Tag Archives: LNG

Will Hela be the next Bougainville?

Young men in Eastern Highlands, PNG engaged in tribal conflict walking to meet the opposing tribe (DFAT/Flickr/CC BY 2.0)

Matthew Allen | Devpolicy Blog | May 24, 2018

In the midst of the flurry of anxiety-driven commentary about the increasing influence of China in the Pacific and its security consequences for Australia, it is oddly refreshing to see some attention being given to what is arguably a far more pressing and immediate security challenge for many of Australia’s near Pacific neighbours: the pernicious social impacts of large-scale extractive resource industries.

Much of this recent attention – including a report by Jubilee Australia – has focused on developments in Hela Province in the PNG Highlands where the devastating February 26 earthquake has compounded the social tumult unleashed by ExxonMobil’s giant PNG Liquefied Natural Gas (LNG) project, giving rise to a downward spiral of violence, death and disorder. Throughout the commentary on the unfolding human disaster in Hela, a recurring question is being posed: could all this blow up into a protracted armed conflict akin to the Bougainville Crisis of 1989 to 1998?

This is precisely the question that forms the point of departure for the research presented in my recently published book Resource extraction and contentious states: mining and the politics of scale in the Pacific Islands.

The book’s focus is on the region known to geographers as the Solomons chain of islands, consisting of the autonomous region of Bougainville and the Solomon Islands. These islands have hosted the region’s two most serious armed conflicts since the Second World War: the Bougainville Crisis and the Solomon Islands “Ethnic Tension” of 1998 to 2003, which was largely confined to the island of Guadalcanal.

Large-scale mining was implicated in both of these conflicts, but much more so in the case of Bougainville, where most informed commentators agree that the Crisis would not have occurred were it not for the impacts of Rio Tinto’s Panguna mine, at the time one of the world’s largest copper and gold mines.

Given that these conflicts occurred on islands, the book sets out to ask whether there is something peculiar about islands — their “islandness” as it is referred to in the burgeoning island studies literature — that makes them unusually or exceptionally potent spaces for the contentious and frequently violent politics that attend extractive enclave economies.

More specifically, the book asks whether the Bougainville conflict would ever have occurred, or occurred to the extent that it did, if Bougainville had not been a sub-national island jurisdiction (i.e. an island-province) of PNG but instead a landlocked province within “mainland” PNG, such as Hela Province, or, for that matter Enga Province, which hosts the violence-plagued Porgera gold mine operated by Canadian miner Barrick Gold and the subject of a damning Human Rights Watch report in 2011.

Of course this is not a question for which there is a definitive answer: if there is anything we have learned from the vast corpus of research on intra-state conflicts in developing country settings, it is that such conflicts are always the outcome of a complex set of social, political, historical and ecological factors operating at multiple scales. When it comes to interpreting the “causes” of developing country conflicts, we have become acutely aware of falling into the traps of determinism, narrative simplification and mono-causal interpretation.

The book does suggest, however, that it is a useful question ‘to think with’, not least because it draws attention to the inescapabilty of geography, and, in particular, to how what geographers refer to as social-spatial relations – such as territoriality and the politics of scale – matter more than ever if we are to understand the violent ructions that are being engendered by contemporary forms of globalisation and what economic geographer David Harvey has described as “accumulation by dispossession”.

By territoriality I mean strategies to enclose and control geographical space; strategies that depend, crucially, upon the communication of territorial boundaries. By the politics of scale I mean struggles over the scales at which economic and political processes occur. Through these struggles, new, sometimes previously unimaginable, scales can be produced and the relative importance of existing scales reconfigured. Notable examples include the European Union, sub-national urbanised mega-regions, and globalised financial markets that transcend national regulatory systems.

Due to their unique geographic properties – their stark boundedness – islands have long been seen as paradigmatic settings for territorialising projects, including the nation-state and sub-national jurisdictions of various types. In the words of John Gillis, they are the “most clearly marked boundaries of all”. In the book I argue that as well as having these distinctive territorial properties, islands can also be produced as a powerful scale of political and economic contestation.

