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O’Neill’s lies show he still wants to get his tentacles on $1.4 billion

War of Words Over PNG SDP Gets Even Hotter

Mekere Morauta | April 25, 2019

The Member for Moresby North-West, Sir Mekere Morauta, said today that Peter O’Neill’s statement that BHP Billiton and I created PNGSDP as a private company with four shareholders, one of whom is me, is a deliberate lie manufactured by a man desperately trying to repair his public face following the comprehensive win by PNGSDP in the Singapore Supreme Court.

“Peter O’Neill also lied to the Singapore Court, through the State’s affidavit, saying he had a document giving the State the power to control PNGSDP,” Sir Mekere said. “He failed to produce the document as evidence to the Court, and the court decision exposed him as the liar he is 

“Why did he not produce such a document? Because no such document exists. He made it up, hoping this would convince the Singapore Court.”

“Why is he still lying? Because he wants to get his tentacles on the $1.4 billion in PNGSDP’s Long Term Fund.”

PNGSDP was established by the State of Papua New Guinea, BHP Billiton and Inmet, the shareholders of Ok Tedi Mining Ltd in 2000, to hold the BHP shareholding (then 52%) gifted by BHP.

The object of PNGSDP was to invest two-thirds of the future dividend flows from the shares into a Long Term Fund to be used after mine closure for sustainable development in Western Province. One-third of the dividend income was spent on development projects throughout the country, including Western Province.

PNGSDP was established as a not-for-profit company, limited by guarantee. It has no shareholders. In such company structures, used by charities, NGOs, sporting groups and other similar organisations, shareholders are replaced by members. I am a member of PNGSDP, not a shareholder.

Members do not derive any benefit from a limited guarantee company, as shareholders would from a limited liability company. The Program Rules, set jointly by the Government of PNG and BHP, prescribe that the benefits from PNGSDP flow only to PNG and Western Province.

Singapore documents purportedly showing I am a shareholder are pro-forma documents that do not provide for companies limited by guarantee. They do not provide for members instead of shareholders, as happens in many jurisdictions.

“The statement that I am a shareholder of PNGSDP is a naked, diabolical lie,” Sir Mekere said.

“Increasingly, it seems that the Prime Minister is fabricating stories to cover his own misdeeds. If he actually believes his own lies, we should all be worrying about not only his level of intelligence, but also his sanity.

“The man is not fit to be Papua New Guinea’s Prime Minister.

 “Peter O’Neill’s ceaseless attacks on PNGSDP and on me are due to his failure to gain access to the Long Term Fund – which is what he wants, desperately.

 “He was not satisfied with the extremely valuable shareholding PNGSDP had in Ok Tedi, which he expropriated in 2013. He also wants the Long Term Fund, which now stands at over $1.4 billion. He wants the lot.

 “I want to assure the people of Western Province that their money in the Long Term Fund is safe, and will continue to be safe, whilst it is managed by an independent PNGSDP. 

“It was my instruction to the advisory team when PNGSDP was established that the company was to be protected from political influence – from the tentacles of octopuses.

“The Singapore Court decision proved the independence of PNGSDP. I am proud that I led the fight and won it for the people of Western Province.”

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O’Neill Loses in High Stakes Battle for Control of US$1.4b PNGSDP

Papua New Guinea state fails to wrest control of US$1.4b stake in PNGSDP

K.C. Vijayan | The Straits Times | 5 April, 2019

The government of Papua New Guinea (PNG) has lost its protracted battle in the Singapore High Court to wrest control of an entity with assets worth about US$1.4 billion (S$1.8 billion) that were spawned from a deal inked with the “largest mining company in the world”.

Justice Vinodh Coomaraswamy has ruled in favour of PNG Sustainable Development Program (PNGSDP) company, saying the state of PNG had failed to prove it had a deal with PNGSDP’s co-founder BHP Minerals Holdings, for joint control to develop PNGSDP assets.

It also failed to prove that there was a charitable trust that allowed the state to intervene.

“I have found that neither the agreement nor the trust exists. The pleaded breaches of the agreement and the trust must correspondingly fail,” Justice Vinodh said in decision grounds on Tuesday.

The outcome means PNGSDP is free to carry out its objectives under the control of its independent board according to the 2001 contractual framework, without interference from the state.

Justice Vinodh, in his 149-page judgment, addressed each of the arguments made as he explained why the state had failed in its bid to wrest control of PNGSDP from its independent board.

“I acknowledge I found the state’s narrative compelling and its logic attractive. But the essential problem… is that this narrative stands alone and is unsupported by the evidence,” he said.

The court examined each key plank of the state’s case and found in addition that none of the state’s witnesses pointed to the existence of a partly oral agreement, much less to the terms of that agreement.

The court found that in the context of a “sovereign nation” and “the largest mining company in the world”, it was likely that the parties would have entered into written contracts “definitively and exhaustively setting out the precise terms actually agreed, instead of exposing their minds to the vagaries of memory and ambiguity inherent in a partly oral agreement”.

The high-stakes court battle involved law heavyweights on both sides. Defending PNGSDP was a team led by Senior Counsel Philip Jeyaretnam from Dentons Rodyk & Davidson while WongPartnership’s Senior Counsel Alvin Yeo led the team representing the PNG government.

PNGSDP was incorporated in Singapore in 2001 with two shareholders: the state of PNG and BHP Minerals Holdings and was meant to enable BHP to divest its shares in mining company Ok Tedi Mining to PNGSDP.

Both parties intended PNGSDP to hold BHP’s shares in Ok Tedi Mining and apply the derived income to promote sustainable development in PNG.

BHP owned 52 per cent and the state 20 per cent of the mine, which was rich in gold and copper and highly profitable.

The judge noted there were several reasons PNGSDP was incorporated in Singapore and these include its robust corporate governance regime.

In 2012 and 2013, PNGSDP made material changes to its corporate governance framework which diluted the state’s powers of control and oversight over the company.

The PNG government sued to reverse the changes.

It argued, among other things, that it would not have agreed to form PNGSDP if the company was free to cast off the state’s rights of control and oversight.

