Tag Archives: Exxon-Mobil

Call for extra security in Hela before PNG elections

The spectre of tribal fighting is a constant in Papua New Guinea’s Hela province where villages are typically protected by trenches and tightly guarded gates. Photo: RNZI / Johnny Blades

Radio New Zealand | 14 April 2017

There’s an urgent need for bolstered security in Papua New Guinea’s Highlands province of Hela, according to its deputy governor.

Thomas Potobe’s comment comes after a military and police callout to a province plagued by tribal conflict and a build-up of high-powered firearms.

The late December callout saw 300 police and military personnel deployed to the region which is central to the country’s US$19-billion LNG gas project.

As the callout wound down last month, police and Hela authorities admitted its corresponding guns amnesty was only a partial success.

Mr Potobe warned that since the last elections in 2012 tribal tensions in the area have worsened.

“And this time I think there’ll be fighting all over the place in the province,” Mr Potobe said. “But last year we had big fights in the province and at the moment now we cannot manage it.

“It’s very important, we need more security personnel on the ground.”

Last month, PNG’s police Commissioner Gary Baki floated the idea of recruiting hundreds of ex-servicemen to Hela to help address the lawlessness and fighting.

Mr Potobe said the plan was requested by the Hela provincial government, but it was clear that neither provincial or national government had the money to pay for this.

He has confirmed fears that lingering tension in and around the provincial capital could escalate again.

“Not only in Tari but also the Highlands around. We need more security on the ground, including Tari,” he said.

“The view of the province, and the electorate, for me, it does not look good for the new elections.”

The elections period officially starts later this month with two months of campaigning before a two-week polling period commencing in late June.

Last month, Mr Baki told RNZ International that in a change from previous polls, provincial police commands, rather than national headquarters would coordinate policing in each province during elections.

But he insisted there would be extra provision made for additional police presence in security hot-spots such as Hela.

Echoing this, the government’s chief secretary Isaac Lupari said that securing the LNG project area remained a priority, suggesting an increased police deployment in coming weeks was possible.

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New threat to LNG project from disgruntled landholders

Hides LOs shut gates to power plant, camp site

Post Courier | April 12, 2017

Disgruntled landowners of the Hides gas to power plant have blocked the road and closed the gates to the power plant at Yuni and Oil Search camp at Nogoli yesterday over non-payment of royalties.

According to landowners from Hides, led by Peter Potape, the landowners are frustrated and had enough of the state’s promises, and have threatened to disrupt all operations if the government continues to mislead them.

He said the people are frustrated over the delay in the payment of the royalty for the gas to electricity project for the past four years, and have decided to block off all access to the main camp site at Nogoli and the Yuni power plant site, to get the government to listen to their demands before going into the elections.

Mr Potape said the landowners also want the state to review the Hides gas to power memorandum of agreement to resolve outstanding issues pertaining to the project that is well over due since 1992.

He said the landowners also want the payment of the K35 million as project security as agreed through an understanding signed in August 2016.

The landowners are calling on the State to address the issue as failure to do so will have serious consequences on the PNG LNG project and the Hides gas to power project.

Similar calls have also been made by the Moran oilfield landowners.

Oil Search Limited when contacted did not respond.

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Papua New Guinea government intensifies military operations at ExxonMobil plant

Armed clansmen in the town of Komo in Papua New Guinea’s Hela Province. Photo: Michael Main

John Braddock | World Socialist Website | 7 April 2017

The Papua New Guinea government of Prime Minister Peter O’Neill is moving to intensify its massive police and military operation against villagers in Hela province, where the $US19 billion ExxonMobil liquefied natural gas (LNG) is based.

In January, the government deployed 150 troops and police near the ExxonMobil site in response to what it claimed was a spike in tribal violence that had left dozens of people dead. Security forces were ordered to seize and destroy illegal weapons after police raised concerns about a build-up of high-powered guns.