In the context of large islands in the western Pacific, such as Bougainville and Guadalcanal, island-wide identities and socio-political movements were, in the first instance, a product of the introduction of capitalist social relations in the form of the colonial plantation economy. The plantation experience, buttressed by the Christian missions and the colonial delineation of sub-national administrative units that were often coterminous with islands, united the culturally and linguistically heterogeneous populations of the large Melanesian islands in ways that were previously unknown, effectively producing the island as a scale of accumulation, dispossession and resistance.

And just as Melanesian islands were socially produced during the colonial epoch of globalisation, so too have they emerged as a critical, albeit problematic, scale of struggle in contemporary contestations around globalised extractive resource capitalism; demonstrated, most spectacularly, by the advent of island-scale armed insurgencies first on Bougainville and then on Guadalcanal.

I say problematic because the island has been an ephemeral and elusive scale for collective action: it has only emerged at particular moments and conjunctures, and it competes with forces that constantly work to fracture it, not least of which in the context of Melanesian resource extraction is another relatively recently produced scale of contestation: customary landownership.

Indeed, it is the scale of customary landownership that has, in the first instance, been most productive of violence in the encounter with extractive industries as powerful individuals, invariably men, have captured economic benefits (such as rents, royalties and compensation payments) at the direct expense of other members of their landowning groups. These processes of exclusion have had salient gender and intergenerational dimensions, and, in the context of Melanesian socio-cultural norms of reciprocity and obligation, they have produced intense social disintegration and conflict.

However, ethnic or indigenous claims to resource-rich territories have also been an important and analytically distinct feature of resource-related violence in Melanesia. This appears to be especially true when the territory or scale in question also happens to be a relatively large island; or, in other words, when it is possible for the scale of ethnicity/indigeneity to be coterminous with the territorial boundaries of an island.

Which brings us back to the question of whether Hela, or for that matter, Enga, could become the next Bougainville? Setting aside (critically important) specificities of history, culture and social organisation, my analysis suggests that the distinctive geographical characteristics of islands can indeed make them exceptionally potent platforms for armed conflicts over natural resources, at least in the context of the Melanesian Pacific.

To be sure, many of the same spatial tensions are also evident around extractive projects in the PNG mainland: the social disintegration of landowning groups and benefit-sharing tensions between the local, provincial and national scales. Indeed it is worth recalling that the creation of Hela Province in 2012 was in large part driven by the desire of the 300,000 strong Huli-speakers, who had long been marginalised from the Highland’s lucrative extractive projects, to capitalise upon the advent of the LNG project, which is located squarely in Huli territory.

However, while new provinces can be created, and while their borders may even be conterminous with language and cultural boundaries, there are no ready-made geographical platforms for sub-national collective political action in these mainland areas. Put simply, territory and scale can be coproduced in islands in ways they cannot in mainland settings.

Of course only a fool would entertain ironclad predictions about social and political developments in Melanesia, but an unabashed geographical interpretation would suggest limits to the potential for localised tensions around extractive enclaves on mainland PNG to escalate into large-scale armed conflict with a distinctive ethno-nationalist or separatist character such as we witnessed in the case of Bougainville.

That said, as demonstrated in the Jubilee Australia report, the current social chaos and disorder in Hela is clearly linked, at least in part, to the PNG LNG project, once again reminding us of the socially corrosive and frequently violent character of Melanesia’s extractive economies.

Resource extraction and contentious states: mining and the politics of scale in the Pacific Islands will be launched at the University of the South Pacific today at 5.30pm and at ANU in late July. The research reported in the book was funded by the Australian Research Council.


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Call To Gazette LNG Clan Vetting

Post Courier | May 24, 2018

PETROLEUM Minister Fabian Pok has been called on to immediately authorise gazettal of the completed landowner clan vetting exercises that have complied with the legal requirements.

