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Evaluating a country’s “golden goose”

An analyst meets with tribal leaders and evaluates a natural gas “golden goose.”

Traveling to a new country requires a certain amount of daring, especially when a traveler is instructed “don't go anywhere without being escorted by the local host” and “make sure you get immunized.” This is how the phone call from the International SOS team went before Piyada left. She describes her feelings before her trip to Papua New Guinea as “excited but somewhat nervous.”

As an analyst, Piyada used to cover Chinese small-cap companies. However, last year Piyada began covering a new sector: Asia-Pacific energy. Piyada evaluated a new LNG (liquefied natural gas) project in Papua New Guinea that cost nearly $20 billion USD. The revenue is projected to more than double the country’s GDP and triple the export revenue once it starts up. However, Papua New Guinea is a country with hundreds of tribes and where violence could spring up quickly.

Piyada describes the experience as “surreal.” The local host took her and a group of senior investment professionals to see the progress of the project, which included a liquefaction plant, a 250-mile on-shore pipeline traversing mountainous terrain, and well-drilling pads and a gas treatment plant literally on top of the mountain. “I came to really appreciate the excitement and challenges of projects of this scale. It involved tens of thousands of workers, a new landing strip for cargo flights to move heavy equipment, and hundreds of landowners negotiating for land access.”

Piyada’s favorite part was the last day when they visited three tribal leaders of the local community. Because they share revenue from the project, they’ve been supportive partners. They instructed their people to treat the oil and gas wells and facilities like their “golden goose.” Piyada’s group also observed a Corporate Social Responsibility (CSR) activity, which is a local center for AIDS patients and their families, and listened to what help the community needs once the gas and money start flowing.

Piyada’s group prepares to observe the progress of the pipeline construction, gas plant and drilling progress of the LNG project in the highlands of Papua New Guinea. Front row left is Piyada. Other Capital Group associates in the photo are investment professionals Corrina Lim, Noriko Chen and Michael Thawley.
At the community AIDS center, one of the CSR projects, the children of the AIDS patients were waiting to welcome Piyada and her group.
The locals welcome their visitors with a traditional dance near the Kutubu oil and gas field.

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