the Environmental Impact Statement (EIS) is simply too general in nature to determine impacts, and many of the mitigations proposed rely upon Environmental Management Plans and procedures that have yet to be developed by Nautilus, and thus the effectiveness of these cannot be judged at present. It is likely that the project would result in severe, prolonged, and perhaps region-wide impacts to a globally rare and poorly understood biological community, and it is clear that the EIS does not adequately assess many of these impacts. Further, the benefits to local people or the economy of PNG seem disproportionately low compared to the scale and risk of the project”.
It added this significant declaration about the Report’s conclusions about the EIS:
“It seriously downplays the risks facing local communities and the marine environment. … The oceanographic aspects of the EIS suffer from a lack of ragout. There are many errors and omissions in the modeling, presentation and analysis of data”.
The Report reviews the oceanographic elements of the EIS for the project in PNG. Its focus is on currents and upwelling that may bring pollutants into contact with local populations and marine species. The risk is with the possibility of upwelling and currents carrying mine-derived metals towards the coastline.
The author of the report Dr. Luick said:
“The physical oceanography and hydrodynamic components of the EIS are second-rate. The shortcomings in these elements of the Solwara 1 EIS are so basic that I could have written the same review 27 years ago while still a student. The modeling is completely unacceptable by scientific standards. The People of PNG deserve better. They should be able to feel confident that the approvals process is open and based on the best available science.”
Dr. Helen Rosenbaum voiced this opinion:
“As such it demands extremely careful attention to scientific detail and transparency in decision making. This new report indicates that both of these elements have been lacking. Important next steps are to make available the full data set behind the EIS”.
In the Foreword to the report it is observed that
“The EIS should provide a clear and rigorous assessment of potential hazards and impacts. It should provide the groundwork for comprehensive risk analysis and the development of mitigation strategies. Most importantly the EIS should have provided a solid basis for the Government of PNG to decide whether to approve this project and if so, under what conditions. Tis review demonstrates that the EIS fails to provide solid ground for informed decision-making”.
In the Overview section of the Report it is stated:
“In summary, there are serious omissions and flaws in information presented in the EIS about surface currents, the speed and direction of currents at different depths, and about tides. These deficiencies mean that several important risks to the marine environment and to local communities cannot be determined. These include the risks of pollution from spills from vessels at the surface, leakage from the riser or discharge pipes, and of upwelling dispersing metals from the mining activity or from the discharge water. The implications of these risks – especially for the people of New Ireland and possibly also East New Britain Province – demands that a thorough and independently verified analysis of currents be conducted as a basis for a comprehensive risk assessment”.
Dr. Luick at the end of the Report concluded:
“The authors of the EIS had access to excellent physical oceanographic data sets and modeling capacity. The EIS should have presented a clear and comprehensive picture of the physical ocean environment as a basis for environmental risk assessment and management. It has failed to do so”.

PNG K2 billion into the red to pay for infrastructure

AAP

Papua New Guinea's treasurer has handed down a K14.55 billion ( $A6.8 billion) budget for 2013, plunging the developing nation more than K2.14 billion ($A1 billion) into the red in a bid to improve the country's failing infrastructure.

Don Polye yesterday announced increased spending for PNG's health, education, infrastructure and law and order sectors, as well as a plan to shift control of some state monies away from the nation's capital, Port Moresby, to provincial governments.

PNG's economy is expected to grow by four per cent over the next year, substantially slower than the 9.2 per cent growth in real gross domestic product (GDP) in 2012.

The deficit announced yesterday amounts to 7.2 per cent of PNG's GDP and is projected to decline to 5.9 per cent in 2014, before falling sharply to 1.6 per cent in 2017.

Mr Polye said the next budget surplus was expected in 2017.

Inflation, which dipped to four per cent year on year in 2012, is expected to climb to eight per cent in 2013, just under 2011 levels.

