"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

Monday, 24 December 2012

Australia adamant in supporting PNG LNG project

Radio New Zealand International - 23 December 2012

The Australia government says to not support the Papua New Guinean government in delevoping the liquified natural gas project would be negligent.

An Australian NGO, Jubilee Australia, says the government has put PNG at risk by investing in the multi-billion dollar project.

It says violence associated with the project could increase in coming years because of high expectations in local communities.

Australia’s parliamentary secretary for foreign affairs, Richard Marles, says Australia has to be doing everything it can to see the project succeed.

“It’s right that Australia should be there helping PNG in relation to what has the potential to be a transformational project for that country. So, it is easy to criticise these projects, at the end of the day, it’s happening, it matters greatly that it works well, and we need to be there, being the best friend that we can be and supporting that project.”

Richard Marles says Australia is supporting the project in economic terms and to make sure it pays a social dividend too.

Thursday, 20 December 2012

LNG may have negative impact

By Ancilla Wrakuale: Post Courier 20 December 2012 

AN investigation report on the PNG LNG project by an NGO called Jubilee Australia has revealed that there are serious risks that revenues generated by the largest multi-billion kina gas project will not mitigate the negative economic and social impacts of the project.

“In fact it is very likely that the project will exacerbate poverty, increase corruption and lead to more violence in the country,” the report says.

The PNG LNG project is the biggest-ever resource undertaking in the history of PNG and the Pacific.

“The project is expected to generate as much as $US19 billion in tax, levy and royalty receipts to the PNG government over the 30 years that the gas will flow.

“The report is the most complete discussion to date of the potential risks and benefits of the project to the people of PNG,” the authors said.

The report highlighted circumstances, events and impacts associated with the multi-billion gas project in PNG.

Director of the Institute of the National Affairs (INA) Mr Paul Barker said the construction phase has brought major inflows of jobs and activities to both local and overseas businesses.

However, he said as the construction phase winds down, there will be few jobs offered by the project to less than 1000 jobs as the project goes into the production phase in 2014.

“Once LNG is in production it will provide few jobs, so the benefits depends on how well national and provincial governments and landowners invest and utilise their funds,” Mr Barker said.

“If they’re wasted through inefficient management, corruption etc, then the opportunity will have been lost, and the whole venture will end up with a negative gain for PNG. If it uses these funds efficiently, there is a good chance there could be solid net gains for the country.

“The trouble is that PNG’s track record with money has been poor. In the 1990s the then ‘minerals boom’ encouraged loose expenditure, boom and bust, with a series of structural adjustment programs to try and put the economy back on a solid footing,” Mr Barker said.

Meanwhile, there are also concerns that the LNG project is also having an impact on agricultural commodities with the appreciation of the PGK on the global market.

Executive director of the PNG Palm Oil Council Mr Ian Orrell said one of the impacts of the county’s booming extractive sector, as we have already seen, is an appreciation of the PGK that has affected the export of agricultural products,” he said.

“This has already had a very significant negative impact on the country's agricultural export crops.

“The two most dominant factors affecting the price we get for export crops are the global commodity price and the value of the PGK against the currency the commodity is traded in on the world market".

Wednesday, 12 December 2012

We have seen this movie before!!

Yesterday Jubilee Australia released a damning report on PNG LNG. Its findings echo the experience of Chad-Cameroon with ExxonMobil. Why didn't PNG's leaders conduct due diligence into Exxon before getting into bed with them! Now it is the people of PNG who are going to pay. 

Compare Chad-Cameroon findings:

"When the Chad-Cameroon  Oil and Pipeline Project was officially inaugurated in 2003, the World Bank explained its rationale for supporting the project: 'There are two essential reasons for World Bank Group involvement: The first is to help ensure that Chad's oil money is used for the well-being of all Chadians, particularly the poor…. The second reason is that World Bank Group involvement has helped ensure that the Bank Group's rigorous safeguard policies were observed in order to implement the project in an environmentally and socially sound manner.'

Despite the World Bank Group's unprecedented efforts, it has failed on both counts. The social and environmental situation in Chad has not improved. In fact, there is evidence (some reflected in World Bank statements and official reports) that things are worse. The project appears to have fueled violence, impoverished people in the oil fields and along the pipeline route, exacerbated the pressures on indigenous peoples and created new environmental problems. Meanwhile ExxonMobil, the leader of the oil consortium and the world's largest oil company, is registering record profits".


With PNG LNG Findings:

"This Report is the most complete discussion to date of the potential risks and benefits of the Project to the people of PNG; it argues that, contrary to the official discourse, there are serious risks that the revenues generated by the project will not mitigate the negative economic and social impacts of the Project. In fact, it is very likely that the Project will exacerbate poverty, increase corruption and lead to more violence in the country".

http://www.jubileeaustralia.org/LiteratureRetrieve.aspx?ID=112463 (3576 KB)

Tuesday, 11 December 2012

PIPE DREAMS: The PNG LNG Project and the future hopes of a nation

This investigative report by Jubilee Australia highlights circumstances, events and impacts associated with Exxon Mobil’s US $19 billion Gas Project in Papua New Guinea’s (PNG) Southern Highlands.
The PNG LNG Project is the largest single development in the history of Papua New Guinea, and the Pacific. The Project will see ExxonMobil and its joint venture partners, Oil Search, Santos, JX Nippon Oil and Energy, and the PNG Government, arrange for the extraction of the large gas resources deep underground in the country’s Southern Highlands, and their shipment by pipeline from the newly-created Hela Province, to Caution Bay near Port Moresby, where they will be liquefied and sold to energy-hungry buyers in East Asia. The Project is expected to generate as much as $US 30 billion in tax, levy and royalty receipts to the PNG Government over the 30 years that the gas will flow.

