Papua New Guinea troops to protect huge Exxon-Mobil gas project

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John Braddock  | World Socialist Web Site | 19 December 2016

The Papua New Guinea (PNG) government announced on Friday that it will deploy military personnel to stop “violence” near the country’s biggest resources installation, the Exxon-Mobil Liquefied Natural Gas (LNG) project.

Troops will be sent to Hela Province in the highlands where the authorities claim dozens of people have died in tribal conflict in recent months. Prime Minister Peter O’Neill said the military call-out would last six months, beyond national elections due next year. The government is asking Exxon-Mobil and Oil Search—the two main companies involved in the LNG project—for “logistical support” for the operation.

O’Neill said the military would work with police to conduct security operations. He stated: “These problems have the potential to impact on the upcoming election as well as the operation of important projects in the area…. Police will have full powers to ensure law and order and to deal with people who seek to cause trouble.”

According to the PNG Post-Courier, the deployment will address the “continuous and sporadic tribal fights fueled by the use of heavy firearms.” Finance Minister James Marape, whose electorate is affected, had pushed for an official state of emergency to be declared. This would provide extended powers to the police and the military to suppress what Marape called the “gun-toting cowboys of Hela.” The declaration was not made only because of the time required for parliamentary approval.

The security and viability of the ExxonMobil operation is a key concern in Washington. In November 2010, then US Secretary of State Hillary Clinton visited PNG and noted that the US Export-Import Bank was helping finance the ExxonMobil project. Speaking to a Congressional committee in 2011, she declared: “Let’s put aside the moral, humanitarian, do-good side of what we believe in, and let’s just talk, you know, straight realpolitik. We are in a competition with China … ExxonMobil is producing it [natural gas]. China is in there every day in every way trying to figure out how it’s going to come in behind us, come in under us.”

Exxon-Mobil’s former chairman, Rex Tillerson, has been nominated as US secretary of state by President-elect Donald Trump. If ratified by the Senate, Tillerson would be directing Washington’s foreign policy, including in countries where ExxonMobil has commercial interests. O’Neill has welcomed Tillerson’s nomination, describing him as a “very good and genuine friend” of PNG.

The explosive situation in Hela Province points to deepening social tensions and anti-establishment sentiment as a result of the government’s sweeping austerity measures. In October, five Electoral Commission officials were attacked while on their way to replace an election manager in the Southern Highlands. Last month, two men were shot dead when the Hela provincial governor’s convoy, which included two members of parliament, was stopped by armed men. Police responded by burning houses and gardens in a purported attempt to flush out those responsible.

The National lamented in May that Hela had become a “troublesome province.” Its development and prosperity had “looked secured by the multi-billion kina LNG project.” Despite the money pouring into the district, the paper complained, not a week went by “without police reports of tribal fights, murders, sorcery-related killings and other lawless activities.”

None of the promised benefits from the LNG projects to improve ordinary people’s living standards has been realised. ExxonMobil invested heavily in PNG chiefly to profit from low labour and start-up costs. The company began shipping exports to Asian markets two years ago, delivering a boost to the country’s output. This year, however, the deepening global economic crisis has produced a precipitous drop in LNG prices to $US6.45 per million British thermal units (Btu) from a peak of $19.70 in 2014.

Traditional landowners are now threatening to physically attack the LNG plant over the government’s failure to pay promised royalties and equity in the project. The landowners are owed $1 billion kina ($A400 million) in royalties.

In August landowners blockaded the ExxonMobil plant in protest at the lack of payments, disrupting the flow of gas. The government deployed 60 police as the dispute threatened to erupt into another major crisis. This followed the violent suppression of an eight-week student strike calling for O’Neill’s resignation over corruption charges and a series of unofficial strikes by sections of workers.

The government finally promised to meet its outstanding financial commitments to the landowners, but is now claiming the money has been held up by court proceedings and delays in landowner identification. Australian National University student Michael Main, who is studying in the area, told ABC News that people are getting sick of waiting for the payments.

