An expected economic boom has not eventuated from Papua New Guinea's liquid natural gas project, which attracted a half billion dollar Australian government loan, a new report claims.
The ExxonMobil-led project supplies eight million tonnes of gas a year to Japan, South Korea and China.
Australia's export credit agency Efic made its largest-ever loan of $500 million to ExxonMobil, OilSearch, Santos and the PNG government in 2009.
A new research report by Jubilee Australia slammed the joint venture's inflated projections of growth.
"The people of PNG would have been better off had the project not happened at all," report co-author Paul Flanagan said.
Among the report's findings:
* Despite predictions of a doubling in the size of the economy, the outcome was a gain of only 10 per cent, and all of this focused on the largely foreign-owned resource sector.
* Despite predictions of an 84 per cent increase in household incomes, the outcome was a fall of six per cent.
* Despite predictions of a 42 per cent increase in employment, the outcome was a fall of 27 per cent.
* The project is having a negative impact on the PNG government's budget of at least 200 million Kina ($81 million) in 2016 and that won't change until 2024.
ExxonMobil defended the project saying it had contributed $5.69 billion to local businesses and the government through employment tax, royalties etc.
"Good governance, accountability and revenue transparency are critical to ensuring that the value unlocked from gas resources in PNG results in economic growth, increased opportunities and a better standard of living for Papua New Guineans," a spokeswoman said.
Mr Flanagan, a former Australian Treasury official, and Jubilee Australia executive director Luke Fletcher called for greater transparency of Efic's decisions.
The report acknowledged the project had been a remarkable technical success and produced higher levels of export gains than expected.
However, there were serious flaws in the original economic analysis and an overly generous tax deal.
PNG Prime Minister Peter O'Neill has repeatedly blamed his struggling government coffers on fallen commodity prices.
Dr Fletcher said Exxon and Oil Search should have been paying half a billion dollars to the PNG government every year, since the gas started to flow in 2014.
"Instead, they are paying a fraction of this amount, partly because of their use of tax havens in the Netherlands and the Bahamas," he said.
The pair pointed out that Jubilee Australia had raised concerns about the economic non-viability of the project and dangerous risks of social conflict in an open letter to then Trade Minister Simon Crean in 2009, two months before the loan decision was made.
The organisation had warned the PNG LNG project would not likely lead to poverty-reducing growth in PNG.
PNG is recovering from February's deadly 7.5 magnitude earthquake in the highlands.
The gas project is expected to return to full capacity next month following the earthquake-enforced shutdown.
The second train at the plant near Port Moresby is now operational and exports have resumed.
ExxonMobil said 82 per cent of the 2600 staff were Papua New Guinean and 22 per cent were women.
The government's distribution of royalties and benefits to landowners began in 2017 and more payments to landholders will start once the landowner identification process is finalised.
Comment has been sought from Efic.
Australian Associated Press