Police Commissioner Gari Baki proposed last month that the government recruit 500 retired ex-servicemen to help enforce “law and order” in Hela. Baki said the former police, soldiers and warders would be on a six-year contract to train new police officers. Baki announced the plan while overseeing the destruction of over 500 firearms, mostly home-made, surrendered by locals during an amnesty that started in January.

Hela Governor Francis Potape admitted that the amnesty, which was extended twice into March, was largely unsuccessful. Police commander Samson Kua told the media on March 7 that hundreds of weapons still remain unaccounted for. Security forces would be ordered to take “tough measures” to recoup the guns and arrest the owners, Kua declared.

The actual purpose of the police-military buildup, which will involve 300 people, including public servants from the law and justice sector, is to protect the giant LNG project, which has been subjected to protests and blockades by traditional landowners.

Chief Secretary Isaac Lupari said securing the LNG site was a “critical” aim of the operation. “We’ve got a very important project that is located there,” he said. “It supports the economy, employs thousands of Papua New Guineans, so we’ve got to restore law and order.”

Construction of the ExxonMobil operation was originally bankrolled by the US Export-Import Bank. The project is viewed as economically vital by the major Wall Street shareholders that have backed it.

In February, the Singapore-based InterOil Corporation announced a $US2.5 billion deal approving ExxonMobil’s acquisition of the company. It includes interests in six licenses covering four million acres of the PNG highlands. One undeveloped gas field, Elk-Antelope, is among Asia’s largest and will be used to vastly expand ExxonMobil’s footprint.

Landowners in Hela are meanwhile still waiting for royalties, development levies and dividends from the project to be paid. In February, more than 1,000 protesters from four villages gathered at the ExxonMobil site to demand the payments, estimated at over 1 billion PNG kina ($A400 million). A spokesman said the government had promised to pay royalties but never kept its promises. It was the second major protest affecting the LNG project. In August 2016, landowners blockaded the entrance to the plant and disrupted gas supplies over the lack of payments.

Michael Main, a PhD student at the Australian National University, told ABC Radio on March 10 that “after four years of operation and windfall profits for the project’s joint venture partners,” the project had “delivered almost nothing of benefit to landowners.”

“In fact,” Main declared, “it has, in important ways, made life worse for the majority of people living in the project area.

Under the LNG Project Umbrella Benefits Sharing Agreement, signed in 2009, ExxonMobil agreed to pay 700 Kina (US$216) per hectare per year for land occupied by the project. The government promised specific additional development programs, such as road sealing and township development. Landowners were told they could expect, according to Main, “the project to deliver tangible improvements to their lives and to the lives of their children.”

However, during the seven months Main conducted fieldwork in the province, he witnessed “a life of immense frustration, disappointment and palpable anger at the absence of benefits.” “What I encountered was abject poverty situated alongside one of the largest natural gas extraction operations in the world,” he explained.

Rampant corruption is a major issue. Main cited the township of Komo, near the LNG plant, which contained a newly built hospital that stood empty with no beds, no staff and no fuel for its generator. This was one of several “white elephants” built at inflated prices by companies owned by PNG’s politicians.

“Promised developments, including road sealing, power supply and schools, had all failed to materialise,” Main said.

The complex clan-based society of the highlands region, with a history of disputes over land and possessions that can be traced back over many generations, has been made worse, according to Main, “by the frustrations of a population hammered by the broken promises of the nation’s largest resource development project.” He described constant outbreaks of fighting by “heavily armed clans, young men gunned down by military assault rifles, and many dozens of houses shot through with holes and razed to the ground.”

Main noted that since the beginning of the ExxonMobil project, PNG’s ranking on the UN’s Human Development Index has fallen by two places to 158, having been overtaken by Zimbabwe and Cameroon.

“Far from enhancing development indicators, the largest development project in PNG’s history, has coincided with an unprecedented downgrade in the country’s development status,” he concluded.

PNG still has one of the lowest levels of GDP per capita in the region. Real GDP growth has dropped from 11.8 percent in 2015 to a forecast 2.8 percent in 2017. Government revenue has fallen sharply due to the precipitous decline in global commodity prices. LNG prices are less than half what they were in early 2014. The price in 2016 dropped as low as $US6.45 per million British thermal units (Btu) from a peak of $19.70 in 2014. Asia’s LNG market fared worse than slumping oil markets, plummeting by 67 percent.