This Report is the most complete discussion to date of the potential risks and benefits of the Project to the people of PNG; it argues that, contrary to the official discourse, there are serious risks that the revenues generated by the project will not mitigate the negative economic and social impacts of the Project. In fact, it is very likely that the Project will exacerbate poverty, increase corruption and lead to more violence in the country.

Pipe Dreams also discusses the nature and the implications of the Australian Government’s financial and institutional support of the PNG LNG Project, continuing Jubilee Australia’s investigation of Australia’s export credit arrangements first revealed in the 2009 report, Risky Business.

Warning on fraud in PNG gas project

Richard Baker - Sydney Morning Herald, 12/12/2012

THE economic benefit of Papua New Guinea's biggest natural resources project has been questioned, with a report warning that ordinary citizens risk missing out because of corruption and contracts that favour the lead proponent, ExxonMobil.

A report by anti-poverty group Jubilee Australia, to be released Wednesday, examines the predicted economic benefit of PNG's liquefied natural gas project and the Australian government's provision of $500 million towards it.

The report highlights endemic corruption in PNG and warns that a government sovereign wealth fund and other official bodies established to handle billions of dollars in revenues could be defrauded.

''The governance and public life of PNG are to this day beset by political intrigue, self-interest of politicians and gross misuse of public funds,'' the report warns.

Scheduled to begin production in 2014, the LNG project is valued at $22 billion and predicted to double PNG's gross domestic product.

Australian companies Santos and Oil Search are prominent players in the joint venture project led by US giant ExxonMobil.

The report by Jubilee Australia - whose supporters include World Vision and the National Coalition of Churches - includes allegations that the PNG government was ''pressured into the signing'' of agreements by the joint-venture companies.

Former PNG attorney-general Allan Marat is quoted in the report as saying he and his office had less than 24 hours to analyse a 200-page agreement before determining whether it was in the best interests of his country. ''This gas agreement was drawn up overseas. It was taken away from our government negotiating team and structured overseas. 
And, we are now forced to dance to the music of foreigners,'' he said.

In response to questions from Jubilee Australia, ExxonMobil disputed the claims and argued that the fast negotiations could be explained by the fact the PNG government relied on many of the same fiscal terms as previously agreed to in a defunct 2006 proposal.

The report found mixed economic benefits for PNG people as a result of the massive investments already being made for the project.

It stated that although PNG citizens fortunate enough to have been directly employed by the project had reported that their livelihoods had improved, there was a strong view that ''an educated and well-connected elite'' had captured most of the benefits.

Using the results of a 2011 study by New Zealand's University of Otago, the report found the project was also leading to increased tensions among landowners in the PNG southern highlands and a phenomenon known as ''bride price'', where the groom's family makes a payment to the bride's family.

The expectations created by the perceived extra wealth being directed into local communities was increasing this price, making ''it more difficult for many young men to marry''.

The report also highlighted an increase in ''destructive social practices'', with the influx of temporary workers and money leading to more gambling, prostitution, drug and alcohol abuse problems.

Increasing environmental incidents have also been noted. The most recent was a January mudslide at a quarry that killed at least 26 people, mainly migrant workers. The quarry had been used by a company working on the project until mid-2011.

The Australian government's decision to contribute a $500 million loan to help the financing of the project has also been criticised in the report. The loan by Australia's Export Finance and Insurance Corporation was made on the basis that 
Australian equity in the project was about 43 per cent and there was $1.5 billion of procurement contracts available to Australian firms.

EFIC used what is known as ''the national interest account'' to fund 80 per cent of the loan. As such, nearly all the documents it holds on the assessment process for the PNG loan are exempt from freedom-of-information scrutiny.


Monday, 3 December 2012

PNG energy sector is burning bright – but for who?