This is to ensure they are not unnecessarily being penalised by the State from receiving and delaying benefits from the LNG project.

Chairman of Benaria Gas Pipeline Landowners Association Gibson Walabe made the call yesterday claiming vetting exercises had already been completed for certain LNG pipeline segment landowners in Hela and Gulf provinces.

Mr Walabe is chairman of the Benaria Gas Pipeline Landowners Association covering segment 2.

Mr Walabe said Mr Pok and his departmental secretary should not delay gazettal of the clan vetting results as they had taken it upon themselves to initiate the process and had done it twice already.

“The results of the clan vetting exercise are with the minister and his secretary and they should immediately ensure they are gazetted,” Mr Walabe said.

“The vetting exercise has been undertaken and completed for pipeline segments, 2, 3, 4 and Gulf landowners.

“All ILGs have also been certified and the process should not be hampered by maybe legal action taken by other infighting landowners which have no bearing on us.

“We should be given what is due to us so that we can also assist in our earthquake devastated areas restore normalcy.

“I call on Mr Pok and his departmental secretary to quickly facilitate the due process and ensure we are given the benefits due to us.”

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PNG Wants a Bigger Slice of Exxon’s Gas Profits

Hides Gas Conditioning Plant in Papua New Guinea. Photographer: Richard Dellman via Exxon Mobil Corp.

Dan Murtaugh and Aaron Clark | Bloomberg |May 23, 2018

  •  Papua New Guinea seeking bigger cut of gas-export revenues
  •  IMF says country got ‘quite limited’ benefit from initial deal

The tiny, impoverished nation of Papua New Guinea came out on the short end of a $19 billion development with Exxon Mobil Corp. to build one of Asia-Pacific’s biggest energy projects. But as the company pushes to expand the venture, the government is vowing that round two may require a much bigger payday for the locals.

By most accounts, the liquefied natural gas business that Exxon and partners built from scratch is an engineering and commercial success. The PNG LNG venture, which started operating in 2014, is delivering more fuel than expected to Asian economic giants Japan and China. It’s so promising that the U.S. company — with annual revenue 10 times larger than Papua New Guinea’s economy — declared the Pacific island a key building block for its future growth and plans to double output.

Trouble is, the original deal reached a decade ago has failed to deliver the windfall to Papua New Guinea that the government and an Exxon-commissioned study predicted. An International Monetary Fund analysis showed “quite limited benefits” for the country, which granted Exxon generous rights to recover certain costs before paying taxes or fees. While the initial investment was welcome, the government has formed a new team to negotiate better terms before it approves the proposed expansion.

“There is a general view that Papua New Guinea gave away too much for the first LNG project,” said Peter Koim, a member of the negotiating team who is also director of the country’s Gas Project Coordinating Office. For the next round “the country will not give away concessions as was the case in the PNG LNG project,” he said.

PNG LNG produces gas from wells in the forested mountains known as the Highlands, and sends it 700 kilometers (435 miles) southeast via pipeline to a processing plant on the shores of Caution Bay, near the capital, Port Moresby. The gas is super-chilled to liquid form and loaded onto special tankers for shipment overseas. Originally designed to process a maximum of 6.9 million metric tons a year, the plant produced more than 8.2 million in 2017.

Exxon last year spent as much as $3.9 billion buying access to additional reserves and drilling rights in the country and is working with partners including Australia’s Oil Search Ltd. and France’s Total SA on a separate $13 billion venture known as Papua LNG. The development would add 8 million tons of additional annual processing capacity at the existing PNG LNG plant, but tap gas deposits in a different part of the country and require a new pipeline.

The country will negotiate separately with Exxon and Total on the different projects that will contribute to an overall expected rise in the nation’s gas exports, Koim said.