The O’Neill government has responded by slashing spending, targeting health and education, by up to 40 percent. Austerity is fueling explosive social antagonisms and anti-establishment sentiment. Sections of the working class are becoming more restive over the government’s vicious attacks on jobs, living standards and basic rights. Early last month, National Civil Registry office workers in Port Moresby stopped work and locked the premises, demanding overdue wages. Workers alleged that they had not been paid for over two years.

The government is increasingly mobilising the police and armed forces to suppress deepening unrest. On March 28, armed police intervened to disperse a large crowd outside the provincial assembly in the East Sepik capital Wewak as Governor Michael Somare, PNG’s first prime minister under formal independence in 1975, was preparing to retire from official politics. The crowd had gathered to demand payments for various projects, activities and past “loyalty” to Somare.

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LNG landowner frustrations rising again in PNG

Hides landowners met several times with the government to discuss outstanding LNG Project payments. Photo: Supplied

Radio New Zealand | 21 March 2017

Papua New Guinea’s major LNG Liquefied Natural Gas or LNG project could be shut down again due to simmering landowner frustrations.

Landowners in the Highlands province of Hela say the government has let them down again by not following through on promised benefits from the multi-billion dollar gas project.

The landowners mounted a protest blockade of the project’s conditioning plant in Hides last August.

In response the government signed an agreement to address landowners’ grievances over lack of benefits and equity arrangements within thirty days

Hides landowner representative Andy Hamaga said government did not honour their promise.

“Unfortunately to date they haven’t done anything. We are looking at options, whether to take them to court, or go with the national arbitration, or go go back again and shut down the whole (LNG Project) operations before the general election,” he said.

At the time of last year’s blockade of the LNG plant, in response the government said the delays in royalty payments to landowners were due to complications over identifying genuine landowners.

The Petroleum and Energy minister Nixon Duban said that it was in the best interests of Hela to ensure that the right beneficiaries would be getting the payments.

“This project is going to be here for a long time,” Mr Duban explained at the time.

“We cannot make a mess and pay the wrong people. And so the onus is on the state to ensure it’s done properly. Whether we take one year or a couple of months, we must ensure it is done properly.”

However, Mr Hamaga said this was misleading.

“The state minister is not giving us the actual information,” he said.

“They were supposed to do this clan vetting and landowner social mapping thing before we signed the big Umbrella Benefit Agreement we have signed in 2009. I think they’re using this one as an excuse.”

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ExxonMobil’s natural gas project foments unrest in Papua New Guinea

Armed clansmen in the town of Komo in Papua New Guinea’s Hela Province. Photo courtesy of Michael Main

Michael Main | UPI  |  March 9, 2017

The Papua New Guinea liquefied natural gas project is the largest resource extraction project in the Asia-Pacific region. Constructed at a stated cost of $19 billion, it’s operated by ExxonMobil in joint venture with Oil Search and four other partners.

The project extracts natural gas from the Papua New Guinea highlands where it is processed before being sent via some 435 miles of pipeline to a plant near the nation’s capital, Port Moresby. The gas is then liquefied and transferred into ships for sale offshore.

Construction for the project began in 2010, and the first gas shipment was made in May 2014.

In February 2009, the economic consulting firm Acil Tasman (now Acil Allen) produced a report for ExxonMobil about the project’s impact. The purpose of the study, which was posted on ExxonMobil’s website but has now been removed, was to provide an analysis of the likely impacts of the project on Papua New Guinea’s economy.

ExxonMobil did not respond to questions about the removal of the report or the impact of the project on local communities.

The report said the project has the potential to transform the country’s economy by boosting GDP and money from exports. These would increase government revenue and provide royalty payments to landowners. It claims the project could potentially improve the quality of life of locals by providing services and enhancing productivity. Workers and suppliers would reap rewards, as would landowners who would also benefit from social and economic infrastructure.

But six years on, none of this has come to pass.