PNGSDP countered that the structure of the parties’ written agreement left no scope for such a critical aspect of PNGSDP’s corporate governance framework to be left “entirely undocumented in that suite of contracts and to be the subject of an oral agreement”.

It added that the common intention in PNGSDP’s formation was to eventually make it a self-run and self-perpetuating organisation and the changes made in 2012 and 2013 were the next step in effecting the common intention.

Justice Vinodh said the dispute is “about corporate governance of PNGSDP”.

He added: “For all the reasons set out, I hold the state fails entirely in its claim against PNGSDP. It is not entitled to the relief sought.”

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Govt, BHP blamed for damage to Fly River

The Fly River is a “dead river” according to the World Bank

The National aka The Loggers Times | January 31, 2019

THE Government and BHP should be equally responsible for the damage to the Fly River as the result of the Ok Tedi mine, a former mining minister says.

Former mining minister and South Bougainville MP Sam Akotai thanked Minister for Environment and Conservation John Pundari for tabling a bill in respect to environment population.

He said the Act would put Ok Tedi on par with all the environment protection laws and practices with other mines operating in the country.

Akotai said the Act would also give confidence to other mines that the Government was not biased with its operations and conducts in respect to the environmental issues in Ok Tedi.

Akotai said he had experience in the industry for well over 18 years and was qualified to make such statements while Ok Tedi mine brought a lot of revenue for the country.

He said the developer, BHP Ltd, owned the mine but it was in partnership with the government and while there was a lot of talks on the damage in Western, both BHP and the national government needed to be squarely responsible for the damage.

He said damage done to the Fly River and its inhabitants was irreplaceable, with the river being described as a “dead river”.

“It is one of the biggest damages ever, and many times we are happy to receive revenues but we have a population who are faced with the situation where the river is already dead,” he said.

“A World Bank report says Fly River is a dead river. After the mine closes, the people of Western living along the Fly River will face the problem for more than 200 years.

“However, the good news was that the new Act would at least control the operation of the mine and the deposit of the waste of the mine.”

Akotai said waste from the Porgera gold mine in Enga was also washed down to the Strickland River which eventually connects the Fly River that added more to the level of damage.

“That is why I’m sorry for our citizens living along the Fly River in Western,” he said.

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Thirty-four years of mining but Western still behind others in development: Yoto

A mother and her malnourished child, Bimadbn Village, Morehead, Western Province, Papua New Guinea. Photo: Penny Johnson

Thirty-four years of mining at the giant Ok Tedi mine but the people of Western Province are still waiting to see the promised benefits

The National aka The Loggers Times | January 28, 2019

Western Governor Taboi Awi Yoto says his province still lags behind other provinces in terms of development, despite 34 years of Ok Tedi mining operations.

Yoto said this when he presented its K308 million 2019 appropriation budget to Treasurer Charles Abel in Port Moresby on Thursday.

“There are no major road networks to connect rural areas to urban areas,” he said.

“My people are still walking long distances, paddling along rivers and swamps to reach the nearest service centres to get medical treatment, attend schools or sell their products at the local market.”

Yoto said the Western Province Development Strategy (2018-22) focused on healthy and educated people with food on the table and income in their pockets.

The Western appropriation budget of K308,050,800 expects K210,831,100 million from National Government grant allocation.

Yoto said the provincial government, through its internal revenue collection, was expected to collect about K97,219,700.

Provincial headquarters will get K171,049,100, South Fly K41,993,900, Middle Fly K49,435, 900, and North Fly K45,571,900.

“The criteria for budget allocation was based on current development and service delivery issues and challenges that confront the lives of over 211,000 people living in rural areas and urban centres across Western,” Yoto said.

Enabling infrastructure got the biggest slice of the budget with K50,764,100 (31 per cent) allocated.

This was followed by education with K36,691,400 (22 per cent)

The health sector was allocated K29,607,000 (18 per cent) while governance sector was allocated K23,372,200 million (14 per cent).

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BHP Billiton facing £5bn lawsuit from Brazilian victims of dam disaster

Ruined homes in the small town of Bento Rodrigues, Brazil after the disaster. Photograph: Felipe Dana/AP

Action launched in Liverpool against Anglo-Australian mining company after 2015 tragedy that killed 19 people

Jonathan Watts | The Guardian | 6 November 2018 

The worst environmental disaster in Brazil’s history has triggered one of the biggest legal claims ever filed in a British court.

The Anglo-Australian mining company BHP Billiton is being sued for about £5bn by Brazilian victims of the Samarco dam collapse in Mariana three years ago.

The class action case was filed in the Liverpool high court on Monday by the UK-based SPG Law on behalf of 240,000 individuals, 24 municipal governments, 11,000 businesses, a Catholic archdiocese and the Krenak indigenous community.

Nineteen people died after toxic waters from the failed tailings dam surged through the village of Bento Rodrigues on 5 November 2015. The sludge destroyed hundreds of homes, devastated fisheries, contaminated forests and left hundreds of thousands of dwellers along the Doce River without drinking water.

It emerged that the company had accurately predicted the risks in a worst-case assessment made six months earlier. Prosecutors charged senior executives of the dam operator Samarco Mineração with homicide and accused its parent companies – Vale and BHP Billiton – of environment damage.

A civil case has been filed in Brazilian courts, but the plaintiffs believe they have more chance to get fair and speedy compensation in Britain than in their home country, where courts can take more than a decade to reach a judgement and compensation offers are far short of the damages incurred.

Lawyers in the UK say that, in certain cases, they will seek 10 to 20 times the damages being offered to individuals in Brazil. For example, individuals who lost their water supply for two weeks have been offered £200 in Brazil whereas £2,000 to £4000 will be claimed in the UK. Fishermen who have only been offered £20,000 each to cover the losses associated with three years’ worth of catches will be seeking 20 years’ worth of future losses based on the slow pace of river recovery. Local governments will demand lost tax revenues and compensation for increased health and unemployment costs.

If jurisdiction in the UK is accepted, the lawsuit is likely to raise the international profile of the case. The first hearing would be next summer and the case could last two to five years. Representatives from the affected communities will be called to testify in Liverpool along with expert witnesses, including Brazilian lawyer Érica Gorga.