Demand for the gas has been strong. Long-term supply contracts were signed with buyers including chemical makers and utilities that are as much as 4,500 kilometers across the sea from Papua New Guinea, which is located on an island just north of Australia’s Queensland state. With global consumption booming, analysts see a shortage of LNG coming in the early part of next decade, right when an expansion project would come online if work were to start soon.

Prospects are so promising that Exxon’s Chief Executive Officer Darren Woods said as recently as March that he is counting on Papua New Guinea and several other countries to help reverse declining output at the company, one of the world’s largest energy suppliers. Irving, Texas-based Exxon plans about $200 billion in capital expenditures through 2025, including in Mozambique, Brazil and Guyana, as well as America’s Permian Basin.

A more demanding Papua New Guinea could pose a hurdle to Exxon’s plans. Already, the company has been forced to defend its contract in Guyana, a small South American country that signed a deal two years ago to develop the world’s biggest new deep-water find in a decade. The IMF described that agreement as “favorable” for Exxon, compared with global norms. The company has said there’s no need to renegotiate because the contract already included several concessions to the government.

The Papua New Guinea government isn’t seeking to revise the old contract. But the tenor of talks over the expansion will be influenced by the public perception that the massive project simply didn’t deliver the benefits that were promised.

Unfulfilled Expectations

An April 2009 version of an economic impact study by ACIL Tasman (now ACIL Allen Consulting) for Exxon said the project “has the potential to transform the economy of Papua New Guinea, boosting GDP and export earnings, providing a major increase in government revenue, royalty payments to landowners, creating employment opportunities during construction and operation, and providing a catalyst to further gas-based industry development.”

And before production began, the government estimated PNG LNG would boost its revenue by 2 billion kina ($613 million) a year through 2021, the World Bank said in a December report.

Instead, the project’s partners paid only about 495 million kina in taxes, royalties, dividends and other payments in 2016, data from the Extractive Industries Transparency Initiative show. A “complex web of exemptions and allowances” effectively mean that little revenue from the project goes to the government and landowners, the World Bank said.

“It’s an extraordinarily low level,” said Paul Barker, executive director at the Papua New Guinea Institute of National Affairs. “If you are not getting much in the way of revenue, there is something a bit screwed up.”

A research and advocacy group, Jubilee Australia Debt & Development Research Centre, had an even harsher take, noting in a detailed report last month that by “almost every measure of economic welfare,” Papua New Guinea “would have been better off without the PNG LNG project.”

Of the total paid to the government in 2016 by PNG LNG partners, Exxon’s share was about 216 million kina, more than half of which was income tax, according to EITI data. By comparison, the company’s revenue from the project was more than ten times that, at about 2.56 billion kina, according to Bloomberg estimates using production figures and annual averages for crude prices and foreign exchange rates.

Papua New Guinea has a stake in the venture through its state oil company, Kumul Petroleum Holdings Ltd. It’s portion of the revenue was 1.28 billion kina in 2016, according to Bloomberg calculations. It contributed about 100 million kina to the treasury and gave the government an advance of 200 million kina, according to an EITI report.

Exxon says it is honoring all contractually required payments and that the project delivers more than just government revenue. PNG LNG has contributed about 14 billion kina to local businesses and the government, and employs 2,600 workers and contractors, about 82 percent of whom are locals, an Exxon spokeswoman said by email.

PNG Liquefied Natural Gas Plant near Port Moresby, Papua New Guinea.Photographer: Richard Dellman via ExxonMobil Corp.

To be sure, it’s not unusual for a country without its own natural gas industry or infrastructure to make concessions to secure the huge investments needed to develop untapped reserves. But often, citizens of poor or underdeveloped countries see little or no benefit from commodity extraction by foreign companies because their governments were inept, corrupt or both — a symptom of what economists call the resource curse.