Governor Garry Juffa, MP

The Hilton hotel where PNG's resources will be sliced and diced
The Hilton hotel where PNG’s resources will be sliced and diced
In December from the 3rd -0 5th, 2012, the 12th PNG – Australia Gas and Petroleum Conference will be held in Sydney, NSW, Australia, organized by the PNG Chamber of Mines and Petroleum. It will be held at the prestigious Sydney Hilton and once more all manner of people involved in the gas and petroleum industry in Papua New Guinea, either directly or indirectly will be there networking, hoping to impress one another with what they know, or who they are or who they know.
There will be many current and ex politicians from PNG and Australia even, experts, gurus on this and that and econometricians, geologists, engineers, lawyers and accountants and so forth. There will be middlemen and agents, those who actually mine and those who mine the stock exchanges around the world, boosting their shares up with great news from the last frontier. In fact there will also be many experts on PNG, some who have actually lived there, some are even Papua New Guinean.
Again, there will be much to discuss and much is at stake – for instance PNG’s future economic prospects and the future profits of the investors in this industry. The two significant questions that come from both these areas of concern are: how does PNG benefit and, how do the investors benefit?
Of course, the investors care very little how much PNG benefits as long as PNG allows access to its resources, grant all manner of Tax and Customs exemptions and allows the Mobile Squad to stand guard at project sites to counter irritating landowners. All the while, PNG is supposed to feel very grateful for a pittance of a stake of some sort in such projects. Clever schemes set up by lawyers and accountants force the PNG Government to excessively fund costs associated with being a stakeholder of some sort and undertake to handle all landowner issues an example of which was witnessed by Papua New Guinea and the rest of the world in Bougainville with the loss of 20,000 lives from 1988 to 1998 and the destruction of a province and a people who are still recovering to this day.
But they can’t say that, at least not in public, survival is their focus, profit is their agenda.
A test of care would be to measure the stake Papua New Guinea owns in any mineral resource project – less then 10% in many instances and this often very reluctantly from the investor.
Meanwhile, Papua New Guineans are always being told in overt or covert manner by investors how grateful they should be for the developments taking place in their country. Expert spin Doctors paid oodles of money arrive on PNG shores literally every day with brand new ideas on how to convince the people to not only accept but to demand and ask and even pay for investments in their country, for their own resources. These magicians who write and talk up a great and convincing hype arrive heeding the call by the industries major players who are willing to pay buckets of money so that they do not have to pay what is rightfully due to the resource owners, that is the people of PNG.
As for the keepers of the gate of the economy, the Government, well they are usually the first to sell out. At least that has been the case and has become the tradition since the first missionaries were sent to urge Papua New Guinea to help the people turn a collective cheek so that the administration that followed could plunder at will and whim and “civilize” the people, often brutally and in condescending and discriminatory fashion until their independence, where by they could now be geographically and politically independent but remain economically manipulated for as long as possible.
So, while the spin doctors churn out propaganda products galore, referred to by the corporate world as “marketing tools” or “community affairs promotion efforts” that are designed to pacify the people and assure the developers that their conscience is clear, the reality is just the opposite for the average Papua New Guinean who has to cope with the burgeoning cost of living, food and accommodation costs ever more while salaries and wages remain ever low with increasingly less accessible government services and increasing crime and fewer opportunities for employment or business. As for the landowner, few genuine landowners benefit, most often miss out. It is usually those who are educated to some degree and in the right place at the right time that end up benefitting. For many, benefitting means they are a conduit for funds from the investor in the form of royalties paid to a plethora of service providers such as prostitutes, loan sharks, pokies outlets and so forth – all in Port Moresby and Lae and increasingly Suva and Nadi and Cairns. Their actual homes remain largely unaffected in any positive way, many have abandoned their wives and children and live their new lives in Port Moresby or Lae.
Now let us look at the national scene in so far as development is concerned. Let us just look at Education and Health as examples. One always hears about the law and order situation and how Port Morbid is in the top 10 list of most dangerous cities in the world and where rape and murder are but daily events throughout much of PNG where many crimes go unreported and unpunished and where ethnic tribal fights are now modernized into raging gun battles that run for days and where many are killed – often unreported.
One can measure how a country is actually progressing by glancing at the indicators in these two areas of development – Health and Education. Papua New Guinea boasts of the worst indicators in the region in so far as Health and Education are concerned. Illiteracy is making a huge comeback and ignorance is his dear friend. Schools are overcrowded with classrooms of 80 – 100 children common and children sit on dirt floors listening to exhausted teachers. Every year almost 80,000 school leavers are ejected from Papua New Guineans education system with only 10,000 finding meaningful employment, the rest experience lives turmoil and challenges witness their dreams evaporate and are forced to downscale them to accommodate reality. Meanwhile the education system itself is a disaster with outdated curriculum and poor administration forcing teachers to leave for other vocations or even depart for positions in smaller pacific island countries where safety is guaranteed and benefits are far more reasonable.
As for the Health Sector, it is unhealthy and hospitals are crammed full with those seeking medical treatment, dying on emergency floors, mothers literally bleeding from childbirth, ordinary people of severe wounds from growing violent crime or ethnic tension in Port Moresby, the cities capital. Doctors are scarce and the Doctor to patient ratio is alarmingly well below UN recommended figures – in one province it is an atrocious ratio of 1 Doctor for 30,000 people. Health indictors paint a gloomy and depressive picture, the specter of Death is very much visible here, gliding over the vulnerable, the very young, expectant mothers and the elderly, picking at what seems to be will and whim, where he so pleases. All the while the nation is reeling from AIDS, TB and malnutrition while the population growth is the highest in the region at 2% and one of the highest in the world and there seems to be no effort to check its growth.
