"We declare our first goal to be for every person to be dynamically involved in the process of freeing himself or herself from every form of domination or oppression so that each man or woman will have the opportunity to develop as a whole person in relationship with others".

- Papua New Guinea National Goals and Directive Principles

Friday, 8 October 2010

Pacific Environment's Fact Sheet on Exxon Mobil’s Papua New Guinea LNG Project

ExxonMobil’s Papua New Guinea LNG Project
ExxonMobil’s Papua New Guinea Liquefied Natural Gas (PNG LNG) Project has received $3 billion in financing from the U.S. Export-Import Bank.
Key Concerns with the Project:
  • The PNG LNG project demonstrates Ex-Im Bank’s disregard of its climate change impacts. Ex-Im Bank estimates that PNG LNG will emit 3, 100, 000 tons of CO2 every year in direct emissions,[i] yet even this figure omits the much greater indirect (lifecycle) emissions associated with LNG schemes which include pipeline transport, a liquefaction plant, the tanker transport, re-gasification and ultimate combustion of this fossil fuel.  According to a Carnegie Mellon study, lifecycle greenhouse gas emissions for LNG projects are more comparable to those of coal that conventional natural gas.[ii].
  • In September 2009, building up to COP 15 negotiations in Copenhagen, President Obama and other G20 leaders called for a phase out of fossil fuel subsidies. However, as climate negotiations begin, Ex-Im Bank announced new financing for fossil fuel-emitting projects like PNG LNG.
  • The PNG LNG Project includes participation by KBR, an engineering firm that has admitted to corruption on another Ex-Im Bank project. KBR plead guilty to corruption charges on an Ex-Im Bank financed Nigeria LNG project and received the second largest criminal penalty in the history of the U.S. Foreign Corrupt Practices Act for $182 million in bribes. KBR subsequently formed a joint venture with WorleyParsons, Eos, which secured a similar engineering contract on the PNG LNG project.
  • Revenue transparency, royalty sharing agreements and inequity concerns are causing increasing unrest which is turning to violence, and Transparency International has expressed “grave concern” about the lack of transparency in the development of a benefit sharing agreement. This growing conflict threatens to dramatically increase diverse project risks to which the US Government will be exposed.
  • The project’s Environmental Impact Statement (EIS) and Social Impact Assessment (SIA) are grossly inadequate and fail to address the environmental and social impacts and provide appropriate mitigation measures. They fail to address several IFC performance standards including: Environmental Assessment, Pollution Prevention and Abatement, Land Acquisition and Resettlement, Biodiversity Conservation and Sustainable Natural Resource Management and Indigenous Peoples.
  • The environmental and social impacts of this project are severe and unacceptable. Please see the facts below for an overview of the impacts and inadequacies.
Key Environmental and Social Impacts associated with the PNG LNG project:
Deforestation, Marine and Vegetation Ecosystem Damage
  • The PNG LNG project includes a 248 km pipeline, much of which will penetrate previously undisturbed primary tropical forests with biodiversity of global significance.
  • 2,809 hectares will be cleared, half in areas not previously disturbed by oil and gas developments
  • 1055 hectares of primary tropical forest will be cleared and an estimated 86% of primary tropical forest losses 
  • Pipeline will cross 26 major water crossings, 138 minor water crossings and will cross the Kutubu Wildlife Management Area.
  • Risks include increased erosion, contamination from construction, and groundwater hydrology contamination
Offshore Pipeline & Impacts
  • The PNG LNG project also proposes a 407Km offshore pipeline 
  • The pipeline will traverse the Gulf of Papua, Omati River Landfall, Caution Bay and Port Moresby
  • The pipeline will physically cover 43 hectares of seafloor
  • Risks include direct and indirect impacts on marine life, increased sedimentation rates and toxicity threats, impacts to threatened species, accidental spillages of hazardous material and seismic hazards
Climate Change & LNG pollution emissions
  • LNG uses gas as source of power in the liquefaction process (super-cooling gas to 260 degrees below zero), which results in greenhouse gas emissions
  • Shipping, re-gasification and transport of LNG results in indirect pollution emissions of greater magnitude then direct emissions
  • Project is estimated to emit 3,100,000 tons of CO2 every year in direct emissions
  • In recent years Ex-Im Bank financing for renewable energy projects has been less than 2% of its financing for fossil fuel projects.
Indigenous Health Impacts
  • An estimated 80% of the construction workers will be expatriates and mostly male
  • Risks include increased violence and STDs in local communities and more burdens on community health, human services and other social infrastructure. 
  • PNG is one of the most serious HIV epidemics in the Asia-Pacific region. The impact of HIV/AIDS can be a two-way catastrophe, with increased exposure from expatriate workers to local people and from local people to expatriate workers, many of which then move on to projects in other countries.
  • The project EIA and SIA fails to commit to adequate mitigation measures: funding for HIV and other disease prevention measures or an increase in social, medical, police, water and sewage infrastructure
Involuntary Resettlement & Inflation
  • Involuntary resettlement, including resettlement of indigenous people. There is no disclosed Involuntary Resettlement or Indigenous Peoples Resettlement Plan.
  • The project fails to recognize that many PNG indigenous landholders enjoy customary tribal land rights that are perpetuated and transferred from one generation to the next.
  • The project fails to address the socio-economic impact of inflation. This includes dramatic inflation in housing and food costs resulting from the influx in investment and relatively much higher purchasing power of incoming workers and often the relative lack of available supply.
Revenue Transparency, Royalty Sharing Agreements and Equity Concerns
  • The project fails to comply with the Extractive Industries Transparency Initiative (EITI) on transparency issues including public disclosures and auditing
  • There is a growing distrust and decreasing ability to know whether the promised revenue for communities is diverted
  • The projects fails to disclose details of the foreign investment contracts among project sponsors and host countries
  • The project is registered in the Bahamas, a notorious tax haven.
Increase in Violence
  • UNICEF estimates that 1 million children in Papua New Guinea live with violence either at home or in their community. Conflict is nothing new among some tribes in PNG. The project increases the risk of more violence among local communities and the foreign oil giant.
  • Local civil unrest about revenue and land owner rights already begun to turn violent. This fall, government ministers were physically attacked by landowners. This project can presage more violence between local people and the company and vice versa.
  • Ex-Im projects historically have caused violence and conflict, as seen in Africa and Peru.

[ii] P. Jaramillo, W.M. Griffin, and H.S. Matthews, “Comparative Analysis of the Production Costs and Life-Cycle GHG Emissions of FT Liquid Fuels from Coal and Natural Gas,” Environmental Science & Technology, vol. 42, 2008, pp. 7559–7565. 

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