LNG investment in Papua New Guinea . . .
Papua New Guinea (PNG) will receive the first funding from a trilateral infrastructure investment partnership between Australia, Japan, and the U.S. The partnership, which will focus on the Indo-Pacific region, was formalized in November 2018. The PNG investment will be about US$1B over two to three years to develop a liquefied natural gas (LNG) project. Additional financing for related infrastructure needs such as power plants and communications networks is also possible.
A response to China’s BRI . . .
This trilateral partnership is a way to compete with China’s Belt and Road Initiative (BRI), whose recent projects in Oceania include port development in Vanuatu, defence co-operation with Fiji, and cable projects in the Solomon Islands. In an effort to curb Beijing’s economic leverage in the region, the U.S. is beefing up its investment mechanisms for emerging markets. For example, a new U.S. agency, the International Development Finance Cooperation, will have a budget of US$60B, twice as much as the agency it’s replacing.
More investment to come . . .
China spends an estimated US$40 billion per year on infrastructure development in countries, especially emerging economies, around the world. The U.S, Japan, and Australia are concerned about Beijing’s wider reach and growing influence in Oceania. The investment in Papua New Guinea’s LNG project is their first effort to offset this influence. Given the size of China’s loans and investment, however, more infrastructure from the U.S.-Japan-Australia initiative is likely to be forthcoming.
- Nikkei Asian Review: Japan, US and Australia begin own 'Belt and Road' in South Pacific
- The Australian Financial Review: US report: China 'debt trap' on Australia's doorstep
- Global Construction Review: Australia, Japan and U.S. to tackle Chinese influence with $1bn LNG plant in Papua New Guinea