What of the remote parts of PNG, inaccessible by road? Well, if you get sick, you die. It’s that simple. A terrible story is increasingly told in PNG’s media, the papers, radio and television, sad reports of mothers who die from birth complications, of village children often from snakebites or dysentery or other easily treatable (anywhere – else – in – the world ailments) almost daily throughout Papua New Guineans rural areas where 85% of the people live. Health Stations and Aidposts that once covered PNG providing basic medical services are disappearing, slow agonizing deaths where nurses and doctors do not replace those who retire or die, and how can they when any supporting infrastructure in these areas such as electricity, Police, banks, post offices, bridges and road even deteriorates in direct correspondence.
Entire district stations, built during the colonial period and unmaintained since are now dilapidated and decaying, most have closed down. The Churches are increasingly the only providers in these areas where Government services are but whimsical yearnings for yesteryear by those who can still remember what a Health Extension Officer was. But even they are abandoned increasingly, as foreign interest is turned over to the local priests and pastors and funds that once flowed dry up. Here, Christian spirit is truly tested.
These snapshots of Papua New Guinea’s state of national health and education do not suggest a nation progressing. But can corporate entities be blamed for this?
Of course not! They are corporate entities and their primary function is to turn over a profit and minimize overheads and heed their boards and or shareholders. The parameters of what they can and cannot do in so far as business is concerned, what they must and should pay and their responsibilities to an economy, a people and the environment have to be clearly drawn by the Government on behalf of its people and then, enforced and administrated effectively and with much resilience and constant review to improve by the Government. So no, the corporate sector is not to blame at all because they are doing exactly what they must.
This is where the PNG Government has failed for the last 37 years. They have not exactly done what they should have.
What is the hope in PNG? There is light at the end of the tunnel of doom and gloom for PNG.
The light is a growing middle-income class. A more educated and concerned Papua New Guinea that are communicating and coordinating their concerns, gathering and applying pressure on their government to be more proactive and protective of PNG interests, the hope is the emergence of politicians who are not intimidated by foreign influence and are able to speak their mind out, think long term and be more conscious of the situation their young nation is in. This growing group of Papua New Guineans is finding means and ways to become increasingly involved in business, either as partners or as sole proprietors. They are becoming confident, adventurous and financially prudent. Internet has opened new doors and developed opportunities for greater communication, debate, learning, commerce, networking and coordination of common concern. From everywhere and virtually anywhere, Papua New Guineans are communicating in real time and about real issues that confront their country and they are finding ways to have their say and be heard and they have a lot to say. Social media has become a platform to launch almost radical movements for common causes and the educated Papua New Guinean can now carryout their role in ensuring that the elected leaders, elected by the largely uneducated and innocently ignorant masses, can be held to account.
In what appears to be direct tandem, the greater masses are now being greatly influenced by the middle class, by the educated that are now informing and influencing voting patterns and therefore outcomes. As a result, a greater number of more responsible, more outspoken and more conscious politicians are being elected into parliament. The 9th parliament of 2012 is a testament to this and the next elections will no doubt see an increase in leaders who are not willing to be just politicians but agents of change, actually leading in every sense of the word, critical of the direction PNG is taken and no longer silently ignorant or negligently so of the efforts of foreign powers and multinational corporations.
Perhaps we will see a government that actually reviews the state of our economy and scan the deplorable and despairing state of our rural communities and do something about it. Already there appears to be greater funding opportunities but that can only work with greater financial controls. The Government has claimed that it is reviewing the audit and financial management mechanisms in place to ensure improved effectiveness and efficiency in the delivery of goods and services. The Government has also borrowed substantially from CHINA – K6 Billion to be exact – for much needed infrastructural development purposes.
Hopefully this will be managed prudently, otherwise, as is the usual formula for any funds available for development of any sort, 40% will be soaked up in consultants fees, overstated contracts and dished out to cronies and friends unless the national procurement system is overhauled and stringently applied to ensure proper application of the borrowed funds. And what of the fine print? The media has not yet informed the people that CHINA has insisted that 50% of all projects to be funded by the loan MUST go to Chinese companies. Will this sacrifice be worth it for the progress of Papua New Guinea? Perhaps. Only time hold’s the answers.
Meanwhile, the Opposition of the 9th Parliament looks formidable and is strategizing to demonstrate that it will not oppose for the sake of opposing but be critical and hold the Government to account. This was evident in parliament when the Opposition leader stood up and made a speech supporting the budget and the extension of the 18 month grace period to 30 months to allow the Government more time to prove what it has been preaching.
Meanwhile a new political development is emerging. Here there are a few who sit neither right nor left, neither in Government of Opposition. But they claim to heed the voice of their people and project that voice, those views and thoughts and consideration on the floor of parliament.
Perhaps, all these efforts from all these changes…can collectively exert greater effort into determining their own destiny and demand greater participation in the development of their resources, including and perhaps especially the energy resources… Perhaps they can then ensure that conferences such as the PNG Mining and Petroleum Investment Conference can be held in PNG…where the resources being determined for sale are actually found

