This week New Zealand’s Prime Minister Jacinda Ardern concluded her first bilateral with China’s two top leaders President Xi Jinping and Premier Li Keqiang and ended with clear signals the two countries are poised to build on the $30billion two-way trade relationship.

But there was more to this bilateral meeting than simply New Zealand – a comparatively small South Pacific economy – solidifying a progressive trade relationship with a global economic superpower. There were significant signals given by both state leaders involving multilateralism and a vision for a non-fossil-fuel future.

For more on this, listen to Radio New Zealand’s The Panel where Selwyn Manning joined Verity Johnson and Wallace Chapman to discuss the NZ-PRC bilateral (On fossil fuels + NZ-PRC’s Relationship )

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As Ardern said: “We also discussed our shared interest in strengthening the international rules-based order and on climate change, as an issue of global importance.” As such, both New Zealand and the People’s Republic of China indicated significant stances in foreign policy terms.

Firstly, the reference to “international rules-based order” appears a signal that New Zealand Government would support China in principle should it seek recourse through World Trade Organisation rules when countering any escalation of the United States/China trade war. The WTO, and other multilateral bodies such as the United Nations and the International Criminal Court, are central to New Zealand’s independent foreign policy. There’s consistency here. New Zealand simply cannot support the alternative, unilateralism, even when disestablishment threats against multilateral bodies are being pitched by New Zealand’s most significant security partner, the United States.

This is a diplomatic delicacy, a courageous statement, that Ardern was willing to deliver.

On numerous occasions this year United States’ President Donald Trump warned that his administration would abandon the WTO should it not reform and emerge with a trade-rules framework that embraces US trade interests. Trump’s threats also signalled how his Administration would track further toward isolationist-unilateralism should China object to any abuses to WTO rules and international trade law.

You can expect that the US Embassy was busy overnight filing its briefing to Washington DC.

Secondly, China included a gutsy clause in the NZ-China Joint Climate Change Statement that was issued by both Premier Li and Prime Minister Ardern after their meeting.

The PRC and NZ stated: “Both sides recognise the importance of the reform of fossil fuel subsidies, which will bring both economic and environmental benefits, thereby supporting their shared global commitment to sustainable development.”

The idea of abandoning fossil fuel subsidies was first advanced by Jacinda Ardern at her first APEC leaders’ summit shortly after becoming prime minister. There, at APEC, she argued on a panel consisting of herself and the vice chair of Exxon Mobil that fossil fuel subsidies ought to be abandoned – that governments should cease subsidising fossil fuel industries and channel their economies toward developing a future free of fossil fuel carbon emissions.

Clearly, the PRC heard her message and was ready to signal support for it as an ideal. This is a win for Ardern. It is also a respectful acknowledgement that the Asia Pacific’s economic superpower rates her as a significant leader on the global stage.

Additionally, the clause also indicates China – in a week where reliable PMI figures showed it in a very favourable space – that it is confident that its future lies less with the old technologies that assisted the development of today’s western economies and more with the new-tech solutions to global economic development.

The USA will be aware that this move signals that China sees itself as more advanced in the area of AI, machine learning, alternative energy transportation and development than its European and United States counterparts.

Ardern has demonstrated how important it is to meet with significant powers face to face. At such bilaterals, she can offer respect and determination while her counterparts observe her honest, trustworthy, progressive no-nonsense leadership in action.

New Zealand will be the beneficiary of this approach: Ardern said: “I also raised with President Xi the importance New Zealand places on upgrading and modernising our Free Trade Agreement with China – an ambition that he shared.”

Both states have agreed to progress our trade relationship well beyond the current record levels of two-way trade (currently at $30b per annum).

With Premier Li, Ardern said: “We discussed the FTA upgrade, and agreed to hold the next round of negotiations soon and to make joint efforts towards reaching an agreement as soon as possible.

“We also discussed China’s Belt and Road Initiative, noting that the Minister for Trade and Export Growth, David Parker, would lead a business delegation to the Belt and Road Forum in Beijing in April. This will help identify opportunities for mutually beneficial and transparent cooperation so we can complete a work plan as soon as possible.

“I reiterated to Premier Li that New Zealand welcomes all high quality foreign investment that will bring productive economic growth to our country.”

This latter point deserves some caution. China has expressed interest in furthering infrastructure investment within New Zealand – including investments that could be argued are contrary to New Zealand’s strategic interests, into the dairy and primary diversification sectors. While any New Zealand Government ought to proceed with caution here, if our diplomatic trade-negotiation team is buoyed by the country’s new leadership style, then perhaps mutual beneficial ventures can advance beyond a Joint Climate Change Statement.

PS: While in Beijing, the Prime Minister Jacinda Ardern also invited President Xi for a State visit to New Zealand as part of New Zealand’s hosting of APEC in 2021.

“On almost every measure of economic welfare, the PNG economy would have been better off without the PNG LNG project.”

Pacific Media Centre Newsdesk

Papua New Guinea’s massive PNG LNG project is one of “broken promises” that has largely failed the country, according to a major study released yesterday by Jubilee Australia.