Tom Goodhead of the Anglo-American SPG Law firm said many of the plaintiffs suffered catastrophic losses yet received almost no compensation after three years in contravention of Brazilian law which says full damages should be paid and the environment be completely restored after an accident.

“Brazil’s courts are cripplingly slow,” he said. “The main purpose of filing this case in the UK is to move at greater speed and to seek a greater amount. People have been let down by the politicians and the courts. We tell them there is no guarantee of winning, but we will put up a proper fight on their behalf.”

The law firm will work on a no-win no-fee basis, taking a maximum of 30% of any compensation they are able to secure for the plaintiffs. This will not be levied in the case of the indigenous community. SPG Law has already spent £1.5m on the case and estimates future costs of £18m, according to Goodhead.

BHP Billiton has yet to respond to a request for a comment, but in previous statements to the Guardian, Samarco, Vale and BHP Billiton said they rejected the charges, that safety had been and remained a priority and that the dam complied with Brazilian legislation. The companies have said they would defend their employees and executives.

Separately from the civil action in Brazil, the three companies made a deal with the federal and state governments in March 2016 to carry out repair, restoration and reconstruction programmes. They have spent more than $1bn on a huge clean-up and relief operation, separate from civil actions launched by prosecutors.

Samarco has paid about $6.7m in fines levied separately by the state government of Minas Gerais. BHP has also announced that it is working on restoring the affected area through a charitable foundation.

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When the dam breaks: European Banks investing over €100 billion in dirty extractive companies.

Timika, in the eastern province of Papua, Indonesia September 19, 2015. Bild: © REUTERS/Muhammad Adimaja/Antara Foto

The Dirty Profits 6 report released by Facing Finance highlights the investments of ten european banks in ten extractive companies which continually violate human rights and damage the environment.

Facing Finance | 10. May 2018

Minerals and metals are an integral part of our daily lives, from smartphones to toothpaste, but the global extractives industry is also heavily involved in some of the worst labour, environmental and human rights violations, particularly in countries of the South. The industry also has a substantial impact on climate change, particularly those companies involved in the extraction of coal, oil, or in risky practices such as Arctic drilling. In fact, just 7 of the 10 companies shown are responsible for almost 8% of global GHG emissions. 

Some of the violations in this report, by the ten extractive companies (companies include for example Barrick Gold, Grupo Mexico, Eni and Gazprom), variously cover contamination of land, water and air; silencing community activists using violence, threats and intimidation; labour violations and forced labour; and failure to provide the remedy communities deserve.

While banks increasingly claim to be improving their ESG policies, and that they pay attention to incidents and violations by companies, the report shows that almost a third of all capital provision (€32 billion) by the ten banks was to the very worst category of companies – those with poor human rights policies, a lack of commitment to international standards, severe violations and an unwillingness to engage on these issues. Over the seven-year period the two UK banks (HSBC and Barclays) provided nearly €9 billion to this category. The largest provision of capital to all the companies, was by BNP Paribas, Barclays and Crédit Agricole, with DZ Bank and Rabobank providing the least.

“The Dirty Profits 6 report shows that most banks, particularly those that made the most capital available, are not taking strong enough action to ensure that the mining and extractive companies they invest in respect human rights and environmental concerns”  Lesley Burdock, Facing Finance

An example of one of the cases covered in the report is that of the company Samarco Mineração (jointly owned by Vale and BHP), responsible for the worst environmental catastrophe in Brazil when its tailings dam broke in 2015, killing 19 people, destroying entire villages and damaging around 2,200 hectares of land and 650 km of river. It has become increasingly clear that this was a preventable tragedy and that the tailings dam was poorly managed.  Danilo Chammas of the International Network of People affected by Vale notes

“Besides being negligent in taking all necessary measures to avoid the dam’s collapse, Samarco, Vale and BHP Billiton have also not taken the required responsibility with regard to reparatory measures for the victims. We have been following up on the company for many years, so for us this does not come as a surprise,  given the company’s bad record of human rights violations and damage to the environment, as well as its usual lack of ability to deal with those affected by its operations.” BNP Paribas and HSBC were two banks which provided direct capital totalling €537 million to Samarco Mineração in the years leading up to the incident. These banks omitted to take action through their due diligence processes to ensure stronger standards of management and thus to prevent the tragedy. The companies Vale and BHP over the seven year period were also provided with capital of over €5 billion and €20 billion respectively- predominantly by HSBC and Barclays.

Facing Finance expects banks to take responsibility for human rights and environmental concerns in their decision making. In particular by improving transparency and making public all relevant information related to engagement; by defining the line between engagement and exclusion of companies; and by taking a proactive approach to identifying non-compliant companies.

Banks claim to use engagement with companies as a tool to identify and mitigate human rights violations and to validate their investments, but most banks provide no public information on this process. Without this information the public cannot know what banks have done to meet their ethical obligations.”  Thomas Kuchenmeister, Facing Finance.

Dirty Profits 6 download

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Papua New Guinea’s resource curse

Armed clan near Komo, Hela Province, Papua New Guinea. Photo by Michael Main

Disaster strikes the nation’s massive gas project

Jo Chandler | The Monthly | May 2018

Brisbane, February 17, 2010. A clutch of ExxonMobil executives gathers for a briefing from Papua New Guinea specialists: a geographer, an epidemiologist and an agronomist. All academics at the Australian National University, they’ve clocked up decades of fieldwork in the remote highlands. They’ve assembled some slides that they hope will give the overseers of ExxonMobil’s $US19 billion liquefied natural gas project, PNG LNG, insight into the lives of the people whose resource they are preparing to pump out of the country’s hinterland and ship to markets across Asia.

The specialists’ pitch is a hard-headed evaluation of looming risk. And it is pointedly plain-spoken, assuming little, if any, knowledge of Papua New Guinea’s geography, history or staggeringly complex cultures.

The good news, they say, is that local people, and the provincial and national governments, want the project.