A shaky agreement

In the years since construction began, Papua New Guinea’s ranking on the United Nations Development Program’s Human Development Index has fallen by two places to 158, having been overtaken by Zimbabwe and Cameroon. Far from enhancing development indicators, the largest development project in PNG’s history has coincided with an unprecedented downgrade in the country’s development status.

In this period, there has been a stream of articles published that highlight the alarming state of Papua New Guinea’s economy and criticize the lack of positive economic and development impacts from the LNG project.

But very little is known about the actual impact of the project on local landowners. This is largely due to the remote location of the gas field in the mountainous Hela Province. The dire security situation in that part of Papua New Guinea also makes any investigation a highly dangerous undertaking.

I first visited Hela Province in 2009 shortly before the project was to begin construction. I encountered a population that was bristling with anticipation and enthusiasm for a development that promised to transform their lives.

In 2016, I returned and spent seven months with the landowners of the LNG project as part of my doctoral research. What I encountered was abject poverty situated alongside one of the largest natural gas extraction operations in the world. Combined with this was immense frustration, anger, corruption, mounting violence and widespread proliferation of weapons.

Like other such projects in Papua New Guinea, the LNG project was able to begin operations after agreement was reached with landowners on the benefits that were to be delivered via the extraction and sale of the resource that exists beneath their land. After much negotiation, the PNG LNG Project Umbrella Benefits Sharing Agreement was signed in May 2009.

On its website, ExxonMobil describes the agreement as ensuring a “fair distribution of the benefits,” but neither ExxonMobil, Oil Search nor any of the other joint venture partners are signatories to the UBSA. Rather, the agreement is between the Papua New Guinea state, various levels of government and the landowners themselves.

The agreement outlines a variety of income streams to be generated by the project, as well as specific development promises, such as road sealing and township development. Its upshot is that landowners can expect the LNG project to deliver tangible improvements to their lives and to the lives of their children.

But the reality – after four years of operation and windfall profits for the project’s joint venture partners – is that the project has delivered almost nothing of benefit to landowners. In fact, it has, in important ways, made life worse for the majority of people living in the project area.

Downward spiral

During my fieldwork with project area landowners, I saw a life of immense frustration, disappointment and palpable anger at the absence of benefits. The township of Komo, which is at the center of operations, contained a newly built hospital that stood empty with no beds, no staff and no fuel for its generator.

It, and its newly constructed staff houses for nonexistent staff, are just two of several white elephants built at inflated prices by companies owned by Papua New Guinea’s politicians. Promised road sealing and township development, including power supply and schools, have all failed to materialize.

The most terrifying aspect of life in Hela province has been the proliferation of weapons. The Huli-speaking population comprises a complex society of hundreds of individual clans with a history of disputes over land and possessions that can be traced back over many generations. This pre-existing context of intense inter-clan rivalry has been made worse by the frustrations of a population hammered by the broken promises of the nation’s largest resource development project.

During the project’s construction phase, Komo was a hive of activity. It was home to thousands of international workers as well as PNG nationals attracted to high-paying jobs and the promise of an LNG-driven future.

Large amounts of cash were paid to people who had no prior experience of money, and the lack of infrastructure development meant there was little to spend it on other than consumable goods and guns.

A black market arms trade has existed between the PNG highlands and the Indonesian military across the border in West Papua for many years. During the course of my fieldwork, I witnessed constant outbreaks of fighting by heavily armed clans, young men gunned down by military assault rifles, and many dozens of houses shot through with holes and razed to the ground.

Much of this fighting is a direct result of payments made to landowners displaced by the project. Compensation money paid to affected clans invariably ends up in the hands of individuals who fail to distribute the funds properly or support their own families, and the money is always paid to men.

In 2009, ExxonMobil agreed to pay 700 PNG Kina (approximately U.S. $216) per hectare per year for land occupied by the LNG project, indexed to inflation. The giant Komo airfield that was built to fly in materials for the project’s construction occupies an area of approximately 1,500 hectares. Disputes over ownership of that land have resulted in sporadic warfare over the past several years and dozens of deaths.