Royalties and development levies came under particular scrutiny by the World Bank and IMF. That’s because the payments are calculated after deductions for operating costs, debt repayments and capital expenses. As a result, when LNG prices fall in line with oil, as they did when crude prices crashed shortly after the project started, the biggest impact is on the amount going to the government. In some cases the project can claim losses that offset future royalty payments, according to the World Bank.

The government’s “current level of revenue from the PNG LNG project is not sufficient due to the heavy concessions granted, loan repayments and subdued oil prices in the recent past,” Koim said.

Highlands Unrest

The distribution of royalties from the project have already caused unrest in the Highlands. Residents threatened violence against gas plants and pipelines in late 2016, after they didn’t receive payments. The government said the distributions were delayed because of a review of clan records and property rights to make sure the money went to the right people. The first 15 million kina in royalties was paid to villagers in late 2017, according to Exxon and Port Morseby-based The National newspaper.

Papua New Guinea has been through similar challenges before. Three decades ago, disputes over royalties from one of the world’s largest copper mines helped fuel an independence movement on Bougainville Island. The autonomous region is planning an independence referendum next year.

During the original negotiations, Papua New Guinea recognized that it needed to sweeten the deal with Exxon by allowing for things like tax breaks on infrastructure spending, according to Koim, of the Gas Project Coordinating Office, and Fabian Pok, the nation’s energy minster.

“Some incentives were given” during the original negotiations, Pok said. “These incentives may not be available” in talks over the expansion, he said.

Balancing Risk

The success of the initial project lowers the risk associated with future investments, which may give Papua New Guinea more leverage in negotiations, said Andrew Harwood, a research director with energy consultancy Wood Mackenzie Ltd. in Singapore.

“The government is entitled to seek a larger share of any expansion, but needs to balance potential higher government revenues against the risk of deterring future investment,” Harwood said.

One way to increase government revenue would be for state oil company Kumul to take a bigger stake in the expansion. Koim suggested a 30 percent share, compared with 16.8 in the initial project. (The state also has a 2 percent interest through its Mineral Resources Development Co.) Other government officials want drillers to sell a portion of their gas domestically to fuel power plants and spur industrial development.

“Everything is on the table for negotiations,” said Pok, the energy minister. At the same time, he said, the government realizes that Papua New Guinea isn’t the only country courting LNG investments, with competition coming from places like Qatar, Mozambique and the U.S.

“We need to remember that Exxon and Total are companies operating worldwide,” Pok said in a telephone interview. “They’ve come into PNG and built confidence in our oil and gas industry, and their investment is welcome. We will come to an agreement, but we need all the parties together and talking and focused on getting the best outcome.”

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Haiveta not happy with delay in paying landowners

The National aka The Loggers Times | May 16, 2018

Gulf Governor Chris Haiveta has called on Oil Search to own up to the fact that it fast-tracked processes in an effort to capitalise on the country’s resources while leaving the landowners stranded with little possibility of receiving royalties promptly.

He said company chairman Rick Lee was out of line during Friday’s annual general meeting in Port Moresby when discussing landowner groups and landowner identification processes.

“The entire reason we are now facing the issues with the delayed royalty payments is based squarely on Oil Search’s lack of ability to correctly communicate and inform both Exxon and the Government of their experience of the process and the requirements of the Oil and Gas Act,” Haiveta said in a statement.

“Oil Search must accept that they continue to generate enormous profits from PNG, they receive beneficial tax credits, yet they are trying to push the blame to the Government for their lack of corporate governance in managing the process when it comes to the landowner identification.

In a statement yesterday, Oil Search said an Australian Financial Review report which quoted Oil Search chairman Rick Lee as saying the PNG government was responsible for the payment of benefits from the PNG LNG venture was misleading and that the “words used in the articles also do not represent the views of Oil Search but those of the journalists concerned”.

Haiveta said: “The fast-track approach to commence the project then opened the doors to further confusion when they called for a new landowner identification process for existing brownfields petroleum development licences (PDLs) when there was already an existing gazetted landowner documentation in place. The determination was only required for the three new PDL’s including Hides 4, Angore, and Juha, plus three new blocks of Hides 1.