And the bad news? Expectations are perilously high. The desire for PNG LNG is founded on the belief that it will bring not only wealth to landowners in its footprint but also desperately needed services, roads, power, jobs and economic growth to the region. Health care for most locals is a long walk to an aid post that in all likelihood has no health worker or medicines. Child mortality rates are almost 40 times what they are in Australia, and markedly worse than elsewhere within the nation. Education levels are woeful – 64 per cent of men and 77 per cent of women living around the gas source have no formal education.

The PNG LNG operation will be dropping into a landscape in which the state barely casts a shadow. Violence is rife, and police and justice elusive. Tribal conflict, deeply rooted, has waxed and waned over the years in what is today called Hela Province. Now anxieties and rivalries are flaring around who will and won’t benefit from the gas mother lode, the experts say, with the potential to escalate to blockades, sabotage and armed resistance. Colleagues have been warning about the stockpile of heavy weapons in the highlands for years.

While numerous promised works were built into the benefits-sharing agreements wrangled with landowner representatives a year earlier, these PNG specialists in Brisbane urge ExxonMobil to invest deeply in education, health, livelihoods, infrastructure, security and monitoring. They point to the junior project partner, PNG veteran Oil Search, which has long-established health programs that are highly valued by local people – why not piggyback on those relationships?

Next slide. “Contexts: other large resource projects.”

There’s the Porgera goldmine (“Police attack migrants and locals, burn houses, shoot people – company accused of breaches of human rights”) and Ramu Nickel (“Chinese company ignored local social and employment conditions – Riots … Mine closed temporarily”). And then there’s Ok Tedi, which in the ’80s became shorthand for BHP’s international shame after a monumental environmental disaster when a tailings dam collapsed.

At the top of the list is Bougainville, a shattering and multilayered episode distilled thus: “Second generation unhappy with benefits … [Bougainville Copper Limited] said it was the PNG Government’s responsibility to fix … Power supply sabotaged / PNG Defence Force soldiers attacked civilians … Years of civil war result [in] permanent closure of mine and high death rate.”

The PNG LNG operation, however, is touted as a game changer, the biggest resources project in the Asia­-Pacific, with capacity to double GDP. The Australian government has backed it with a $US350 million investment. Compared to the mines in the slideshow, its environmental footprint is light.

But PNG LNG will sit in one of the most culturally fascinating and incendiary landscapes imaginable. The Huli people of Hela Province, keepers of the gas flame, have forever seen themselves at the centre of the universe. For better or worse, the implications of this project – regionally, economically, geopolitically – are seismic.

The last slide is titled “The beginning, not the end”. A small Huli boy is juxtaposed with a barefoot youth crouched by a roadside and nursing a high-powered automatic rifle. “I will be 18 years old in 2022,” says the caption. “And if I have not been educated and I am still a subsistence farmer living in relative poverty, I am going to be really angry! I may be armed and dangerous!”

Tari, capital of Hela Province, February 1, 2018. By the time the Air Niugini Dash 8 drops through the highlands pall we’re almost jumping distance above the forest canopy. It’s broken by the contortions of rivers and the odd road, and clearings occupied by round huts and crops of sweet potato and greens.

Beyond the blur of the propeller, the clouds close like shutters on the distant ranges. There was no world beyond this fortressed horizon for the Huli until first contact in the 1930s. The first permanent colonial patrol post didn’t arrive in Tari until 1951. Then came the missionaries. The prospectors. The oilmen. And then, a decade ago, after a few false starts, the advance guard of PNG LNG.

The ancestors had seen them coming, these “red-legged” men. The Huli knew all about the subterranean power buried within their country, the fire (gas) and water (oil). They navigated around it with ritual. Their lore was selectively enlisted for the PNG LNG hard sell. It was destiny that the underground fire the Huli call Lai Tebo would “light up the world”, bringing in wealth that would transform the nation’s economy and the lives of its citizens.

But as I learnt on a previous visit in 2009, en route to villages with a health outreach team, that account neglected certain critical elements.

“When the white people come to take the power from the earth, there will be terrible fighting and Huli culture will fade away,” Dr Hewali Hamiya, the then CEO of Tari hospital told me. He was at the wheel of a 10-seater troopie, navigating broken roads, expanding on politics (“the poor and illiterate are spectators in our own land”) and explaining Huli Cosmology 101.

In an ancient narrative once described by ANU anthropologist Chris Ballard as “a user’s guide to apocalypse”, the Huli seek to influence the nature of the final event. This apocalypse would be “the terminal point in a long, linear process of moral and ecological decline”. It’s a mythology that has provided fertile ground for fire-and-brimstone Christian missionaries. And it has endured, fuelled by unfolding events.

Much of the mountainous interior of Papua New Guinea is too steep, too high or too wet to produce crops. But the town of Tari, at 2100 metres, sits in a hospitably undulating agricultural sweet spot, a magnet for people and trade from far-flung hamlets. From a window seat on the final approach, it looks like tropical Arcadia. It’s not.

By all accounts, there is a social emergency playing out, one that has ancient heritage but in modern times is enmeshed with both the history and the fate of PNG LNG. The project taps its source in the nearby limestone ridges. Concerned chatter among the Pacific cognoscenti has been gaining volume, the most dismayed among them fearing that Hela could explode. They recall and contrast memories of the Bougainville situation. But PNG pundits know better than to try to anticipate the future in the “land of the unexpected”. The cataclysm that will occur in 25 days’ time is beyond anyone’s control.

By now PNG LNG has been operating for almost four years, dispatching hundreds of shipments worth $US13.9 billion at last count. But none of the estimated $300 million worth of landowner royalties has so far found its way to the people at its highlands source. Indeed, the beneficiary landowners in Hela have yet to be identified. Their dues are meanwhile held by the PNG government.

There’s also no sign of many other promised benefits: the tertiary campuses, an agricultural research centre, roads, water and sewerage projects. The province sends power over the mountains to run the Porgera mine, but its people still have no lights. Even in Tari, power hiccups with the dodgy town generator. Oil Search’s managing director, Peter Botten, says more than $237 million has been paid to government entities and landowner groups to build infrastructure, but “the reality is they haven’t been delivered on the ground”. (ExxonMobil declined an interview, but in a statement said the project had put more than $300 million into projects and programs.)

