Wild Papua New Guinea: Tavurvur volcano spewing ash.

In two separate news stories this week, two very different images emerged of Papua New Guinea and its lure for oil and gas majors.

The first reminds us that the tiny Asia Pacific country is still plagued by political weakness and instability, as well as local hostility. The second highlights Papua New Guinea’s new image as a burgeoning global gas hub, ripe for LNG exports.

“Despite the abundant resource wealth and increasing foreign investment, PNG continues to face high levels of poverty, which have fuelled local grievances towards projects in the extractive industries,” global risk researcher Maplecroft said in a profile published in mid-March.

“Social resentment over the lack of investment by the government at a local level risks business, particularly extractive projects, becoming a target for violence and criminality,” it added.

Similarly, Standard & Poor’s lowered Papua New Guinea’s long-term sovereign credit rating from stable to negative in January, because of “weakened political settings” following a short-lived battle between two would-be prime ministers in December.

Buoying those descriptions, the Papua New Guinea government sent troops into the Southern Highlands on Thursday to quiet landowner protests near the site of ExxonMobil’s $15.7 billion PNG LNG project. Work at the site has been suspended for weeks as landowners are demanding additional compensation.

Even more telling, perhaps, is what did not happen this week. InterOil has not announced a final investment decision (FID) for its Gulf LNG project, the country’s second proposed export facility.

The Texan company had aimed to announce it by December 2011, but the constitutional crisis scuppered those plans. It then pushed the target date to 31 March. While InterOil did not return Interfax’s call on Thursday, an investment bank analyst who covers the company said the government is to blame for the delay.

“The hold up right now is they have not yet received final government approval,” said Pavel Molchanov of Raymond James. “If the timing of the project was purely in InterOil’s control, I’m sure they would have reached FID by now.”

But the delays, protests and troops do not appear to be deterring the big players. The same day the troops charged into the Exxon site, China National Offshore Oil Corp. stepped into Papua New Guinea with the acquisition of a 70% stake in three petroleum prospecting licences.

This came just weeks after Exxon and its PNG LNG partner, Oil Search, expanded their already sizeable Papua New Guinea assets, buying a prospecting licence for $15 million. Just a few weeks before that, Mitsubishi agreed to pay $280 million for stakes in nine of Talisman’s prospecting and retention licences, which could be developed into a third LNG project.

After all, for the majors, Papua New Guinea is no riskier than many other resource-rich hubs, argued Molchanov. “Oil and gas companies have been going into dangerous countries for a long time; it’s certainly not like Iraq.”