“The Government accepts that landowner identification process was always going to be complicated if this was not completed before the PNG LNG project commenced. The PNG LNG project should have never started without the gazetted landowners.

“Oil Search should not be concerned with how the royalties will be used and continuously calling for transparency.

“There is no issue with the transparency of funds; the Government will work closely with the correctly identified landowners to further improve the provinces and districts.”

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Oil Search denies blaming PNG govt for project problems

There have been complaints of a lack of benefits coming from the LNG project. Photo: RNZI / Johnny Blades project

Someone is not happy with Oil Search – but this kind of back-tracking is not going to fool anyone!

Truth is they are all to blame – Oil Search, Exxon Mobil and the PNG government…

Radio New Zealand | 16 May 2018

The oil and gas company Oil Search denies that it blamed Papua New Guinea’s government for non-payment of benefits from the LNG gas project.

This comes after statements by the Oil Search chairman at its Annual General Meeting last week acknowledging landowner frustrations over project payouts.

Oil Search claimed its chairman’s comments were mis-reported.

In a new statement it said that during the annual meeting, the company outlined the need to ensure royalty payments and other benefits owing to landowners were distributed as soon as practicable.

Oil Search said it was working closely with the PNG government and other stakeholders to ensure the project benefits owing were distributed as soon as possible.

The statement said that at no time had Oil Search accused the government of being responsible for the delay in the payment of these benefits, rather it had outlined to its shareholders that it had fulfilled all of its requirements under the Oil and Gas Act.

“We also stressed that substantial progress had been made by the Government in this area over the last 12 months and more was expected in the short term,” Oil Search said.

However, the Governor of PNG’s Hela province criticised developers of the LNG gas project, ExxonMobil and Oil Search, over lack of payments to his province.

Philip Undialu said when establishing the project, corporate giants bullied PNG politicians into a substandard agreement.

The Governor said Provincial Governments of the LNG Project area lost nearly $US240 million in Development Levies and Royalties over the last four years.

Mr Undialu said there were hundreds of millions more dollars in royalties which Hela people should have been paid.

“It is pathetic for Chairman of Oil Search to attack the Government after robbing it’s people through a flawed agreement the Somare Government facilitated between 2008 to 2010,” Mr Undialu said.

He called on lead developer ExxonMobil and its project partner Oil Search to admit this failure and pay Hela what belongs to its people, saying the province desperately needs money after February’s major earthquake.

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Hela governor hits out at LNG project developers

ExxonMobil’s LNG Project cuts a swathe of ‘development’ through Hela province in PNG’s Highlands. Photo: RNZI / Johnny Blades

Governor: “corporate giants bullied PNG politicians into a substandard agreement”

Radio New Zealand | 16 May 2018

The Governor of Papua New Guinea’s Hela province has criticised developers of the LNG gas project over lack of payments to his province.

Philip Undialu said when establishing the project, corporate giants bullied PNG politicians into a substandard agreement.

The Governor said Provincial Governments of the LNG Project area lost nearly US$240 million in Development Levies and Royalties over the last four years.

Mr Undialu said there were hundreds of millions more dollars in royalties which Hela people should have been paid.

He called on lead developer ExxonMobil and its project partner Oil Search to admit this failure and pay Hela what belongs to its people, saying the province desperately needs money after February’s major earthquake.

His comments come after the Oil Search chairman said community discontent and violence around the project was not his company’s fault but a result of the PNG government’s failure to distribute royalties.

“It is pathetic for Chairman of Oil Search to attack the Government after robbing it’s people through a flawed agreement the Somare Government facilitated between 2008 to 2010,” Mr Undialu said.

“It’s by time we take everything back to round table and ascertain who is to be blamed.

