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IEEJ:August 2016

JICA ENERGYPOLICY (B)TRAINING
PROGRAM:PAPUA NEWGUINEA
COUNTRYREPORT.

Presented by: Mr Marlcom
Negints(Senior Project Coordinator,Department of Petroleum andEnergy)
Date:

27th June 2016

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Outline:
1.0
2.0
3.0
4.0
5.0

General information
Current Energy Policy and Measures
Energy Demand and Supply
Statistics
Major Difficulties and Bottlenecks
faced in formulating Energy Policies
Conclusion

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1.0 General Information

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1.1 Geography
 PNG is a small island nation that has over 850

different languages and cultures with an estimatedpopulation of over 7 million people.
 The total land area of its mainland and 600 smaller
islands is approximately 463, 000 square kilometres
which is rich in biodiversity and hosts one of the top
ten largest rainforests in the world behind Congoand South America.
 It is the largest Pacific nation that shares its landmass to Indonesia which is located to the west.
Papua New Guineans are categorised as
Melanesians in the Pacific region.

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1.2 Independence

 PNG was a protectorate of the British Empire called

British New Guinea in 1888 and was then placed
under the authority of the Commonwealth ofAustralia in 1902.
 PNG became self-governing on December 1973
and then went on to gain its independence on
September 16th 1975.
 The first Prime Minister was Sir Michael Somare who
still is an active Member of Parliament today.

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1.3 Constitution
 PNG is a constitutional monarch where the Head ofState is Queen Elizabeth II represented by thecountry’s governor general.
 The government has three tiers; the national,provincial and local-level which represents thelegislative branch of the government. The judicial
branch consists of the supreme, national andvillage courts.
 The executive arm of the government is theNational Executive Council (NEC) or cabinet whichis recommended by the prime minister andappointed by the governor general.

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1.4 Customary Law

 Traditional and customary law is still prevalent. , theland tenure system is deeply reflected by thetraditional customary laws
 Over 90 per cent of land is customary landcommunally owned by a community or group ofindividuals. Because of this fact, the land tenuresystem is not fixed; there is always a constantrearrangement of power, authority and evenboundaries of land within a customary group or
between its neighbours.
 Land can be subject to ownership and user rightdisputes. The issue of landownership of customaryland is one of the leading issues prevalent in thePetroleum and Energy Industry.

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1.5 Economy
 While PNG’s economic growth has been strong

over the past decade, the benefits of this growth
have not been equitably distributed.
 A lack of quality infrastructure, insecurity, weakgovernance, low education levels and poor healthservices constrain service delivery and economic
development.
 More than 2 million people—or an estimated 40 per
cent of PNG’s population—live in poverty. Life
expectancy is only 62 years. Over half of all
pregnant women give birth without the help oftrained health workers. One in five children are
not enrolled in school. (dfat.gov.au)

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2.0 Current Energy Policies andMeasures.

Currently there are numerous Energy Policies used by various
government institutions in Papua New Guinea. These are a list of
the majority of them: Vision 2050 (2010-2015) Long Term Development Strategy (2010-2030) – finallyrecognizes and captures energy as a government policy fordevelopment.
 Petroleum Policy (and Regulation) – DPE Petroleum Division Draft Electricity Industry Policy National Energy Policy Rural Electrification Policy Draft Geothermal Energy Resources Policy Policy on Renewable Energies
 Gas Commercialization Policy Landowner Management Policy Electricity Industry Policy (Dec 2011) – 70% access by 2030

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2.1 Medium TermDevelopment Strategy

 The country’s Medium Term Development

Strategy (MTDS) 2005–2010 recognizes energy andpower as critical ingredients for development andpoverty reduction. The strategy invites thegovernment to assist the disadvantaged to “liftthemselves out of poverty by improving basicservices, such as water and electricity.” The MTDS
places high priority for government spending on
non-revenue-generating infrastructure, such asroads and education, without making anyfinancing provisions for electrification, the private
sector having been expected to invest in thenecessary power infrastructure requirements fordevelopment. Unfortunately, progress has beenslow, and this has not yet occurred.

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2.2 Medium Term
Development Plan On October 2010, the Papua New Guinea

Government announced its Medium Term
Development Plan (MTDP) 2011–2015.
 The MTDP 2011–2015 will focus on increasing accessto electricity for all households in the country. New
investment from the private sector in solar
technology is also expected. Comprehensiveanalysis is required into the cost effectiveness ofvarious alternative sources of power.

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2.3 Department of Petroleumand Energy The Energy Division

is responsible for energy policies
and plans, data collection and analysis, andadvice to the government on energy sector issues.
In practice, it concentrates on electric power,
although PNG Power, the national electricity utility,
undertakes the majority power sector planning. TheDPE itself reports that extremely limited resources
have seriously hampered data collection andanalysis.
 The Petroleum Division of the DPE is responsible foroil and natural gas exploration and development.

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 Over the past years, three policy drafts, including

Draft Energy Policy, Draft Electricity Industry Policy(EIP) and Draft Rural Electrification Policy, havebeen circulated within the ED-DPE and discussedwith the Government and concerned stakeholders.
 PNG endorsed their National Electric Industry Policyin December 2011, and the Energy Department isthe custodian of Energy Technical Regulation,
which includes energy efficiency and conservation.