Saturday, 1 December 2012

Prime Minister Labels PNG Workers Lazy

When you have a state so eager to become capital, through equity interests in the mining, gas and oil sector, it stands to reason Ministers will begin to think like capital, whose primary focus is disciplining and exploiting labour. Enter Prime Minister O'Neill

LNG blowout irks O’Neill

Source:The National, Friday 30th of November, 2012


In Sydney PRIME Minister Peter O’Neill has blamed the recent blow-out in the PNG LNG product costs in part on the country’s work culture.O’Neill told the Lowy Institute in Australia that productivity remained one of Papua New Guinea’s greatest challenges to development and one that had cost the country dearly.

He said PNG had never really focused on productivity, especially on government measures to improve productivity.It has become “relaxed and comfortable”, even “complacent” to the extent it cost the country greatly as evidenced most recently by the blowout in cost of the PNG LNG project, appreciating from the forecasted US$15.7 billion (K32.49 billion) to US$19 billion (K39.23 billion).

The additional cost is to be borne by shareholders ExxonMobil, Oil Search, Santos, Nippon Oil and Gas and the state, which has a 19.4% stake in the project.“While currency fluctuations have been a factor, there is no doubt that actual construction costs have grown significantly,” O’Neill said.“As a shareholder, the national government, on behalf of the people, will have to meet its share of the additional cost.“What concerns me is that we have taken our eye off the main game when it comes to lifting productivity and addressing the rising cost factors impacting the development of our resource sector.”

The project management recently announced that the cost blowout had in part been caused by currency fluctuations and in part by work stoppages brought on by landowner actions and adverse weather.O’Neill said he would be insisting on efforts to lift productivity across the board in every activity right throughout the country.

Productivity had to increase to best position PNG to reap the benefits of an exciting period of resource sector growth, he said.Productivity would enable PNG to compete with other LNG producing nations in the region and elsewhere to secure sales in an increasingly crowded LNG market.O’Neill said contracts for sale for the first LNG project were concluded and LNG would be exported to China, Japan, Taiwan and Korea but the challenge would be to get contracts of sale for the second project managed by InterOil, which received initial approval recently.

“There are more than 70 applications for petroleum prospecting licences awaiting approval and a number of potential projects for domestic gas and export are advanced,” he said.“That is going to require project developers and the national government to focus on cutting development costs, streamlining processes, making sure our tax regime is competitive and ensuring there are no disruptions during the construction and operation phases.”

That would be the only way Papua New Guinea got ahead and stayed ahead of the competition, he said.

Thursday, 29 November 2012

No One Has Taken Responsibility for Tumbi Disaster MP Claims

LNG cost on lives: MP  
Post Courier, 29 November

THE monetary cost blow out in the LNG project is smaller than the cost blow-out on the lives of the project area landowners, Koroba-Kopiago MP Philip Undialu told Parliament on Tuesday.

Mr Undialu said during Question Time in his series of queries to Petroleum and Energy Minister William Duma that the Department of Petroleum as the custodian of the industry had failed to honour its part of the agreement to have line agencies like Environment and Conservation, Lands and Physical Planning, Commerce and Industry on the ground but operating by remote control from Port Moresby.

“The LNG project will be a gain for the country but a huge loss for my people in terms of environment conservation and sustainability,’’ he said.

“We want to see key Government departments on the ground to ensure compliance of environment laws, land laws and other relevant laws enforced on the ground through monitoring.

“This particular project was done in a very rush manner and so much cost has been incurred. One classic example is the Tumbi landslide disaster claiming almost 26 lives and no one has taken responsibility for that tragedy.”

Mr Undialu said construction work on the project was progressing with accidents claiming lives and nobody was claiming responsibility.

“Our streams and creeks that have been green or blue in colour have turned yellow and nobody has claimed responsibility,’’ he said.

“Our forest is being cleared for roads and pipelines and nobody from relevant National Government agencies are on the ground to ensure compliance to relevant environmental laws.”

He said the current construction of the 25km road from Hides 4 to Hides 1 had now stopped resulting in a stand-off between the landowners and developer.

“There have been notices given by landowners of Angore and Juha, and this Government is thinking of selling the gas by 2013 but we have issues on the ground bombarding this industry that the country depends on,’’ Mr Undialu said.

“What is your plan in so far as landowner identification and social mapping are concern, landowner and business development?

“From the date we signed the agreement I have not seen a single officer from your department, Environment and Conservation and other key agencies on the ground because serious undertaking was given that they will monitor the impact of the environment and business participation by landowner.

“I have not seen one single officer on the ground monitoring. I would like to see serous commitment fulfilled. I want to see responsible department on sight to ensure we deliver the LNG project on time in 2013.

Exxon v Landowners: Minister Duma Chooses Exxon

LO issues raise cost at LNG Project   

Post Courier, 29 November

Petroleum Minister William Duma says part of the cost blow-out of $US3 billion is attributed to landowner issues. 

“We have all heard about the cost blow out, one of the factors that have contributed to the cost of doing this LNG project has been attributed to landowner behaviour to stop works,’’ he said.

Mr Duma said the developer in its periodic reports to the department reported 500 high level incidences involving threats, assaults, illegal occupation of land, refusal of landowners to move out of the way to allow work to progress.

“It is incumbent upon us as leaders at provincial and national level to work with our landowners to realize that although they may have their own grievances it is important that we work together.”

He said the infrastructure development grants (IDG) and business development grants (BDG) would not solve all the problems

“There are a combination of factors that have led to the situation where we are in now, when we negotiated the UBSA and LBBSA agreement, the Government made a number of commitments in relation to benefits to landowners, the first one relates to IDG and BDG which are payable to landowner companies.”

Mr Dumas said in terms of BDG the Department of Commerce and Industry was the implementing agency and Petroleum was to facilitate the project to go ahead.
He said initial landowner identification and social mapping was done by Petroleum and Energy, to be phased out for independent study by outside consultants.

“Outside consultants are engaged, tender process which was done outside of my department and the CSTB awarded a K10 million contract to a company which was made up of individuals with experience in dealing with our landowners, unfortunately, due to many reasons, officers from the company who went to the project areas to do studies were not allowed to do that by landowners ...”