“There’s tremendous resentment and frustration directed almost exclusively towards politicians,” he said.

The landowners are also threatening to create “chaos” if the government does not honour another deal to give them equity. The government-owned company Kumul Petroleum Holdings has withdrawn an offer to finance the landowners’ purchase of 4.27 percent of the LNG project. The landowners need to find more than $US1 billion to buy the equity before their option expires at the end of 2016.

The turmoil in Hela is symptomatic of the country’s worsening economic and social crisis. The government’s 2017 budget, handed down in November, contained a 3.5 percent spending cut and a two-year pay freeze for public servants. Under new housing-benefits tax proposals, workers living in company-provided housing could lose more than half of their fortnightly salary from next year.

The assault on living standards has fuelled a series of struggles by students and sections of the working class, including doctors, nurses, pilots and dock workers. Two thousand health support workers voted overwhelming in November to strike for three weeks over pay and working conditions. Last week, bus drivers in Port Moresby struck over the death of a driver who was allegedly beaten by police officers. The ruling elite is relying on the trade unions to suppress this movement and shut down strikes.

O’Neill has responded to the escalating social disaster and emerging opposition with preparations for further repression. After a National Security Advisory Council meeting in July, a new National Security Joint Task Force, including police and military personnel, was established to “quell increasing internal security threats.” The deployment of troops to protect the ExxonMobil LNG site is another step in this agenda.

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10 Comments

Filed under Financial returns, Human rights, Papua New Guinea

10 responses to “Papua New Guinea troops to protect huge Exxon-Mobil gas project

  1. Kupeng Tanga Baram

    The current government has to play this game properly or cautiously because if it does not, things are heading another Bougainville way. Papua New Guinea has a good experience in this field of natural resource extraction industries and so the government has to play the game correctly otherwise.

    Mining laws has to somehow change in favour of the indigenous landowners to benefit them.Billions of kina and dollars have been pumped out of this country ever since inceptions of these various mining and petroleum companies. These have been so through illegal arrangements and policies safeguarding only the investors, leaving behind the landowners crying over the spill milk causd by the government and the investors.

  2. On 10 August 2016, PNG Industry News reported:
    Stand-off in Hela over royalties

    DISGRUNTLED landholders in Papua New Guinea’s Hela province have reportedly locked the gate at the Hides gas plant to protest over what they say is a failure by the government of Prime Minister Peter O’Neill to pay them what they say they are owed.

    The long-standing royalties grievances have regularly flared up since the start-up of the PNG LNG plant, which has now shipped more than 20 cargoes, but while the plant is operating even better than expected for operator ExxonMobil and its partners, including Oil Search and Santos, landholders say after seven years they are tired of waiting to see the benefits promised to them.

    Hela landholders have threatened to shut down the entire PNG LNG project over claims that the government has failed to share the wealth it promised from the Pacific region’s biggest single commercial development.

    A spokesperson for ExxonMobil this morning told PNG Industry News that the company’s facilities were continuing to operate.

    “ExxonMobil PNG is continuing to monitor the situation regarding the peaceful protest in Hela Province. We respect the right of individuals to peacefully protest, but we also encourage continued dialogue between landowners and the government to resolve their outstanding issues promptly. We are committed to maintaining a positive relationship with landowners, the government and the wider community,” the spokesperson said.

    PNG media reported that a delegation of landholders presented notice of their intentions to the project operator ExxonMobil at the Hides gas conditioning plant site.

    The landowners have given the government seven days to respond with outstanding royalty and equity payments or face a shutdown of the entire LNG operations.

    In the meantime, the gates to the Hides plant have been locked down by landowners, who chopped down trees to block access to the project site, Radio NZ reports.

    Locals have built a shell house and told ExxonMobil that the gate will not open until the PM arrives with the money they are owed.

    The landholders say they are armed and ready to confront PNG security forces, including the notorious flying squad.

    Police are reportedly deploying extra security personnel to the Hides area to protect the project sites.

