New Zealand High Commission Port Moresby, Papua New Guinea

Opportunities for the New Zealand Engineering sector

The PNG LNG project

In late 2009 Papua New Guinea’s huge ExxonMobil-led LNG project was given the final go-ahead. There are two main phases: construction (2009-2013) and production (2014-2044). Information about the PNG LNG project, including timelines and contractors, is available at www.pnglng.com.

Five principal engineering, procurement and construction (EPC) contractors have been appointed. They are:

  • Chiyoda-JGC Joint Venture: LNG Plant
  • CBI Clough Joint venture: Hides Gas Plant
  • Spiecapag: for onshore pipelines and infrastructure
  • Saipem: offshore pipeline
  • McConnell Dowell - Consolidated Contractors Group Joint Venture: Komo Airfield

In addition to these are two additional principal contractors:

  • Clough-Curtain Brothers Joint Venture: Upstream infrastructure
  • Parsons & Curtain Brothers: LNG Plant Site Infrastructure

NZ companies interested in tracking tender opportunities offered by these principal contractors should make contact with these companies directly.

Under ExxonMobil’s agreements with the PNG Government, an important aspect of the Project is using and developing local suppliers. As a result many local companies are vying to participate and are receiving assistance through the PNGLNG Project Enterprise Centre, with which they must register. This register provides a good starting point for foreign companies looking to partner with a local company for the purposes of tendering for a sub-contract. The Enterprise Centre can be contacted at:

The wider energy sector

The PNG energy sector offers real opportunities to New Zealand companies, as PNG’s energy sources match New Zealand experience. There is substantial scope for strategic engagement in the sector in renewable energy and hydro in particular. There is some, but limited, scope for commercial engagement in geothermal.

PNG Power is a state-owned power generation and distribution company, whose shares are held in trust by the Independent Public Business Corporation, it was corporatised in 2002.

The CEO, Tony Koiri, has described the PNG energy sector as "very similar to New Zealand: primarily hydro-based and supported by some thermal". Currently power generation is about 60:40 hydro:thermal (diesel). Port Moresby's current demand is around 40MW on average, but in the summer it can peak at 92MW.

PNG Power currently faces a 10% per annum increase in demand and expects the same for the next six years. For the past 20 years demand has increased only 2-3% per annum. This unprecedented increase in demand is putting pressure on both generation capacity and on maintenance of existing plant. PNG Power's priorities, therefore are both on maintenance of existing plant and energy efficiency, as well as new developments. Future developments, for PNG Power, will focus almost solely on hydro plants. PNG Power has identified around 2000MW of hydro potential in PNG.

The next major development will be a hydro plant at Naoro Brown River about 40km out of Port Moresby. This green fields development is expected to take around four years from start to completion and is expected to generate around 40MW. PNG Power would welcome New Zealand companies engaging in this project.

In addition to major plant developments, PNG Power is also looking at how to expand its network to more rural areas. Again, PNG Power is looking at hydro as the best means of delivering power efficiently and cost-effectively in remote locations. There are good opportunities for companies to invest in the development of these smaller (3-4MW) hydro schemes at around PGK5 million per MW.

 

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