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"Papua New Guinea is richly endowed with gold, copper, oil, natural gas, and other minerals. In 2001 mineral production accounted for 25% of GDP. This will inevitably decline as old discoveries are mined out. Years of sluggish exploration mean that few new deposits will be open in the coming years. However, recent regulatory and tax reform have led to a resumption of exploration which may boost the sector in the out years. Government revenues and foreign exchange earning have depended depend heavily on mineral exports. Indigenous landowners in areas affected by minerals projects also receive royalties from those operations. Copper and gold mines are currently in production at Progera, Ok Tedi, Misima, and Lihir. A consortium led by Mobil/Exxon hopes to begin the commercialization of the country's estimated 22.5 trillion cubic feet of natural gas reserves through the construction of a gas pipeline from Papua New Guinea to Queensland, Australia, however, the project has been stalled until major customers make purchase commitments. Interoil, an American firm, opened PNG’s first oil refinery in 2004. It will produce 30,000 barrels of product a day, covering all of PNG’s domestic requirements and leaving 15,000 b/d for export."

"With the 2003 withdrawal of Chevron/Texaco, Australian companies are the most active in developing Papua New Guinea's mining and petroleum sectors. Exxon/Mobil retains a major share of natural gas reserves and is interested in building a pipeline to Australia. Interoil, an American firm backed by an OPIC loan, operates a 30,000-barrel a day refinery in Port Moresby."

"After years of decline and government deficit, PNG was bolstered in 2003/2004 by a general rise in commodity prices and by government steps toward spending control. The economy grew modestly and the government deficit fell from 8% of GDP to 1.7%. However, the commodity boom will be temporary and the nation continues to have serious problems of corruption, a lack of law and order, land tenure concerns stifling investment, political interference in businesses, and a lack of political will to adapt needed sweeping reforms. Mining output and oil production have led a general decline in output of the modern economy though some see long term hope in a resumption of exploration after recent regulatory reform."

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"The Papua and New Guinea Act of 1949 formally approved the placing of New Guinea under the international trusteeship system and confirmed the administrative union of New Guinea and Papua under the title of "The Territory of Papua and New Guinea." The act provided for a Legislative Council (established in 1951), a judicial organization, a public service, and a system of local government. A House of Assembly replaced the Legislative Council in 1963, and the first House of Assembly opened on June 8, 1964. In 1972, the name of the territory was changed to Papua New Guinea.

Elections in 1972 resulted in the formation of a ministry headed by Chief Minister Michael Somare, who pledged to lead the country to self-government and then to independence. Papua New Guinea became self-governing in December 1973 and achieved independence on September 16, 1975. The 1977 national elections confirmed Michael Somare as Prime Minister at the head of a coalition led by the Pangu Party. However, his government lost a vote of confidence in 1980 and was replaced by a new cabinet headed by Sir Julius Chan as Prime Minister. The 1982 elections increased Pangu's plurality, and parliament again chose Somare as Prime Minister. In November 1985, the Somare government lost a vote of no confidence, and the parliamentary majority elected Paias Wingti, at the head of a five-party coalition, as Prime Minister. A coalition, headed by Wingti, was victorious in very close elections in July 1987. In July 1988, a no-confidence vote toppled Wingti and brought to power Rabbie Namaliu, who a few weeks earlier had replaced Somare as leader of the Pangu Party.

Such reversals of fortune and a revolving-door succession of Prime Ministers continue to characterize Papua New Guinea's national politics. A plethora of political parties, coalition governments, shifting party loyalties and motions of no confidence in the leadership all lend an air of instability to political proceedings. <b>For the first 27 years of independence, a "first past the post" electoral system resulted in many parliamentarians elected with less than 15 percent of their constituency</b>. Fractious politics and a 75% loss rate for incumbents precluded the development of strong political parties or a stable national leadership. <b>Many hope that limited preferential voting, introduced in 2003, and an organic law on political parties will stabilize national politics.</b>"