Military intervention

In August 2016, several leaders of landowning clans at ExxonMobil’s gas conditioning plant at the village of Hides, which is located on a ridge in a remote part of Hela Province, organized to blockade the facility and shut off the gas taps at several wells. Although security guards initially opposed the blockade, the landowners came armed. They forced their way into the plant site before locking its gates and demanding that the government meet their ultimatum to honor the UBSA agreement.

Members of Papua New Guinea’s mobile police squad told me they had no intention of acting against the local population, who vastly outnumber and outgun any police and military presence the government is capable of providing.

When I interviewed the landowner leaders during the blockade, it became clear that what they were demanding amounted to a better future for their families.

In November 2016, a convoy carrying the Hela Provincial governor, deputy governor and some local level government councilors was blocked on the road by an armed clan. Although the dispute was clan-related, I was informed that the convoy was targeted as a result of frustration over the lack of LNG project benefits and perceived corruption.

The resulting shootout left two people dead and one policeman wounded. A few weeks later, the PNG government announced that it would be sending troops with “logistical support” from ExxonMobil and Oil Search into Hela province, to flush out illegal arms and restore peace to that volatile part of the country.

The military intervention in Hela province has thus far been unsuccessful. James Komengi, a Huli who runs a peace NGO based in Hela province, told me that a gun amnesty that’s been in place for the past two months has failed to recover anything other than a few homemade shotguns and some non-serviceable factory-made rifles.

Residents of Komo village are reporting that ExxonMobil staff are being transported under heavily armed guard from their arrival at the Komo airfield to the gas conditioning facility at Hides. Recently, a man was gunned down at the Komo market in full view of the police and military contingent that is tasked with ridding the local population of its weapons.

According to the blog Papua New Guinea Mine Watch, these forces stood by and watched the killers as they calmly left the scene. They said that they were human beings who are fearful of losing their lives in the face of the enormous task ahead of them.

The governor of Hela Province has now declared the gun amnesty to be unsuccessful, with few weapons being surrendered.

The next stage is for the police and army to attempt to forcibly remove thousands of military weapons from hundreds of clans throughout the province. All this is a far cry from the excitement and optimism that characterized the mood of the landowners when the LNG project began construction in 2010.

Papua New Guinea now faces a situation where it’s compelled to send its army to an area where a major resource extraction project has failed to deliver on its promises to landowners. It may be time for all parties involved – both state and corporate – to consider development as a more effective path to peace.

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Opposition questions PM on benefits from LNG shipments

Delays in royalty payments are frustrating landowners

Delays in royalty payments are frustrating landowners

Post Courier | March 05, 2017

PRIME Minister Peter O’Neill has come under fire again from the Opposition on the benefits from LNG’s more than 200 shipments.

Mr O’Neill said bigger benefits were looming for the country in the next LNG projects at Port Moresby’s inaugural petroleum and energy summit.

Opposition Leader Don Polye said the Department of Treasury projected that annual proceeds from the first LNG would be up to K4 billion.

“Our alternative government’s question is who will benefit the most? We know these benefits looming in the petroleum and energy sector.

“This is not the first time we will see them coming in from such an international project.

“Our resource owners have missed out on benefits which are rightfully theirs in the first LNG project,” he said.

Mr Polye said the government had betrayed the people.

“Talking about projects after projects will not solve the real problems. There is nothing from the LNG project reflected in national budgets.

“Budget books show nothing. With such disarray in the management of the resources, pushing for another LNG project is unheard of,” he warned.

Sovereign wealth fund, he said, was established outside of the international best practice Santiago principle.

Mr Polye added that the Extractive Industry Transparency Initiative was not fully established within the standard frameworks as well.

“We cannot justify discussing another second or third LNG project. We are afraid their proceeds will also go down the same trend.

“I must boldly tell the nation that Prime Minister Peter O’Neill has mismanaged the country’s proceeds from the first LNG project.

The country is in the red. I would like to advice the forum to address these issues,” Mr Polye said.

