"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

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