In a dilapidated church hall in Tari, I meet Janet Koriama, the president of the Hela Council of Women. She is explaining why she declined an invitation to attend the legendary 2009 gathering of thousands of project stakeholders, where benefits-sharing deals worth more than $7 billion over the 30-year life of the project were thrashed out among (overwhelmingly) male landowners after days of negotiations and, infamously, much beer and debauchery.

Koriama thought it was wrong to host the forum in the town of Kokopo, 1000 kilometres away from the project site. (So does PNG law, and so the deal had to then go to a series of local forums.) “And I was a bit scared because of what tradition says.” Koriama is referring to the belief that you can give away “the water” (the oil, which has been pumped out nearby for decades), but not the gas. “They said you give Lai Tebo away, the fire will fuel so many conflicts. The prophecy is fulfilling.”

Downtown Tari comprises the airstrip, roads so fractured that it’s quicker (though not safer) to walk, the heaving open market, the bank (hour-long queues for the working ATM), the hospital, roadside trade stores (bigger Chinese stores have shut down in fright), a handful of tired public buildings, and the bones of several unfinished two- and three-storey structures – relics or promises of the mother lode, it’s hard to tell. It services a population somewhere upwards of 300,000.

Koriama is one of half a dozen leaders who come to me for interviews after I abandon plans to venture out to the project villages – only an hour’s drive away, but too risky. Hela Province is infamously combustible, and things are hot. Fighting flares unpredictably, with guns and bush knives. Police are lying low after two officers were murdered, the shooter accusing them of selling ammunition and weapons to his tribal enemies. Young men in dark glasses and long coats – to conceal their weapons – work their phones, their backs protected by the red-earth cliff that falls away at the edge of the market. Oil Search health workers I’d hoped to meet at Tari hospital have been hastily extracted because of a scare.

One way or another, the trouble is all about money, says Koriama. “The truth is we don’t have funds. No funds – royalties, equities, support grants.”

The project has been shattering for women and children, she says. “Women are the ones who are in the house … we pay for school fees, for the clan compensation [for deaths], all these things. But women are not recognised and we are not benefiting from the LNG … The big money – where is it going?”

Koriama is savvy – politics in PNG is no place for the faint-hearted. She’s dealt with corporates as a landowner in the Mt Kare goldmine. But she can’t get traction with PNG LNG. She travels to Port Moresby and talks to ExxonMobil and the government. “I said, ‘We are the women of Hela, but we are not benefiting’ … I said, ‘How do we do it?’ Do we write a letter? Do we dress up? … But we are not recognised.”

All that said, she declares that none of the problems are the fault of ExxonMobil or its partners, Oil Search and Santos. “They are here to help us.” She sits on the hospital board with Oil Search’s Peter Botten, under whose chairmanship (and resources) that neglected facility has become unrecognisably functional. (The host of my guesthouse has twin baby girls, Faith and Grace, and a dramatic birth story that none of them might have survived without what the hospital has become.)

Koriama lays responsibility for all the disappointments squarely with PNG authorities, the national and provincial governments, and “our own sons, who were educated, who were supposed to put it together, to look into who is owning the area … I am blaming ourselves.”

The distance between what PNG LNG promised and what it has delivered is an issue preoccupying many close observers of the project. ANU economist and PNG specialist Stephen Howes has highlighted concerns about the failure of royalties to flow to landowners, for this and future projects. “The other surprise is that it has generated hardly any revenue for the PNG government.” This is despite outputs being much higher than anticipated. Most of the blame is put on tax concessions criticised by the International Monetary Fund and the World Bank as too generous. But “we still don’t have a complete answer on why tax revenue has been so far below expectations”.

Botten blames a dramatic drop in oil prices. He defends the project’s economic contribution to the country, citing PNG National Research Institute modelling that says PNG LNG “has delivered tremendous benefits to the PNG economy and is expected to do so in the future”.

But a new analysis by the economist Paul Flanagan, an associate of Howes at the ANU Development Policy Centre and a former executive in the Australian and PNG treasuries, catalogues a “yawning chasm between spruiked expectations and outcomes”. Oil prices are not the explanation, he says – they are in line with predictions, “[but] all the other predictions about economic gains were well off”.

His report for Jubilee Australia, an anti-poverty research centre attached to the Australia Institute, found that rather than a doubling of the economy there has been a gain of only 10 per cent, all focused on the largely foreign-owned resource sector. Household incomes were expected to increase 84 per cent but have fallen 6 per cent; jobs were to grow by 42 per cent but are down 27 per cent; government spending on services and infrastructure was to kick up by 85 per cent but has fallen 32 per cent; imports were expected to rise 58 per cent but have fallen 73 per cent. “On almost every measure of economic welfare,” Flanagan concludes, “the PNG economy would have been better off without the PNG LNG project.”

A trio of male leaders comes in to meet me in Tari from project hotspots: Henri Harinda from the town of Angore, Pipe Tundu from Komo, and Haguai Kamia from Hides. Like Janet Koriama, they are damning of the PNG government, but they don’t share her regard for the companies. They each bring piles of worn paperwork tracking their land claims and, in English and the local languages of Tok Pisin and Tok Ples (via an interpreter), attempt to explain their rights through the labyrinthine local lore of customary landholding.

Individuals might have a tie to a piece of land on the father’s line (“A” class), or on the mother’s or wife’s line (“B” class), or through association (“C” class). Any piece of land might have several custodians with overlapping rights. These rights are archived not in titles but in fine-grained memory going back generations. ANU geographer Bryant Allen, who worked on contract for ExxonMobil, has stood in the bush with his GPS and a posse of clan leaders countless times trying to determine boundaries. “Sometimes they will say, ‘Bryant, you go over there, we have to talk about this.’ And there will be some shouting and screaming. Then it stops. Three or four people have said their genealogies and argued their case, and someone has said, ‘You’re right,’ and they all agree.” Mostly, he says, it sticks.

In the years leading up to PNG LNG, local landholding custom was explored and explained in depth to corporates and bureaucrats by experts such as Allen and the anthropologist Laurence Goldman. Goldman likens residency arrangements on the land to hotels: some rooms are occupied by descendants of the hotel ancestor, some get a room by virtue of a female link (but might get kicked out at any time) while others are occupied by friends – so long as nothing rocks the boat. Yet as the landowners I meet tell it, the strongest land claim these days sits with the man who is drinking buddies with the company community affairs rep or who has the most persuasive English.