"The 2013 budget is set against assumptions of a modest acceleration of activity in the global economy in 2013 compared to 2012," Mr Polye told parliament.

"Real growth is expected to slow down ... before rebounding to 5.5 per cent in 2014.

"The slowdown in growth is largely due to the PNG Liquefied Natural Gas project having already reached its peak levels of investment."

Government debt is projected to peak at 74 per cent by 2017, while PNG's debt to GDP ratio will peak at 34.6 per cent in 2014 before dropping to 25.5 per cent by 2017.

The government will also spend K781.27 million ($A365.1 million), up from K683.86 million ($A310.23 million), on improving primary and secondary education, with the vast majority of that money going into boosting teacher's salaries.

Many of PNG's roads, including vital but heavily dilapidated links such as the Highlands Highway, can expect an upgrade and maintenance as well.

PNG's strained police force can also expect a pay rise and some new colleagues, with the government announcing 400 officers are to be hired a year for the next five years.

In a move labelled historic by Mr Polye, the national government will also relinquish some control of state money to give PNG's 22 provinces and districts K5 million ($A2,295,700) and K10 million ($A4,591,400) respectively.

Every province in PNG has one or more district.

"The O'Neill-Dion government believes key services can be better delivered by the parts of government that are closest to its people," Mr Polye said.

Institute of National Affairs director Paul Barker says the plan to hand money to the districts comes with considerable risks.

"It's a large amount of money going out to the local governments, but a lot of them don't have any professional skills," he told AAP.

"As someone in treasury said to me, the national government level has little capacity and the local level is worse.

"A lot of it could end up in Cairns real estate, so there should be some good parties there."

Mr Barker was referring to recent media reports that some PNG politicians and bureaucrats had made substantial property deals in Cairns with public monies.

Legends match boosts PNG NRL bid

By Richard Ewart of ABC

Photo: Veteran rugby league forward Petero Civoniceva was among the Australian Legends who took part in the Port Moresby clash (Dean Lewins: AAP, file photo)

Papua New Guinea's bid for a place in Australia's National Rugby League competition is gathering momentum, with a number of big names in the sport backing PNG's case following the Legends match at the weekend.

A team of former Kumul greats defeated an all-star Australian line up in the Port Moresby clash on Sunday.
The NRL recently said it would not be looking at any expansion of the competition until at least the end of 2014, instead looking to cement the strength and popularity of the current competition.
Brad Tassell, chief executive of the PNG NRL bid team, says several of the Australian players are keen to press Papua New Guinea's case for a place in the Queensland Cup in two years' time.
"It was a real eye-opener for a lot of those guys, as to not only the passion for NRL up here, but what the PNG NRL bid are doing to develop the game up here," he said.
"Guys such as Petero Civoniceva, who's taking up a role with the NRL...is a huge supporter.
"Scott Sattler, as well, it was his first time up here, and he was blown away by the passion and the support - and also by the friendliness and the welcoming attitude that the Papua New Guineans had towards him and the Australians.
"So those sorts of key guys are great to have as ambassadors for our cause."
Mr Tassel says he is confident a PNG side will be playing in the Queensland Cup in 2014, which would be major step on the road to the ultimate goal.
"We did have a full submission that was put forward to the QRL, and that included strong financial support, strong government support and a definite plan for how we wanted to manage entry of a PNG team into the Queensland Cup competition," he said.
"It was received really well, and we'll be having further follow-up discussions with the QRL over the next few months and really pushing and starting to get into place our plans to enter a team in 2014."
Mr Tassel says there's also been a positive response from some NRL clubs in the Queensland and the Australian competition to playing more games in front of a Papua New Guinean crowd.
He says South Sydney and the Broncos have had some discussions about sending teams for pre-season matches against a PNG side.
"Everyone believes that we can have a team from PNG in the future, but what we need to do is make sure that we have the right pathway to put ourselves in a position to be able to bid for a team in the future," he said.