Tuesday, 20 November 2012

Locals demand answers

Source:  The National, Tuesday 20th November, 2012

PEOPLE living along the LNG pipeline route in Moran’s Greenfield area will meet with ExxonMobil, Spicapac and Kutubu Recruitment Services (KRS) representatives this week to resolve pending issues over work contracts and a 15% share agreement payment owned by the people’s umbrella company, Moran Inanaka (Min) Ltd.

Under the agreement, KRS is supposed to pay Min Ltd its 15% share every month.

But the company said that had not eventuated.

Their leaders had petitioned the LNG developers and sub-contractors to meet with them this week to resolve pending issues to allow work along the pipeline route to continue.

They said in a statement yesterday that they were unhappy that ExxonMobil had bought and handed out some machinery and light vehicles to other pipeline landowners, but not them.

“We demand that this and other matters be addressed this week, especially those concerning benefits and assistance meant for the Homa, Paua, Paguale and Yalenda people,” the statement said.

“We want that no more contracts meant for Min Ltd are to be given to KRS.

“We would like Spicapac and ExxonMobil to deal directly with Min Ltd.”

Police use force to remove Southern Highlands roadblock

Source:  The National, Tuesday 20th November, 2012

THE two-day roadblock at the Poroma junction to the Kutubu oil fields was cleared yesterday by Southern Highlands police.

The police used force to clear the roadblock.

The villagers set the roadblock last Friday morning, preventing big trucks and the public from travelling into Kutubu from Mendi.

Provincial police commander Sibron Patoto said yesterday that the roadblock was set after a local, who worked with a company contracted to Oil Search Ltd, failed to get any compensation for injuries he had sustained at work. The man was on a wheelchair.

Patoto said this was the third time the locals had set illegal roadblocks because of the delay by the company to pay compensation.

He said the first one was set at the start of this year and another was around June when police moved in and easily cleared the road.

“I told the relatives of the victim and management of the company to come to a round-table discussion and resolve their problem peacefully,” Patoto said.

He said they could not hold other people and big companies operating in Kutubu oil fields at ransom.

It’s a national highway and it must be cleared at all times for the travelling public, he said.

Taking the law into their own hands would not help solve the problem.

Patoto said the victim was frustrated when his former employer played delaying tactics to prolong the compensation demand for the paralysing injuries.

He said that after the two roadblocks, numerous negotiations without success because the company didn’t  meet the demand of the victim.

“I told them that this illegal roadblock must be first and last and want the matter to be resolved outside peacefully in the presence of police,” Patoto said.

Thursday, 15 November 2012

Kulang slams Exxon

Post Courier 15/11/12

The much glorified PNG LNG project, with its mega-buck promises, has now come to haunt Papua New Guinea.

That is the immediate reaction from the Shadow Minister for Public Enterprise and Kundiawa-Gembogl MP Tobias Kulang, following media reports of a further K6.9 billion equity injection needed to bring the project into fruition.

“This is a scam, concocted by Exxon Mobil knowing absolutely well the vulnerable position PNG is in. The announcement unfortunately comes just a week away from the handing down of the country’s 2013 National 

Budget, putting further strain on it, and the Government must reject it outright,’’ he said. “Where would PNG look for the extra K1.3 billion to meet such unplanned and ill-forecast announcement when it is just about to borrow heftily from the EXIM Bank of China to fund its development agendas?”

The MP fears that Papua New Guinea will now be forced to further reduce its 19.4 per cent stake in the project, which was a reduction from the mandatory 22.5 per cent State equity during the initialling of the project agreement in 2009, with serious ramifications on local participation, not mentioning the local economy.

“Furthermore, the State had to fork out additional K900m in the 2012 Budget to cover for shortfall in the $A1.68 billion Abu Dabi IPIC loan, a transaction completely mishandled by the then Somare government to fund the 

State’s stake in the PNG LNG project,’’ Mr Kulang said.

“We must also note that as per the existing terms of the loan, the loan has to be repaid in full by March 2014, which is way before the project starts producing significant revenue. Now with additional capital call and extension in time, PNG is really placed in a difficult position.’’

Mr Kulang said this would force the Government to forego or shelve certain development plans, to the detriment of ordinary Papua New Guineans that was completely unfair.

“The Opposition may be forced to withdraw support from the passage of the 2013 national budget should any unplanned borrowings or expenditures to do with the PNG LNG project, are factored into the money plan,” he cautioned.

Mr Kulang said what was astonishing was that the then Attorney-General Dr Allan Marat had admitted to not being a party whilst the State Solicitor did not review the LNG agreement respectively before it was executed.

Mr Kulang is angry in that Exxon Mobil, a leading international oil and gas developer, was not prudent, by not ascertaining PNG’s future liabilities during the negotiation stage, in case the situation changed, and when knowing all along that the country’s economic environment was vulnerable.

Furthermore, landowner issues and weather conditions were known issues affecting resource development projects in PNG and for a reputable operator like Exxon Mobil to say at this stage of the project that they did not anticipate accurately was lame and very suspicious.

“They did not have any problems when they allowed the State five hours only to review the agreement so they should now cover for the State for their professional oversight and negligence.”

He is concerned that PNG should be looking forward to enjoying the benefits of the project starting 2014 as promised by proponents of the project proponents, but it will now be locked further into liabilities. Mr Kulang also urged Papua New Guineans not to be complacent, but to read deep into the latest PNG LNG development and speak up because the project scenario may have now changed either for worse or better

Tuesday, 13 November 2012

US$150 Million Bill for PNG Government

The huge US$3.3 billion blowout in costs associated with Exxon's PNG LNG project, has come as a shock to shareholders (see below Oil Search Project Update).