“This is a human rights issue and I will not allow my people being deprived of. I need those monies to rebuild infrastructure devastated by the earthquake disaster… so we will rebuild our communities.”

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PNG LNG project has not delivered on promise of infrastructure and services – new report

A new report on the adverse social impacts of a Papua New Guinea Liquefied Natural Gas project has found four years after the project has been operational, the majority of the promised infrastructure and services has not been delivered.

Jubilee Australia’s new report ‘On Shaky Ground: PNG LNG and the Consequences of Development Failure’ is the first independent comprehensive report of the social impacts of the PNG-LNG pipeline since it started operating in 2014.

PNG activist Lucielle Paru said:

“The Huli and all those who have been affected by the PNG-LNG project from Hela Province to Central Province have not benefited.  The decision by the leader of the People’s National Congress Leader and Prime Minister Peter O’Neill to proceed with this project has destroyed PNG’s economy. Peter O’Neill should apologize to the people of PNG especially those directly affected by the PNG LNG project. There is a growing call not only by the landowners in the Hela Province but within PNG for Peter O’Neill to resign as a result of the mismanagement of the PNG LNG project and non-payment of our royalties.

Summary of findings:

  • Although some royalties have been paid to communities near the LNG plant, no royalties have yet been paid to Hela communities.
  • The landowners of the resource in the areas of Hela Province are still living in conditions of abject poverty.
  • Despite warnings about the dangers of starting production before the completion of landowner identification and vetting, the companies proceeded into production phase before this was complete.
  • The majority of the promised infrastructure and services has not been delivered.
  • For the past two years, there has been a series of incidents of violence, sabotage and kidnapping that are clearly connected with frustrations and discontent about the project. Since August 2016, the violence has escalated in the Hela communities.

PNG LNG  is an Exxon-led project which supplies about 8 million tonnes of LNG a year to Japan, South Korea and China from the gasfields of the Hela region. It is projected to run for 30 years.  The project’s partners are Exxon, Oil Search, Santos and the Government of PNG.

Report co-author and anthropologist Michael Main said:

“During the seven months I spent living with Huli landowners I witnessed the abject development failure of the PNG LNG project. The landowners of the resource remained in conditions of dire poverty and promised development projects did not exist.

“During the construction phase of the project landowners had jobs, families had money, and conflict between clans was minimal. When construction ended and people lost their jobs, money stopped flowing, frustrations built up and violent conflict escalated to catastrophic levels. The devastating earthquake of 26 February has only compounded the frustrations of the Huli population and lack of development from the project has diminished their capacity to cope with natural disasters.

In 2009  Australia’s Export Credit Agency, Efic lent AU$500 million of taxpayers money to the project. This is the largest loan ever made by Efic. The Efic loan to the project has generated significant media interest in Australia over the years.  Last month Jubilee released an economic analysis of the project which confirmed that the PNG economy has indeed gone backwards as a result of the project. On the back of this report, Australia’s Assistant Trade Minister Mark Coulton said that there will have to be an ‘investigation’ into the decision to fund the PNG LNG decision.

Report co-author and Executive Director of Jubilee Australia Dr Luke Fletcher said:

“Although they have never been released, we know that Australian government agencies Efic and DFAT prepared risk analyses of this project before it was approved. It was known that that the project was to happen in an area with a long history of social and often violent conflict, within a system of complex landowner relationships.

“Efic and DFAT either rated the project as low or moderate risk, which was clearly incompetent. Or they rated the project as high risk, and recommended approval anyway, which is scandalous.

“Either way, Efic and DFAT must release all risk analyses at once, and the Assistant Trade Minister should make good on his commitment to a full inquiry into this matter as soon as possible, preferable in the Senate so that all Australians and people of PNG might be privy to it,” concluded Dr Fletcher.

This new report follows the publication last month of an economic analysis of the pipeline, Double or Nothing: The Broken Economic Promises of PNG LNG’  by Jubilee Australia.   

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