He warns Total, ExxonMobil and other players that whilst bidding to increase their profitability to serve the interest of shareholders, they have a moral and legal obligation to PNG as well.

“We would like to see responsibility on the part of the developers to create a sustainable economy for PNG.

“When we are in government, we will not only bid for maximum benefits for our resource owners, we will fix SWF and EITI, minimise law and order, restore rule of law and alleviate corruption to make PNG become an attractive investment destination,” Mr Polye said.

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Papua New Guinea Asks Energy Explorers: Can We Keep Some of Our Gas?

lng-australia

Dan Murtaugh & Perry Williams | Bloomberg | March 6, 2017

  • Papua New Guinea gas is exported to nations like China, Japan
  • Access to gas may help boost industries, generate electricity

Less than three years after it began sending one of its most precious resources overseas, Papua New Guinea’s future may be determined by how much of it stays at home.

The tiny Pacific island nation wants some of the world’s top explorers to allow a portion of its natural gas to stay in the country, said Nixon Duban, the minister for the government’s petroleum and energy department. The fuel pumped from remote mountain ranges and forest-covered hills could spur industries, generate cheaper power for an electricity-starved population and even help catch tuna. But not at the cost of driving away drillers.

“The challenge our government faces is finding the right balance,” Duban said in an interview in Port Moresby, the capital of Papua New Guinea. “We’re trying not to dictate against the energy industry.”

Duban’s caution is understandable. The developing country of less than 8 million people is one of the poorest in Asia, with soaring crime rates, high unemployment, and almost half the population living in squatter settlements. It’s counting on energy resources to boost finances, and needs foreign investment. Its exports have led to some signs of prosperity, with Port Moresby turning home to a luxury hotel and a major mall as well as hosting international sporting events.

$19 Billion Project

Still, more sustained development will mean using some resources for itself. When the government signed deals almost nine years ago that led Exxon Mobil Corp. to build a liquefied natural gas terminal, it allowed the energy giant and its partners to export all of the gas it found. The project’s $19 billion price tag was more than the country’s annual gross domestic product. The LNG now lights the homes in metropolises including Tokyo, Beijing and Taipei.

The concession was made because the country was unproven as a gas exporter at the time, Prime Minister Peter O’Neill said in an interview in Port Moresby last week. In the past, “we allowed all the gas to be exported,” he said. “Now we want to secure some to go to the petrochemical industry.”

The government is in talks with commodity trading firms such as Japan’s Itochu Corp. and Sojitz Corp. to build petrochemical factories near the capital that will convert gas into methanol, Duban said. He recently negotiated with drillers on one lease to keep 15 percent of the gas for the domestic market, and will look at each lease on a case-by-case basis to make sure the projects are still attractive to the industry.

Itochu is considering the methanol project but nothing has been decided, a Tokyo-based spokesman said. Sojitz is currently considering whether to build a methanol facility on the island and is performing a feasibility study for the facility, according to its spokesman.

Power Outages

The government is also aiming to electrify 70 percent of the country by 2030, and while it wants 100 percent of it to come from renewable sources, natural gas could provide a bridge or alternative to reach its goal. Just 13 percent of the population has access to electricity, and even then it’s not uncommon for power outages to strike multiple times a day, forcing businesses to invest in expensive back-up diesel generators.

There’s already one industry on the island that could benefit from a stable supply of electricity — tuna canning. One-tenth of the world’s tuna is caught off the shores of the country, with estimates putting the value of Papua New Guinea’s yearly catch at $1.3 billion. If the canneries have access to cheap, affordable power, the businesses could thrive, said Mark Baker, Australia & New Zealand Banking Group Ltd.’s managing director for Papua New Guinea.

He cautioned that the island must be wary of the phenomenon known as the ‘resource curse,’ where mineral and fuel-rich nations tend to have worse economic growth, political stability and development than countries with fewer natural resources.

“They need to use their resources to invest in broad-based growth,” Baker said in an interview in Port Moresby. “The government is trying to avoid the resource curse, and that can only happen when you invest in infrastructure like power, ports and roads.”

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