Eric Watkins
Oil Diplomacy Editor
US Sec. of State Hillary Clinton offered the nation's help to Papua New Guinea in creating a sovereign wealth fund to manage its coming resource revenues and avoid the so-called "resource curse."
"There is a phrase 'resource curse' where countries with an abundance of natural resources like oil and gas or gold or minerals, if they are not handled right can actually (make) a country poorer instead of richer," Clinton said in PNG's capital city of Port Moresby.
Clinton's visit to PNG was part of a 2-week tour of the Asia-Pacific, and was described by the State Department as a means of underlining Washington's relationship with a region "where we have significant and growing interests."
"There's been enormous petro-finds—natural gas and the like," said Kurt Campbell, Clinton's top diplomat for Asia, referring to PNG's $16 billion LNG project.
Led by ExxonMobil Corp., PNG LNG is considered likely to double the country's gross domestic product with at least 30 years of gas sales to Asian buyers once it comes online after 2014. PNG LNG's buyers include Chinese Petroleum Corp., Osaka Gas Co. Ltd., Tokyo Electric Power Co. Inc., and Unipec Asia Co. Ltd., a subsidiary of China Petroleum & Chemical Corp. (Sinopec).
Clinton said the US wanted to provide PNG whatever help it could, including assistance with the creation of a sovereign wealth fund to help the country manage its expected energy revenues from the project.
"We know that Papua New Guinea wants to do this right and we want to provide whatever technical assistance and help that they would need," said Clinton, adding, "We want to help you manage these new revenues wisely."
Clinton's remarks echoed concerns of a World Bank report that stated PNG must ensure "that the benefits of these natural resource projects should more materially and broadly accrue to the larger population." Earlier this year, watchdog group Transparency International rated PNG as one of the 20 most corrupt nations in the world and one of the three most corrupt in the Asia-Pacific region.
Meanwhile, Clinton added that the resource industry also has a responsibility to tackling climate change, saying, "PNG represents both the promise and the peril, more energy resources but more threat from climate change."
On her visit, Clinton said the US, ExxonMobil, and local groups would set up a mentoring program "aimed at ending the culture of violence" against women and girls in PNG, ranked by Australia's AusAID as 123rd out of 136 nations for violence against women.
The $15 billion PNG LNG development includes gas production and processing facilities in the Southern Highlands and Western provinces. The project partners expect to produce and sell more than 9 tcf of gas over the life of the development.
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