The village of Hides sits on a ridge the locals call Gigira, home of the underground fire, Lai Tebo. It is at the heart of the project, hosting the gas-conditioning plant and several wellheads. Haguai Kamia has spent five years in court seeking rental payments for key sites. He won his case in 2017 and was awarded $100,000 back rent. The court orders, filed in a worn leather satchel, cost him most of that in legal fees, he says. So far he hasn’t been able to retrieve a larger payment, for environmental damage, that he says ExxonMobil gave to the wrong person. Like everyone, he’s still waiting on royalties. When the money comes he will be obliged by custom to share it between seven clans – dozens of individuals – and the church. All of them, waiting.

Kamia was one of the landowners involved in a blockade of the Hides plant in August 2016, a defining escalation in tensions between locals and the project. ExxonMobil’s blanket position is that payment and distribution of royalties and other benefits is the responsibility of the PNG government – nothing to do with the company. Many landowners accept this, but they also know that they won’t get action from the government unless they bring pressure to bear on the project. And around it goes.

Later I speak to three senior village women who live near the plant. They say that fighting has displaced many people, many schools are closed, and many families are hungry. Meanwhile, “the government is employing policemen to just look after the camp, and neglect the people”. The three women also worry about waste from the plant contaminating the water they rely on to cook and wash. They ask me not to publish their names.

Kamia says his boys dropped logs over the Hides access road “because we are crying for the royalties to be paid”. Armed men occupied the plant and shut it down. An ultimatum was given to the national government to honour benefits-sharing agreements within seven days. In the end a deal was brokered, including a government offer of $14 million “to try and soften the mood”, says Kamia, “make [us] feel, Oh, there is something bigger coming, just sit down and relax.

Things could have gone differently. Kamia says a lot of big weapons were moved into the area. There was potential for the situation to explode. But soldiers and police guarding the project are mindful that locals outstrip them for firepower, says Michael Main, a Melbourne-based anthropologist who was doing fieldwork in the area at the time. “One [police officer] told me, ‘We’re not going to risk our lives for ExxonMobil – I can see people have got nothing out of this project. We’re not going to go against the locals.’”

Main also tells of encountering young men who had hauled 20-kilogram rice bags packed with marijuana through the bush to the West Papua border and traded it for Indonesian military weapons. He observed landowners growing emboldened. Whether the Huli have the cohesion to mount a Bougainville-style resistance is a matter of lively dispute, but their firepower is not in doubt.

In December 2016, shortly after an ambush on a political convoy killed two men, and with a national election looming, the PNG government announced it would deploy the PNG Defence Force to the project area to quell violence. But skirmishes continued, including kidnappings of PNG LNG personnel and attacks on facilities. Last November, after an ExxonMobil security manager was kidnapped and released unharmed at Angore (thanks to the intervention of a local pastor, according to Main’s sources), the company evacuated non-essential staff.

Main has written a report exploring the backstories of recent clashes, often identifying threads relating to PNG LNG. His analysis, which will also be published shortly by Jubilee, echoes warnings from a gathering of development and resources specialists and scholars at ANU back in 2007 that “far from improving the wellbeing of [highlands] communities, these new sources of revenue have created new sources of friction”.

The question of how powerfully the PNG LNG project factors in the tempo of tribal conflict provokes intense debate among scholars and old PNG hands. Peter Botten says he’s seen profound cultural change over 25 years in PNG. “There were no mobile phones, tribal culture was relatively straightforward, and the elders and leaders were respected and listened to.” But it’s simplistic to blame big projects, he says. “The resources industry has really had very little effect apart from bringing more money in. Fights aren’t over jealousies [about] resources issues; the fights are very strongly around traditional issues of ‘you took my wife’ or ‘you took my pigs’, and then someone gets killed and then it’s payback.”

The Huli are infamous fighters. (We are sharing, caring and loving, says Janet Koriama, until you take what is ours.) But warfare was historically highly regulated and centred around compensation for losses, says anthropologist Chris Ballard. The LNG project “has massively ramped up rivalries, fuelled the arms race, and provided everyone with some level of grievance”. That said, apportioning blame is “hugely complicated, and I would be deeply suspicious of any narrative that claimed to know otherwise”. Another expert, who lived in the area for many years, argues that “government at all levels must bear responsibility”.

I ask Pipe Tunda, a landowner from Komo, how people are feeling. He lets rip. The interpreter summarises: “They are traumatised, it is really pressuring them, it could explode at any time … They are hungry and they have nothing.” During the construction phase, Komo was buzzing with jobs, aircraft bringing in equipment, camps full of workers. Now it’s a no-go ghost town.

Tunda is party to a judicial dispute-resolution process set up to try to resolve competing landowner claims that have dragged on for more than three years. He’s also involved in a process of “clan vetting” set up by the PNG Department of Petroleum and Energy to try to find ways to get royalties paid to rightful clans or sub-clans in Hela. That mission is now eight years over deadline.

Janet Mbuda, a schoolteacher from Hides who interprets some of my other interviews, says much of the danger comes from young men, teenagers mostly, who left school because of fighting or the lack of school fees. “They can kill anyone … the white men, the black men, they don’t care … their mindset is spoiled. They were expecting something high, but their life went back to zero.”

Around 80 per cent of Papua New Guineans live beyond the reach or interest of a largely dysfunctional state. Land, most of which is still in customary ownership, is cherished as central to security, society and survival. Papua New Guinea law recognises this. The Oil and Gas Act 1998 requires that before convening a development forum for a new project – the meeting where stakeholders thrash out terms and conditions – the petroleum minister shall determine the persons who will receive royalties and equity benefits. Yet today those beneficiaries remain unidentified in Hela.

“Somehow all the construction went ahead without this important part of the law being complied with,” says Stephen Howes, who with PNG lawyer Sam Koim co-authored an analysis on the stalemate. Howes says the responsibility – and the failure – to make the determination rests with the PNG minister. But “it’s the responsibility of all parties to ensure compliance”.