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3.0 Energy Demand andSupply Statistics
PNG LNG PROJECT FIRST SHIPMENT MAY2014

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3.1 Oil and Gas
 Papua New Guinea’s proven hydrocarbon reservesconsist primarily of natural gas (14 tcf of probablegas reserves), followed by oil (0.660 billion barrels)
and gas condensates (0.262 billion barrels). The
inclusion of inferred, mean-risk reserves would
increase oil reserves by an additional 1 billion
barrels, and natural gas by more than 283 bcm(PNG CMP, 2012).
 Oil development started in 1991 with crude oilproduction at the Kutubu fields. Production at theKutubu fields peaked in 1993, but has been
declining. The fields are projected to be depleted
by 2026 (DNPM, 2010a).

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 In 2005, Papua New Guinea’s first oil refinery started

production, sourcing crude oil from both local oil
fields and imports. In 2008, 5.8 million barrels ofcrude oil were processed (DNPM, 2010a). The
capacity of the existing refinery, with expansion,
could reach 9 million barrels by 2035.
 PNG LNG Project will produce 9tcf of gas over 30years with a capacity of 6.9 million tonnes per year.
 PNG is a net energy exporter and does not importenergy products.

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3.2 Geothermal Energy The Geothermal Energy Association estimates

PNG’s geothermal potential at 21.92 terawatthours; the association also categorizes the country
as an economy that could, in theory, meet all its
electricity needs well into the future fromgeothermal sources alone. Installed geothermal
capacity in 2010 was 56 MW.
(http://aperc.ieej.or.jp/) APEC Energy Demand andSupply Outlook – 5th EditionIEEJ：August 2016 © IEEJ2016

3.3 Hydropower
 PNG has significant hydroelectric potential. Its landarea includes nine large hydrological drainage
divisions (basins). The largest river basins are the Serpik(with catchment area of 78,000 sq km), Fly (61,000 sqkm), Purari (33,670 sq km), and Markham (12,000 sqkm). There are other catchments of less than 5,000 sqkm, in areas that are very steep.
 The gross theoretical hydropower potential for PNG is
175 TWh per year. There is little economic potential forthe expansion of large hydro, due to the lack of
substantive demand near supply sources. However,greater potential exists for developing smaller hydroschemes. (http://aperc.ieej.or.jp/) APEC Energy
Demand and Supply Outlook – 5th EditionIEEJ：August 2016 © IEEJ2016

3.4 Wind Energy There have been no systematic estimates of windenergy potential since the 1970s, when the best
potentials were assessed in portions of Central,
Western, Milne Bay and New Ireland provinces, andthe Port Moresby area.
 A pilot wind energy project is being installed in theDuke of York islands, jointly funded by the Papua
New Guinean and Chinese governments.
(http://aperc.ieej.or.jp/) APEC Energy Demand andSupply Outlook – 5th EditionIEEJ：August 2016 © IEEJ2016

3.5 Solar Energy Solar energy is among the largest potential sources

in PNG. Average insolation in much of the country is
400–800 W/m2, with 4.5 to 8 sunshine hours a day.
Of 23 locations assessed, Port Moresby has thelargest resource, with 2,478 sunshine hours per year.
The lowest is Tambul, Western Highlands, with 1,292
hours.
 As of 2008, no electricity-producing installations
were present in the country, although a solar homesystems project for schools is in place, with help
from the Sustainable Energy Financing Project fromthe World Bank/GEF.
(http://aperc.ieej.or.jp/) APEC Energy Demand andSupply Outlook – 5th EditionIEEJ：August 2016 © IEEJ2016

3.6 Biomass
 Although two thirds of PNG are covered with forest,

much of it is inaccessible or unsuited for energy use.
58% of land is subject to strong or severe erosion,and 18% is permanently inundated or regularlyflooded. The main practical biomass energy
potential is in areas such as logging and agricultural
production, using either the crop output or residues.
Log exports are roughly 2 million m3 per year, butvery little is processed locally, leaving only small
amounts of biomass for energy production.
(http://aperc.ieej.or.jp/) APEC Energy Demandand Supply Outlook – 5th EditionIEEJ：August 2016 © IEEJ2016

3. 7 Summary Papua New Guinea will become a major LNG exporter

with the start-up of LNG export projects after 2014.
 Papua New Guinea’s total primary energy supply isprojected to increase from 2.2 Mtoe in 2010 to 6.7 Mtoein 2035; fuel gas for LNG liquefaction accounts for asignificant portion of this increase.
 Papua New Guinea may shift from a net oil exporter to anet oil importer after 2020 unless new reserves of oil arefound.
 Papua New Guinea has a significant hydroelectric andgeothermal potential. The government plans to either
build or upgrade 800 MW of hydro electricity and over
500 MW of geothermal generating capacity within thenext 10–15 years to provide a reliable and affordable
electricity supply

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Generation Resource 2010-2030

GDP and Population1990-2035

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4.0 Major Difficulties andBottlenecks faced informulating Energy Policies

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4.1List of Challenges
 Lack of clear implementation plan to realize goalsof strategy documents.
 Lack of funds
 Institutional Capacity and lack of Training Uniform retail tariff is not cost reflective of PNG’scurrent economic situation
 Stakeholder attitude eg. compensation demands,vandalism Management Support
 Disarray in sector policy management / duplicationof roles, functions and responsibilities.
 Lack of comprehensive data

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5.0 Conclusion The JICA Energy Policy (B) Training Program will help

in formulating much needed Policy requirements tocater for the growing Energy Industry in PNG.

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ARIGATO GOZAIMASU
Any Questions?

Contact : report@tky.ieej.or.jp