LOWER oil and gas prices are the biggest risk to future investment in Papua New Guinea, petroleum and energy minister Ben Micah has told a business luncheon in Perth.

Speaking at a leadership lunch on the sidelines of the 18th International Conference and Exhibition on liquefied natural gas (LNG 18), Mr Micah said prices were a challenge for the nation.

“The big challenge for us comes from our great neighbour to the south. If they are able to be more competitive than us in production costs then the buyers will choose them rather than us,” he said.

“I think it is still a buyer’s market and we are vulnerable to that, plus competition from Australia.”

However, the responsible fiscal regime the nation had introduced, alongside concessional tax processes and concessions for materials during the construction phase of contracts played a role in encouraging investment, he said.

“Our proximity to markets, our competitive labour costs and our experience in economics and investment takeup of some of the big companies that are in PNG… that in itself is a sign of confidence in potential LNG development in PNG,” he said.