Taiwan to stop buying PNG gas on spot market over 'One China' spat

Taiwan has suspended some liquefied natural gas (LNG) purchases from Papua New Guinea as part of an escalating diplomatic dispute over the future of its representative office in Port Moresby.But it has backed down from a threat to tear up a major gas contract with the Pacific nation.PNG's Foreign Minister Justin Tkatchenko drew a furious response from Taipei earlier this month when he announced PNG would immediately shut Taiwan's de-facto embassy in "recognition" of his country's One China policy.China has publicly celebrated the decision, with Foreign Minister Wang Yi declaring it could set a model for other nations, stirring anxieties in Taipei that other countries could follow suit, undermining its informal diplomatic network around the world.Taiwan lodged a formal diplomatic protest in the wake of the announcement, saying the decision was made unilaterally, that Taipei would not accept it, and that its officials would stay at their post.It also vowed to revise its gas contracts with PNG in response, including a long-term contract until 2030 to import 1.2 million tonnes of LNG every year.Taiwan has not touched that contract but yesterday a senior official from its foreign ministry announced it would suspend separate spot purchases on the open market.It said that amounted to about 500,000 tonnes of LNG every six months.Under current market rates, the sum appears to be worth about $800 million, although analysts say it could be worth more given volatility in gas markets. But Graeme Smith from the Australian National University said he did not think the move would have a major financial impact on PNG, because it was likely to find other sellers quickly, partly because of the energy shocks caused by the Iran war and the chaos in the Strait of Hormuz."Because of what Trump is doing in Iran it's a bit of a sellers market for LNG so I don't think PNG will be too worried," he said."But it's essentially a way for Taiwan to make the statement that it's not happy."The Australian government has not commented publicly on the case, with multiple ministers saying last week that it was not for Canberra to weigh in on the sovereign decisions made by PNG.But one Australian government source told the ABC that Taiwan was clearly trying to "remind" PNG that it remained an important trading partner, and to signal that it was not willing to accept the decision.Taiwan has also threatened to review or cut its development programs in Papua New Guinea, although the Ministry of Foreign Affairs said yesterday said it was not yet taking that step.Taiwan's official representatives have remained in PNG since the dispute broke out, and Papua New Guinea's government has not yet made any attempt to force them out.Professor Smith said the "irony" was that PNG's decision to close the office was "in some ways, not really about Taiwan"."It's about PNG sending a signal to China that despite its quite close security agreements with both Australia and the United States, that it still wants to be China's friend," he said."And Taiwan has been caught in the crossfire."The ABC has contacted PNG's Department of Foreign Affairs for comment.