    Energy Minister Nixon Duban has acknowledged the petition and landholder concerns, but asked landowners to refrain from doing anything to disrupt the process of the LNG project in the area, which is vital to the PNG economy.

    “I want to appeal to the landowners that we have a big investment here and we cannot derail any future prosperity,” Duban said.

    He admitted there are continuing issues that mean the royalty payments are being held back, because the Landowner Beneficiary Identification Program still needs to be completed to properly define all those who are in line for royalty payments, so there are no issues in the future for PNG LNG, its expansion or Papua LNG.

    Duban stressed that the proceeds of past sales are not been squandered by the government, but have been safety parked in the Central Bank, along with $55.7 million in development levies.

    Landholders expect to see around $6 billion over the life of the project.

    The PNG government said an advance team from the Department of Petroleum and Energy will be heading out to Hela today to talk to protesting landowners.

    Dubin is expected to travel to Hela tomorrow to try to help quell thoughts of rebellion.

    Last October local chiefs warned of a Bougainville-style uprising if the traditional owners don’t start seeing some of the income from the nation’s first LNG project, and they then warned they were prepared to “turn off the taps” of the $US19 billion project.

    At the time the PNG government blocked a delegation of lawyers arriving in PNG to help negotiate an end to the stand-off, which centres around a 2009 deal that has turned increasingly sour for local tribesmen in the mountainous Hela province, where the majority of the gas is sourced.

    The tribes are already concerned by the impact of the project, but were prepared to tolerate wellpads, pipelines and facilities for a chance at a better life.

    Six years ago some 6000 tribal leaders negotiated a 7% stake in the project plus royalties and grants – 2.8% would be paid up front and the remaining 4.2% when the gas was flowing.

    ExxonMobil, Oil Search and the PNG government have all received profits, but the locals say they are missing out.
    =====
    On 11 August 2016, Papua New Guinea Prime Minister Peter O’Neill told Parliament $1 billion kina ($A400 million) owed to landowners in Hela Province will be paid, but no timeframe was given.
    =====
    Then on 16 December 2016, Prime Minister Peter O’Neill deployed the PNG Defence Forces to the Hela Province because landowners in the province were threatening to attack Exxon-Mobil’s PNG LNG project due to ongoing complaints about royalties and equity.
    The companies Exxon Mobil and Oil Search have beem asked for logistical support.

    http://www.pngindustrynews.net/pngindustrynews/news/1111390/stand-off-in-hela-over-royalties

  3. Pingback: Papua New Guinea troops to protect huge Exxon-Mobil gas project — Papua New Guinea Mine Watch | Indiĝenaj Inteligenteco

  4. Pingback: Papua New Guinea troops to protect huge Exxon-Mobil gas project — Papua New Guinea Mine Watch | The Modern [AfroIndio] Times

  5. More importanly, right now, is to find out if our friends who have the right to protest the injustices of not receiving their equity or royalities are safe knowing that the PNG Government with logistical support from Exxon Mobil have deployed the PNG Defence Force troops.

  6. Pingback: Papua New Guinea gets a dose of the resource curse as ExxonMobil's natural gas project foments unrest | Wikipedia Editors

  7. Pingback: ExxonMobil’s natural gas project foments unrest in Papua New Guinea | Papua New Guinea Mine Watch

  8. Pingback: PNG gets a dose of resource curse as ExxonMobil's gas project foments unrest - Australia news,World News, Politics, Economics, Entertainment,Sport,Business & Finance | Australia news,World News, Politics, Economics, Entertainment,Sport,Business &

  9. john

    PNG got got resource but the government and exxon mobil benefit not the land owners this is the reality people say this and that real truth exxon dont care and the government dont care exxon is just sucking the blood till its runs out then it moves to the next place they care as long as they are making money and thats the truth

  10. john

    i believe the only way to go is to take this matter to the trial on the international court they are miss leading the land owners and the government so corrupted that it miss lead its own people.we are under commonwealth and and who benefit the corrupted government and the exxon it we papuan living of common weaith agreement and now every body is using papuan system

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