It appears shareholders will be expected to put their hands into their pockets and pay for 30% of the difference.

This means that the PNG Government will be liable for about US$150 million (approx K$300 million). Where will this come from? This is a huge blow to the O'Neill government as it attempts to role out plans for improved access to education and health.

It is also a huge blow to investor confidence in Esso Highlands management. After all, we are talking about a 20% increase in costs.

They point to unexpected foreign exchange impact. Ah 101 management you put in place measures to insure against that. They argue, we didn't expect so many land access issues and work stoppages? Well perhaps had you paid national workers and landowners more, they would not have been so combative.

A bad day for Exxon, an even worse day for the people of PNG, who bet on them.

12 November 2012
Oil Search

Esso Highlands Limited, a subsidiary of Exxon Mobil Corporation and operator of the PNG LNG Project, completed and provided to co-venturers last Friday a revised cost and schedule estimate for the Project. (See Operator’s press release attached).

The Operator confirmed that the Project remains on track to achieve first LNG sales in 2014 and is now approximately 70% complete. The Operator also provided a revised capital cost estimate for the Project which indicated that it has increased from US$15.7 billion to US$19.0 billion. Foreign exchange is the largest single contributor to the increase, at US$1.4 billion. This brings the total realised and estimated foreign exchange impact (though to first LNG deliveries) to US$2.1 billion since Project sanction. Delays from work stoppages and land access issues, which have led to increased construction and drilling costs, have added US$1.2 billion to the cost estimate. In addition, adverse logistics and weather conditions, including rainfall exceeding historic norms for most of the last two years, are estimated to have added US$0.7 billion.

It is anticipated that the capital cost increase will be funded in line with the Project’s existing financing terms, namely 70% by debt and 30% by equity contributions from the Project co-venturers.
Based on the estimated capital cost forecast, Oil Search would be required to contribute additional equity of approximately US$300 million. Including this increase, Oil Search’s remaining equity share of costs through to the end of 2014 is approximately US$0.74 billion. The Company has ample liquidity to fund this increased equity contribution, given its existing cash balance, strong operating cash flows and the recently established US$500 million corporate revolving credit facility, which is presently undrawn.

The Operator has confirmed an increase in the LNG plant capacity, from 6.6 mmtpa to 6.9 mmtpa, which is now available to be sold into the market.

Peter Botten, Oil Search’s Managing Director said:

"The increase in the estimated final costs of the Project is disappointing. The extent of the change is considerably beyond the upper end of what might have been expected from cash drawdowns and Project progress to date. In addition, the estimated foreign exchange impacts and the amount allowed for additional contingency is higher than we would have anticipated. Oil Search intends to fully review the revised estimates and is committed to working with the Operator to seek to mitigate these estimated cost increases. Nonetheless, even including the higher costs, PNG LNG remains a highly robust economic project.

The Operator has assured the co-venturers that the PNG LNG Project remains on schedule, with first deliveries expected to commence in 2014. Confirmation of an increase in plant capacity is pleasing, with the additional 0.3 mmtpa likely to be sold either under contract or on the spot market.
Oil Search’s balance sheet and funding capabilities are strong and the Company is fully committed to advancing its suite of potential growth opportunities, which include the expansion of the PNG LNG Project, high potential exploration opportunities in the Gulf of Papua and the appraisal and possible development of the recent Taza oil discovery in Kurdistan."

Managing Director

Monday, 12 November 2012

Oil Search slides as PNG project cost balloons

Shares in Oil Search, a partner in Exxon Mobil's Papua New Guinea LNG project, have fallen 5 per cent after the costs of the massive gas export development were revised sharply higher.

In a letter published on Monday, Exxon told its partners costs would rise 21 per cent to $US19 billion due to foreign exchange impacts and delays from work stoppages and land access issues.

Shares in Oil Search fell as low as $6.96 and last traded down 5.2 per cent to $6.98, while shares in Santos, another partner in the project, fell 2.4 per cent in a broader market down 0.3 per cent.

The PNG LNG project, the country's largest resources project, is being operated by Esso Highlands Limited, a subsidiary of Exxon Mobil Corporation, and Oil Search has a 29 per stake partner.

Santos, Japan's JX Nippon Oil and Gas Exploration, a unit of JX Holdings, and the Papua New Guinea government are also stakeholders.

Esso has indicated the cost estimate for the project has risen from $US15.7 billion to $US19 billion, due mainly to foreign exchange factors, Oil Search said this morning.

Delays from work stoppages and land access issues, and adverse weather conditions have also added to the cost of the PNG LNG project, it said.

The increased cost is expected to be met in line with the project's existing financing terms, Oil Search said, and it expects to contribute an additional $US300 million in equity.

Santos expects to contribute an additional $US130 million in equity.

"The increase in the estimated final costs of the project is disappointing," Oil Search managing director Peter Botten said in a statement.

"The extent of the change is considerably beyond the upper end of what might have been expected from cash drawdowns and project progress to date.

"In addition, the estimated foreign exchange impacts and the amount allowed for additional contingency is higher than we would have anticipated.