Entitled Double or Nothing: The Broken Economic Promises of PNG LNG, this report, co-authored by Paul Flanagan and Dr Luke Fletcher, compares the projected economic benefits of the PNG LNG project with actual outcomes.

The new study uses PNG government data to examine the predictions of the 2008 project report commissioned by ExxonMobil and promoted by Oil Search.

This examination finds that the positive predictions for the PNG economy were largely incorrect.

Key findings:

• Despite predictions of a doubling in the size of the economy, the outcome was a gain of only 10 percent and all of this focused on the largely foreign-owned resource sector itself;
• Despite predictions of an 84 percent increase in household incomes, the outcome was a fall of 6 percent;
• ●Despite predictions of a 42 percent increase in employment, the outcome was a fall of 27 percent;
• ●Despite predictions of an 85 percent increase in government expenditure to support better education, health, law and order, and infrastructure, the outcome was a fall of 32 percent; and
• ●Despite predictions of a 58 percent increase in imports, the outcome was a fall of 73 percent.

-Partners-

30-year span
PNG LNG is an Exxon-led project which supplies about 8 million tonnes of LNG a year to Japan, South Korea and China.

It is projected to run for 30 years. In 2009, Australia’s Export Credit Agency, Efic lent A$500 million to Exxon, OilSearch, Santos and the government of PNG.

Efic’s decision was based on advice from the Department of Foreign Affairs and Trade (DFAT) provided to the then-Minister for Trade, Simon Crean, on advice from DFAT. This is the largest loan ever made by Efic.

Paul Flanagan writes in PNG Economics:

Specifically, growth in the resource sector has matched the confident predictions even with the fall in oil prices in 2014.

However, all other parts of the PNG economy have not done as well as predicted.

This is a major “broken promises” gap. This is the basis for the title of the latest report – the PNG LNG project promised to double GDP, but the outcome of 10 percent is close to nothing (especially when the size of PNG’s GDP is facing a major downgrade in the latest NSO 2015 update).

Revenues to the budget are only one-third of expected levels, and after allowing for project costs, will continue having a net negative impact on the budget (so below nothing) until around 2024.

Economy gone backwards
Of even greater concern, the examination finds that the PNG economy, apart from the resource sector, has actually gone backwards relative to its underlying growth path.

The most likely explanation for this sad outcome is PNG has slipped again into poor policies associated with the resource curse. The temptations of the rosy PNG LNG promises were too strong for politicians despite warnings from PNG Treasury, BPNG and outside academics.

During the O’Neill/Dion government, PNG descended into very damaging economic policies of a bloated budget and PNG’s largest deficits ever, fixing the exchange rate at an over-valued level, making foolish investments in areas such as Oil Search and harming the independence of PNG’s economic institutions.

With the focus being so strongly on getting the PNG LNG project operational, there was a lack of policy emphasis on other parts of the economy.

This is the “resource curse” gap.

Third time
PNG needs to learn the lessons from this experience. This is the third time that PNG has suffered from the resource curse:

• the first was with Bougainville Copper and the experience of the late 1980s;
• the second was the Kutubu/Porgera expectations that crashed so badly in the mid-90s;
• and the PNG LNG period is the third resource crisis.

The benefits of PNG’s resource wealth could in theory be tapped without damaging the rest of the economy.

But it would require very different choices by PNG’s politicians. PNG probably lacks the strong governance and institutions required to deal with the powerful resource sector lobby.

Even in Australia, the power of vested interests around the resource sector is blocking sensible options for sharing resource benefits more equitably and efficiently.

The Oil Search facility near Lake Kutubu in Hela province, Papua New Guinea’s Southern Highlands. Image: Damian Baker/Jubilee Australia

Article by AsiaPacificReport.nz

By Jeffrey Elapa in Port Moresby

More than 30 people are believed to have been killed in the massive 7.5 magnitude Papua New Guinean earthquake that hit Hela and Southern Highlands Provinces yesterday.

Provincial authorities say more than 300 mainly villagers have been injured and properties destroyed.

Although the communication network into the two provinces has been cut-off, reports through satellite by Hela Provincial Administrator William Bando said there had been unconfirmed reports of more than 30 deaths.

Sketchy reports indicated that more than 13 people have been reportedly killed in the Southern Highlands capital Mendi, while a further 18 people have also been reportedly killed in the most affected areas of Kutubu and Bosave.

The quake, reported widely by the world media, hit in the early hours at a relatively shallow depth of 25 kilometres.

Developers of the multi-million LNG project in Hela and Southern Highlands are preparing to evacuate non-essential staff because of this.

Bando said it was a severe natural disaster which had claimed the lives of many in the two provinces, creating sinkholes and landslides.

Flights cancelled
Electricity supply in the two provinces has been disrupted while flights have also been cancelled.

He said the Komo Airport was believed to have suffered damages to half of the runway.

Bando, who was to fly to Tari from Port Moresby, was also unable to leave because the airport was reportedly closed.

Unconfirmed reports from Mendi said that the earthquake was so powerful that people did not sleep, while there has been reports of landslides, landslips and sinkholes in several places and deaths.