“In hindsight, it’s a mystery as to how this happened given ExxonMobil is a multinational and pretty risk averse, and worried about its reputation. And the only answer I have been able to come up with is that they thought [the determination process] would happen pretty quickly.” But Howes says that assumption meant that “Exxon and the other developers were taking on a massive project risk”.

Howes also questions Australia’s $US350 million investment in the project, through the Export Finance and Insurance Corporation (EFIC) in 2009. At the time it was the biggest foreign loan made by the Australian government. “Given that it was a legal requirement prior to construction, EFIC should have put as a condition of disbursement that landowner identification be determined by the minister.”

ExxonMobil deflects questions on this issue. But Oil Search’s Peter Botten answers emphatically. Determinations were made for every licence area, he says, albeit with landowner leaders rather than individuals. “I was there on the ground [in Hides] at four in the morning when it was signed. They had the mandate from their people, I assume, to sign off on that, otherwise they wouldn’t have done it.”

Colin Filer, an anthropologist and resources expert at ANU who helped write the PNG legislation, explains that what the law requires is for companies to undertake and submit to PNG authorities “full-scale social mapping and landowner identification studies”. But what that means is open to interpretation.

Filer says that in 2006, as the PNG LNG project was rapidly taking shape, meetings were held in Brisbane and Canberra between the PNG government and ExxonMobil to try to sort out what the process should and would entail. He was there as an independent consultant. The PNG side argued it wanted a kind of “telephone directory” of Huli landowners, something that would identify individual beneficiaries.

“And we said to ExxonMobil, ‘Well, that’s probably what you ought to produce.’ But then the question was, who was going to pay for it? Because it was going to be an expensive thing. And ExxonMobil said, ‘Well, we’re not paying for it – we’re not required to do this [in] the Act.’”

So no telephone directory, partly because it was going to be extremely difficult (some argued impossible) and costly. And “because basically these guys in Texas can’t see the point”, says Filer.

“They don’t seem to have ever been able to adapt their corporate management style to the realities of Papua New Guinea. They are still operating as if it was just any other gas project anywhere else in the world. It could be Siberia.”

The upshot is that four years down the track the landowners of Hela are still waiting. As angry as many of them are, the rationale is that they can’t and won’t mount any substantial, sustained or coordinated attack on the project for fear of never seeing their money.

But Howes argues that “people aren’t always rational, especially over long periods of time in a conflict-prone area. And the second problem is that once the [distribution of royalties] is finally made, there will be winners and losers, and the losers then will protest.”

In the capital, Port Moresby, I got a glimpse of the superheated tensions among landowners when I found myself squashed in the National Court’s tiny public gallery with about 60 Huli men hearing rulings on a disputed portion of the $13 million payment that was promised to break the Hides blockade 18 months earlier. (The only other woman in the court was the judge.) The desperation of the Port Moresby–based landowners, some of whom have been enlisted for years by the companies to keep a lid on tensions at home, was palpable.

When I recall the scene for lawyer Sam Koim a couple of hours later, he provides the backstory. “These people have come to Moresby, they live on borrowed money, they hire vehicles, they are chased after by loan sharks.” Koim has observed the fallout, the fragmentation even within families, fighting and suing one another. Hela Province is not like Bougainville, he says, where you had an organised and cohesive society. “But the people [in Hela], with due respect, are the last people you want to play games with. They may not be organised, but it needs just a spark.

“I’ve warned the Exxon guys, told them, ‘Don’t be arrogant.’ They think these people up there are ignorant, but the moment they are enlightened, they cannot continue to be suppressed,” says Koim. “They have the weaponry to do it, they have the potential to do it, they have the might to do it.”

And then the earth roared.

The 7.5 magnitude earthquake struck under Mt Sisa in Hela Province at 3.44am on February 26. It poured mountains of earth into rivers and destroyed food gardens, choking the lifeblood of countless families, so its cruelty has barely begun. As well as many deaths there were reports of communities desperately eking out supplies waiting on unreliable food drops and suffering outbreaks of diarrhoea. Damage shut down PNG LNG facilities for more than six weeks, with ExxonMobil declaring force majeure on its exports. It announced it would be restarting operations on April 13.

The response from the outside world to the crisis was slow, largely blamed on remoteness. ExxonMobil said it would give $1.3 million to earthquake relief, and Oil Search $6.4 million in cash and kind. The latter quickly mobilised its helicopters to take a lead role in assessing needs and delivering relief, ferrying Prime Minister Peter O’Neill into the crisis where he consoled bereft survivors daubed with mourning mud.

But distress soon turned to anger on the ground. “This is 5th Day,” wrote Hela governor Philip Undialu in a Facebook post.

Where are all the helicopters used to fly around Hela looking for Oil and Gas? Why a number of helicopters still flying around the disaster areas but not interested in helping victims? Why we have helicopters for evacuating employees but nothing to rescue injured people? Don’t we have social obligation to the communities?

“The Tari fight is getting worse,” tweeted the Catholic bishop of Mendi, Donald Lippert, on March 30. “They’ve come to the Mission primary school and burned down four staff houses. What’s next???? Most people have run away carrying their belongings on their backs and dragging their pigs behind them. PNG 2018!!!! Good Friday!!!”

The same day, James Komengi, the disaster response coordinator with the Uniting Church in Tari, sent me an email. “We are outside on the road watching the communities on one side of town burn down. We are told many men and women have been shot dead. Will confirm deaths.” Seven fatalities were later reported, among them three teenage schoolboys – one shot, two hacked with bush knives. The killings were described as tribal payback for the shooting in the Tari market of a local councillor two weeks earlier.

Seismic and social aftershocks continued, one crashing upon another. In Tari, violence spiralled. Under the headline “Tari on the Brink of Anarchy”, The National’s reporter wrote that people were more fearful of the fighting than they were of the earthquake. Governor Undialu said he had fewer than 20 police to secure the town. Meanwhile, a specialist squad was up the road, guarding the ExxonMobil plant at Hides. “Why should PNG LNG Project be given preference over the lives of ordinary people?” Undialu asked. “I’ve been asking the police commissioner to … give us additional manpower, which has fallen on deaf ears.”

