Despite sitting on oil reserves of 132 million barrels, the country's oil production has slipped from 149,000 barrels per day in early nineties to around 60,000 bopd currently.

"The oil industry is not going to be able to sustain itself if new discoveries are not made," the official said. "The future of our industry is gloomy and unpredictable.

"We're looking at taking the taxes down from 50% to 30-35%. This is one of the main things companies are looking for from the government."

PNG will be looking to the proposed $3.5 billion PNG-Queensland pipeline to help develop the estimated 15 trillion cubic feet of gas the country has in reserves. The PNG Gas project is aiming for gas flow in 2006 and is hoping to secure a supply contract for the proposed gas-fired power station in Townsville. A decision by the Queensland government is expected later this month.