Goodbye Baniu! Taiwan no longer tolerates the closure of the embassy and cuts aid. Can the lifeline of 38 billion exports to Taiwan be saved?

Papua New Guinea (PNG) is pro-China and suppresses Taiwan. On the 6th, our Ministry of Foreign Affairs announced that it would proactively close its embassy and stop purchasing Papua New Guinea liquefied natural gas (LNG) spot and signing new spot contracts. This diplomatic dispute also affects the huge economic and trade interests of both sides. According to the import and export statistics of the Ministry of Economic Affairs, Taiwan's imports from Papua New Guinea in 2025 will be approximately US$1.158 billion (approximately NT$38 billion); the import volume in the first nine months of 2026 will also reach US$982 million (approximately NT$32.2 billion). With Taiwan halting LNG spot purchases, whether PNG can maintain its export scale to Taiwan has attracted much attention.

Taiwan and Papua New Guinea have been experiencing a long-term trade deficit. Statistics from the Ministry of Economic Affairs show that in 2025, Taiwan’s imports from PNG will be approximately US$1.158 billion (approximately NT$37.982 billion), while exports to PNG will only be approximately US$38 million (approximately NT$1.246 billion), with a trade deficit of US$1.12 billion (approximately NT$36.73 billion). 600 million); in the first nine months of 2026, Taiwan’s imports from PNG reached US$982 million (approximately NT$32.21 billion), while exports to PNG were only approximately US$23 million (approximately NT$754 million), with a deficit of US$959 million (approximately NT$31.455 billion). From the perspective of bilateral trade structure, Taiwan is an important export market for Papua New Guinea.

Natural gas is the key to bilateral economic and trade exchanges. The Ministry of Economic Affairs announced in July this year that CNPC will import approximately 1.82 million metric tons of liquefied natural gas (LNG) from PNG in 2025, accounting for approximately 8% of CNPC’s annual natural gas imports. PNG is CNPC’s fourth largest natural gas supplier. The Ministry of Foreign Affairs pointed out on November 6 that Taiwan’s purchases account for approximately one-third of Papua New Guinea’s total LNG exports, highlighting the importance of the Taiwan market to Papua New Guinea’s energy exports.

The Ministry of Foreign Affairs stated on the 6th that Taiwan has stopped purchasing PNG LNG through the spot market. The original planned spot purchase volume in the first half of 2026 is about 500,000 metric tons, and no new spot purchase contracts will be signed in the future. The Ministry of Foreign Affairs assesses that this move will have a substantial impact on PNG’s natural gas exports and foreign exchange earnings.

However, the cessation of spot purchases does not mean a complete interruption of natural gas transactions between the two parties. Minister of Economic Affairs Gong Mingxin previously stated that spot procurement has the flexibility to adjust, but existing long-term supply contracts involve contractual obligations and must still be fulfilled as much as possible. The Ministry of Foreign Affairs’ latest statement did not announce the cancellation of the long-term contract. Therefore, how much PNG’s exports to Taiwan will be reduced remains to be seen later.

As for Taiwan's energy supply, the Ministry of Foreign Affairs emphasized that the country has completed the assessment of natural gas supply and demand and adjusted the procurement allocation, and has found alternative gas sources to ensure stable gas supply and will not be affected by the suspension of purchases of Papua New Guinea spot natural gas.

For PNG, Taiwan’s import scale of nearly 38 billion yuan last year reflects the importance of the Taiwan market. Now that Taiwan has stopped placing new LNG spot orders, whether PNG can successfully find alternative buyers and maintain natural gas export revenue will become the most noteworthy economic issue in the aftermath of this diplomatic dispute.