By mid March the quake’s death toll stood at 125. Soon after, more than 55,000 people had been displaced by either the quake or the fighting, and 270,000 were in need of assistance.

With the landscape rolling and roiling with powerful aftershocks, the traumatised population looked for explanations. While all else was broken, Digicel’s communications towers were working overtime. Some turned to the spiritual, recalling the Lai Tebo prophecy, some to science. Social media erupted with a mix of passionate religious rants appealing for mercy from the Huli god Dadagaliwabe, and cut-and-pastes from geological journals on “induced seismicity” (where minor earthquakes and tremors can be triggered by human activity). These “Facebook scientists”, as James Komengi describes them, were “confusing people who are 80 per cent uneducated” by blaming the earthquake on gas extraction. Either way, the project was squarely in the frame.

“I now demand answer[s] from Exxon and my own government as to the cause of this unusual trend in my Hela,” wrote finance minister and local MP James Marape on Facebook. The prime minister appealed to the Australian government to provide scientific advice.

When Geoscience Australia responded with a report explaining that the quake was consistent with the regional plate tectonics that have shaped the highlands over millions of years, and that it was highly unlikely to have been triggered by mining, exploration or extraction, Hela governor Undialu wasn’t persuaded. Nor was former justice minister Kerenga Kua, who in parliament argued that the Australian government could not carry out an independent assessment because it had a financial stake in the project.

Peter Botten was quoted saying that the Huli superstitions around the cause of the earthquake represent “a communication issue”. But anthropologist Michael Main argues it is, rather, a critical development issue, arising from the collision of the conditions in Hela before the quake and the trauma in its wake. “Huli cosmological belief that the extraction of their gas will bring about the end of the world has been fuelled over the past four years by growing resentment over the failure of the project to come good on its development promises,” he wrote for the scholarly blog EnviroSociety.

If the PNG LNG project had delivered on its promises of education and training opportunities, infrastructure, business development and alleviation of poverty, then the concern of its Huli landowners might be over how to utilise their resource to better develop their province to cope with earthquakes into the future. As it is, the PNG LNG project is logically understood in the context of their resource curse.

In an email to me, American-born Bishop Lippert described a maelstrom of factors at play: frustration at the failed promises of the PNG LNG project (“no matter what the causes … legitimate and illegitimate”); young men impaired by blind rage and the abuse of cannabis or alcohol; the breakdown of traditional society with nothing to take its place … “The perversion of cultural constraints has opened the door to killing women and children, something that would be rare in the past, so I’m told.”

On March 30, an emergency order was issued, declaring that “the security situation in Hela Province (and specifically the town of Tari) has deteriorated to the point where the lives of relief workers, public servants and the general public are manifestly in danger”. The order mobilised the PNG Defence Force to bring the situation under control using “all reasonable force”. There was a “shoot to kill” curfew from 6pm to 6am, Bishop Lippert wrote. The United Nations and other agencies evacuated their relief teams, who had still not returned by mid April.

James Komengi keeps a running list of requirements for when the relief teams return: tarpaulins, water containers, building materials, tanks … “The rains are saving many families,” he writes. “Without rain, many people will become very sick.”

In a closed Hela Facebook group, someone posts a picture of four high-powered automatic weapons leaning against the wall of a grass hut. The post says the guns were stolen from a mobile police squad – they’re being offered for sale. Papua New Guinea’s highly active social media commentariat furiously debates whether this might become another Bougainville, and what else it signals for the fragile nation’s future.

“The worst-case scenario is one that PNG has already experienced,” argues ANU economist Paul Flanagan in an article for East Asia Forum.

The loss of social licence for the Bougainville copper mine in 1989 started a decade-long civil war that led to thousands of deaths, undermined development prospects on the island for a decade, damaged PNG’s economy more broadly, and quite directly led to the removal from office of prime ministers Paias Wingti and Julius Chan.

“There are real risks that the parallels [in Hela Province] will be much more manifest than to date,” Flanagan tells me. “Almost every wrong policy is being pursued – everything we wouldn’t want to avoid a resource curse.”

If the crisis in the wake of the earthquake persuades the PNG government to find a way to get overdue royalties to Hela landowners, and along the way rethink some of its macroeconomic policies, “hopefully things will go well”, Flanagan says. It’s not too late, he argues, to change the development path from a resources focus to something more inclusive that builds on agriculture and other areas. “It will take a decade. It’s got to start.”

If not, he warns, the consequences will be worse than what Papua New Guinea endured through the 1990s, when incomes across the country fell by 25 per cent. Provinces with healthier economies would resent the drain of poorer ones. “That is the sort of thing that leads to these fracturing tendencies in the nation state of PNG,” says Flanagan, an observation that feeds into increasing anxiety about the fragile geopolitics of the Pacific.

Stephen Howes argues that the failure of royalties to flow to Hela landowners already casts a significant pall over the prospects of future resource projects. “The PNG LNG project was supposed to send the global investment community a strong signal that PNG could manage large resource projects. But it is increasingly evident that this one very important piece of the puzzle was never put in place. And that will surely be a deterrent to other potential investors.”

Michael Main says that not so long ago, despite all the distress of landowners around the project, he would not have imagined that they would ever organise to put an end to it. “But things change, and the structures that were there – and that I thought would mean this project would keep going – are themselves subject to change in a way I hadn’t expected.” And that was before the Huli apocalypse.

Laurence Goldman, an anthropologist with many more years’ experience in the highlands, albeit not recently, won’t venture any such bets. “PNG has a wonderful way of contravening the best guesses that people have.” It’s an observation that evokes a favourite line from another PNG veteran, the late historian Hank Nelson: “As is often the case in Papua New Guinea, unfolding events have continued to unfold.”

Back in Australia, I receive an email from James Komengi in Tari. He says that there’s a lot of talk about protests planned in Hides and Tari against the project, maybe another shutdown. “Many people here [even outside the project area boundaries] are demanding they be compensated as landowners because the ‘man made’ earthquake disaster has affected us.” Events are unfolding.

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