Taiwan pulls the plug on PNG ties, putting LNG trade in the spotlight

Papua New Guinea is facing a new economic and diplomatic fallout after Taiwan announced it will close its representative office in Port Moresby and stop buying PNG liquefied natural gas.

Taipei said it will withdraw all personnel, end its bilateral aid and cooperation programmes and halt new LNG spot contracts after PNG renewed its demand for the Taipei Economic Office to shut down.

The move follows PNG's decision to enforce its one-China policy, under which it does not recognise Taiwan as a separate state.

The Taipei mission had operated in Port Moresby since 1990.

Taiwan's Ministry of Foreign Affairs said the decision was made after a review of the relationship and was needed to protect its national interests.

"In consideration of national dignity, diplomatic autonomy, and overall national interests, and following a comprehensive assessment, the ROC (Taiwan) government has made the decision to close the office, withdraw all stationed personnel, and conduct a full review and adjustment of bilateral ties."

Papua New Guinea's LNG trade is facing a potential hit after Taiwan announced it would stop making new spot purchases, having historically accounted for about one-third of PNG's LNG exports. Photo/energyproducers.au

The economic impact could be significant for PNG. Taiwan has historically accounted for about one-third of PNG's LNG exports, and Taipei said it had been planning to buy about 500,000 tonnes of spot LNG in the first half of 2026.

Taiwan said it would now stop making new spot purchases and warned the decision would affect PNG's gas exports and foreign exchange earnings. It also said its own energy supply would not be affected because it could source LNG elsewhere.

The diplomatic dispute has also put Taiwan's long-running development support for PNG at risk. Taipei said it was ending technical cooperation, agricultural and fisheries assistance, medical missions and scholarship programmes.

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"Taiwan has consistently provided concrete support to Papua New Guinea over the years in areas including the economy, agriculture, healthcare, and talent development, significantly contributing to the wellbeing of its people and its national development."

Washington has backed Taiwan and criticised PNG's decision.

"The United States is deeply concerned by reports that Papua New Guinea has unilaterally ordered the closure of the Taipei Economic Office and the departure of its personnel," the US State Department said.

It said Taiwan was a "reliable, like-minded democratic partner" and warned that the move could undermine countries' ability to build their own relationships with Taiwan.

Beijing, however, welcomed PNG's decision and offered to deepen its economic relationship with Port Moresby.

"The decision by the government of Papua New Guinea to close the 'Taipei Economic Office' in Papua New Guinea once again shows that upholding the one-China principle is where international public opinion trends and the arc of history bends," a Chinese government statement said.

China has welcomed Papua New Guinea's decision and says it is ready to increase LNG imports from PNG and deepen economic and trade ties. Photo/Supplied

China also said it was ready to increase LNG imports from PNG and expand trade and economic cooperation.

The diplomatic shift comes after PNG Foreign Minister Justin Tkatchenko announced in July that the government had ordered the immediate closure of Taiwan's representative office.

At the time, PNG said: "The physical presence of Chinese Taipei will no longer be recognised or required within the jurisdiction of Papua New Guinea."

Taiwan had continued operating its mission despite that announcement, but the renewed deadline has now forced its withdrawal.

For PNG's government, the immediate question is what replaces the economic and development links being cut by Taipei and how quickly Beijing can step into the space being left behind.