The Department of Mineral Policy and Geohazard Management said the 7.5 magnitude earthquake was centered about 30km south of Tari and 40km northwest of Lake Kutubu, (in Bosave) Southern Highlands Province, at a depth of 25km.

It said that the earthquake occurred as a result of fault movements in the Papuan Fold and Thrust Belt, which runs parallel to the axial mountain range of PNG.

“There is potential for significant damage from this earthquake because of the large magnitude and shallow depth of the event. A number of aftershocks have occurred, and more are likely in the coming days,” department said.

“The largest of the aftershocks so far is M5.5. There is little possibility that this earthquake would have generated a tsunami.”

Series of aftershocks
Oil Search Limited, the developer of oil and gas developments in Hela and Southern Highlands, said in an email that the quake struck about 3.44am yesterday.

There had also been a series of aftershocks.

The company said its primary concern was the safety of its employees and contractors and that no injuries had been reported.

Oil Search said that as a precautionary measure and in order to assess any damage to facilities, its production operations in the PNG Highlands is in the process of being shutdown.

ExxonMobil PNG Ltd, the developer of the PNG LNG, also confirmed that the PNG LNG Project facility at Hides has also been safely shut down. It said that all its employees and contractors at its Hides facilities have been accounted for and are all safe.

“As a precaution, ExxonMobil PNG Limited has shut its Hides gas conditioning plant to assess any damages to its facilities,” the management said.

Meanwhile, Oil Search and ExxonMobil said they were also monitoring the impact on people in the local communities and would assist the relevant authorities, where possible.

Assessing damage
“We are continuing to assess damage to our facilities in Southern Highlands and Hela provinces. The Hides gas conditioning plant has been safely shut down and our wellpads have been shut in as a precaution until full assessments can be completed.

“Preliminary reports from the Hides Gas Conditioning Plant indicate the administration buildings, living quarters and the mess hall have sustained damage. Flights into the Komo airfield have also been suspended until we are able to survey the runway.

“The safety and security of our employees and contractors is top priority. Due to the damage to the Hides camp quarters and continuing aftershocks, ExxonMobil PNG is putting plans in place to evacuate non-essential staff.

“We are also concerned about the impact the earthquake is having on our nearby communities. Telephone communications have been impacted in the region, and we are working with aid agencies and our community partners to better understand damage in the local area,” ExxonMobil said in a statement.

The developers had a briefing with the department of Petroleum and Energy yesterday and big rivers like the Tagali and Hegego have been blocked and building up dams, threatening lives down stream in Kutubu and the Gulf Province.

The gas to electricity that powers Porgera gold mine is also said to be affected while the Ok Tedi mine has also reported to have been affected.

Infrastructure like roads and bridges have all been destroyed, cutting off traffic in the two provinces.

Disaster reports
However, National Disaster director Martin Mose said all reports on the overall damages should be ready by today when the government team flies in to access the situation, some 28 hours after the disaster.

Chief Secretary Isaac Lupari said the National Government has dispatched disaster assessment teams to parts of Southern Highlands and Hela following the earthquake.

“The National Disaster Centre is working with provincial authorities to assess any damage and impacts on service delivery in the area.

“The Papua New Guinea Defence Force has also been mobilised to assist with the assessment and the delivery of assistance to affected people, as well as the restoration of services and infrastructure.

“Information will be provided as this is made available from assessment teams in the area.

“As this assessment process is underway, it is important that people in the Southern Highlands and Hela be aware of the dangers of earthquake aftershocks. It is advisable to stay out of multi-story buildings, to be aware of the potential of landslides, and to be prepared to move to open ground in the event that an aftershock is felt,” Lupari said.

Jeffrey Elapa is a journalist with the PNG Post-Courier.

Article by AsiaPacificReport.nz

The majority of shareholders approve ExxonMobil Corporation’s takeover of InterOil in Papua New Guinea. Image: EMTV

Papua New Guinea’s InterOil shareholders agree to ExxonMobil acquisition; gender-based violence stakeholders condemn GBV deaths; and Sirinum Dam closure soon to affect Port Moresby residents are the headlines in the latest EMTV News.

InterOil Corporation announced that the majority of shareholders had “overwhelmingly approved” the acquisition of the company by ExxonMobil Corporation, LNG Industry reports.

The company claims that more than 91 percent of the votes were cast in favour of the proposed transaction.

The acquisition is worth kina 7 billion (about NZ$3.05 billion), reports EM TV.

On 21 September 2016, just 80 percent voted to approve the original transaction in a special meeting.

In the statement, InterOil claims that the court hearing in which InterOil is seeking a final order over the Amended and Restated Plan of Arrangement is currently scheduled for next week on February 20.

InterOil is an independent oil and gas business, which has a sole focus on Papua New Guinea.

The company’s assets include Elk-Antelope – one of Asia’s largest and undeveloped gas fields – in the Gulf Province, as well as exploration licences covering approximately 16,000 sq km.

The company’s main offices are in Port Moresby and Singapore.

InterOil Corporation