"Oil Search intends to fully review the revised estimates and is committed to working with the operator to seek to mitigate these estimated cost increases." But Mr Botten and Santos chief financial officer Andrew Seaton each said the PNG LNG project remained a "highly robust economic project".

The project remains on track for first production in 2014.

AA, Reuters

Sunday, 11 November 2012

PNG LNG Security Contractor G4S Under Cloud

Security at PNG LNG is provided, in part, by G4S. Below is an article on G4S PNG's Head of Security, Kerry McNamara.

Scott Free

By NICK PAPPS, Herald Sun, December 13, 2000, p.1

A POLICE sergeant sacked over charges of bashing, robbery and theft of drugs has been allowed to walk free.
A Herald Sun investigation reveals the officer, Kerry McNamara, has escaped any criminal charges despite internal police charges branding him unethical and disgraceful.
A confidential 18-page police disciplinary report on Mr McNamara, 46, obtained by the Herald Sun, outlines the internal charges against him.

It says: "You have consistently assaulted members of the public, stolen their money and stolen any drug material you found on them.
"Your behavior has been without regard for the law or the rights of members of the public, and has been completely unethical."
Police said yesterday there was not enough evidence to charge Mr McNamara, a former SAS soldier, with any criminal offence.
It has also emerged that Mr McNamara organised the infamous Tasty nightclub raid in 1994, which cost police $10 million in compensation after 450 patrons were strip-searched.
He was earlier kicked out of the police Special Operations Group for bastardisation after shocking recruits with a stun gun and shooting paint balls at their bare buttocks.
Mr McNamara's time in the SOG included shooting dead an armed robber and arresting a murder suspect after hitting him in the face with a pistol.
Mr McNamara was made an acting sergeant with the SOG because of his SAS background.
In 1979 he was drummed out of the Western Australian police force after only three months after a drink-driving car accident in which several people were killed.
Mr McNamara's disciplinary charge notice covers incidents from 1994 to 1998 and includes charges he:
HAD an affair with a prostitute he was investigating and recommended charges against her be dropped, calling her 211 times in four months.
ILLEGALLY entered houses and stole drugs and money.
OBTAINED cash from police coffers by drawing payments for a fictitious informer.
REGULARLY strip-searched, bashed and stole cash and heroin from teenagers.
Mr McNamara refused to appear before a police disciplinary hearing and did not supply any evidence to refute the criminal allegations.
He was sacked in late 1998 but no criminal charges were ever laid and he was paid his superannuation.
Police spokesman Kevin Loomes yesterday said the Office of Public Prosecutions had said "there was no reasonable prospect of conviction".
"We followed all procedures," he said. "The bottom line is, he was dismissed from the police force.
"Anyone we suspect of corruption will be dealt with swiftly."
The OPP yesterday declined to comment.
The Ombudsman's office said the lack of witnesses would have made it difficult to gain a conviction.
"It's just appalling. Here was a member running rampant, but there was a serious credibility problem with witnesses," acting assistant Ombudsman Brian Hardiman said.
"A lot of the alleged incidents occurred with no independent witnesses.
"There's nothing more that could have been done. It's extremely disappointing."
But Mr Hardiman said some of Mr McNamara's senior officers had been disciplined and counselled by their superiors.
"There's no doubt there's been a failure of police managers and superiors that allowed him to do what he's done," Mr Hardiman said.
"It was just extremely bad management."
A police investigator told the Herald Sun Mr McNamara was uncontrollable.
"No one could tell him what to do," he said. "He did what he liked when he liked.
"He should have been kicked out when he was with the SOG. There was a lack of resolve."

Monday, 5 November 2012

PNG Disaster Management in Disarray claims Parkop: Yes Tumbi Knows!

PNG lacks disaster management 


The Governor for the National Capital District Powes Parkop stated this last week during the presentation of K10,000 as sponsorship to Miss NCDC Judith Buseng to enter the Miss PNG Red Cross pageant.

The Papua New Guin ea Disaster Management body is not prepared to provide instant relief and also search and rescue during times of natural disaster.

He stated that government relief effort is not quick and response is usually very slow and late during times of 
natural disasters.

“Disaster management in the country is a disaster itself. Natural disasters become man-made disasters again.

“The government must have an effective and well-funded disaster management team in the country. 

“I believe the National Disaster Centre is under funded by the government so they don’t have funds to provide immediate relief,” Governor Parkop stressed.

He stated that Climate Change is a huge global concern that is causing unpredictable weather patterns that cause disasters that can strike anytime on the on land, sea and air.

“Therefore, the National Weather Office must effectively work closely with other disaster offices to issue warnings of change in weather patterns in PNG. 

“People need to be aware of weather patterns in advance and prepare for it,” he added.
He stated that in order for this to happen, funds must be allocated by the government to disaster management institutions to carry out relief work on time.

“Disaster relief funds and response logistics must be allocated to different provinces and at district level to respond to disasters in their area.

“So when disaster strikes, they will not wait for the government but will quickly provide relief to those affected,” he added.

He has called on Prime Minister Peter O’Neil to set up this capacity to be prepared for any natural disasters in the future.

“Who knows where and when the next disaster will strike? We must be prepared.

“Who is responsible for tsunami alert, earthquake alert, storm alert, El NiƱo, drought alert and so forth?

Where should we get our warnings from, Australia, Hawaii or where? Our disaster management is a disaster itself,” he stressed.

Post Courier 5/11/12