Opinion: falling LNG revenues require a new strategy for the Papua New Guinea economy

[seabedmining]

this could have influence on the next 5% pieces - but how get money from other resources (solwara instead of lng) without investments? - difficult to say what happen...

http://www.businessadvantagepng.com/opin...a-economy/

[observer]

this could have influence on the next 5% pieces - but how get money from other resources (solwara instead of lng) without investments? - difficult to say what happen...

http://www.businessadvantagepng.com/opin...a-economy/

Investors need to face up to the real possibility that PNG will say "no thanks", in fact such a twist would not at all be untypical of the project.

[maui4marko]

Investors need to face up to the real possibility that PNG will say "no thanks", in fact such a twist would not at all be untypical of the project.

True statement.  If PNG chooses not to opt in, Nautilus will not receive ~120M for another 15%.  Which means they will have to raise more capital to get to production, but it also means they will keep the additional 15% revenue stream of $300M for themselves (us).

So what's the math on the PNG payback?

As discussed in the Growing on instinct: Mohammed Al Barwani thread, the Sol1 value at today's metals prices is worth approximately $2B.  PNG's current 15% share, for which they paid $120M, would come to $300M.  For every dollar they paid in, they get 2.5 back.  Granted they have to wait for a few more years to get it, but 2.5x your investment in 3 years time is a damn good investment in my book.  Equally so for the next 15%.  If PNG doesn't want it, then I say let's keep it for ourselves.  Add it to the dividends we'll be receiving in a few short years.

In terms of investing in seabed mining vs. LNG, they are like apples and oranges.  For starters, LNG is an order magnitude larger in terms of investment and payback.  Both take decades to deliver.  Seabed mining is portable, LNG is fixed.  However extended it is, the Nautilus timeline is still years shorter than the next PNG Gulf LNG project (2018 vs 2022) and will cost an order of magnitude less.  PNG could make a "measly" few hundred million while they are waiting for Gulf LNG.