ExxonMobil: LNG plant will stay shut

LNGWATCH PNG: Exxon operate in some pretty 'rough and ready' places across the world. This violence will not overly phase them. However, internally within Exxon questions may be being raised over the competence of the Police Commissioner and/or senior Ministers. Besides resolving the issue so they can get on with what they are there for, making money, Exxon will be concerned about minimizing publicity over the attacks on employees. Bad press will potentially frighten off expatriate staff, and may lead to employee’s asking for ‘danger money’. Esso Highland's PR man Miles Shaw, if he is a smart operator, has most likely developed a good relationship with key journalists to ensure 'the facts' are reported, i.e. Esso/Exxon's preferred version of events.  

The National- Tuesday, January 25, 2011

 By PATRICK TALU

EXXONMOBIL Corp, operator of the multi-billion-kina PNG liquefied natural gas project, said the Hides 4 LNG conditioning plant site will remain shut.

ExxonMobil’s subsidiary Esso Highlands Ltd public affairs manager Miles Shaw yesterday said “as a result of this illegal action, we are instituting a shutdown at the Hides gas conditioning plant site”.

Shaw said during the shutdown, the company would “discuss the necessity of a safe and secure operating environment with the government and local leaders and the requirement to use established processes in place to manage any dispute”. 

“Any use of violence is unacceptable,” he added.

Miles also confirmed that a group of people illegally entered the project camp at Hides 4 petroleum development licence (PDL) 7 last Friday evening and allegedly attacked four workers who sustained minor injuries. 

In related events, members of a mobile police unit stationed at Hides 4 last Saturday allegedly beat a man in relation to last Friday night’s event. 

The man was said to have died from his injuries, causing more fear among workers that relatives would retaliate.

A government ministerial delegation was expected to fly into the area today. 

Acting Police Commissioner Tony Wagambie said last night more police personnel would be sent to the area today (see reports on Page 3). 

The national planning committee, chaired by Deputy Prime Minister Sam Abal, would be briefed by the company today.

Foreign Affairs, Trade and Immigration Minister Don Polye said in a statement yesterday that he had been tasked by the prime minister to lead a fact-finding mission to the plant site today.

Polye said his objective was to negotiate for the immediate resumption of work at the project site while talks continue among all parties to find a lasting solution to the issues raised by the landowners as well as other stakeholders in the project.

Polye would be accompanied by Petroleum and Energy Minister William Duma and Treasurer Peter O’Neill.

Southern Highlands Governor Anderson Agiru said yesterday that the government needed to get its house in order and that it was part of the problem.

Too many ministers were responsible for different aspects of the project and for payments to the people, which was creating confusion among the people, he said.

Agiru said the government must appoint one person to liaise with the people and project developers. He recommended Abal.

Today’s national planning committee meeting would focus on the ExxonMobil matter as well as unbudgeted commitments by the ministers.

Friday night’s intruders were removed by police while all personnel in the construction camp had been accounted for. 

Miles told The National that there was no damage to the camp facilities and equipment.

“The motivation for the invasion remains unclear; however, local village leaders have apologised.

“Police have initiated an investigation and we are providing our full support,” Miles added.

The initial shutdown occurred last Friday over the death of a four-year-old boy who allegedly consumed a powder-like substance used for drill blast at a quarry site near Hides 4.

Sources claimed angry relatives demanded that CCJV, contractor of the LNG plant site, accept liability. When this failed, the villagers allegedly forced their way into the camp and stopped all work.

Meanwhile, attempts to contact Gigira Hides 4 Joint Venture chairman Erick Ayule and other leaders were unsuccessful. 

PNG Powerbrokers' Snap up Property (The Australian, 20/1/11)

LNG WATCH: Exxon claim they have made no under the table payments. Of course not, but everyone knows that despite the best efforts of some devoted civil servants, money can very easily dissapear from public accounts. But I guess that is not Exxon's problem.

WHEN Papua New Guinea's petroleum minister bought a Cairns McMansion in 2001, the deal was so ``quick and easy'' that the agent selling the property thought he was dealing with the wealthy owner of a coffee plantation.

Despite buying in the depths of the global financial crisis, William Duma didn't aggressively negotiate for a better price.

He paid $585,000 for the 330sq m, five-bedroom, two-bathroom home with water views after securing the services of a Cairns agent to do the deal.

``I was thinking, where did he get the money from? It was all too quick and easy,'' says real estate agent Shane Trimby, who sold the property.

Duma was involved in much more lucrative business than coffee. As petroleum minister in the government led by PNG's 74-year-old founding father Sir Michael Somare, Duma is the country's oil supremo. At the time of the purchase he was negotiating with ExxonMobil's consortium to build a mammoth $US15 billion liquefied natural gas project.

As PNG looms as an oil-rich country verging on state failure, some of its political elite have been quietly building up assets offshore, coinciding with huge development of the country's gold, petroleum and copper riches.

In the past five years, key political figures have invested $6 million in Cairns and Brisbane property. Some have their wives and children based in Australia and shuttle regularly between Port Moresby and Cairns.

Some of these politicians may have exploited an exemption in Australia's foreign investment regime that allows non-residents to buy new properties.

In 2008, foreigners used this exemption to buy $15 billion worth of residential real estate.

PNG is emerging as an extreme case of the two-speed economy, with boom conditions in Port Moresby driven by liquefied natural gas and other resource projects, while the rest of the country sinks deeper into poverty and state dysfunction.

While proving ineffective at running the country, Sir Michael and his family have shown themselves adept at buying real estate and hanging on to power.

After a no-confidence motion back in July , Sir Michael suspended parliament for the rest of the year, and then agreed to stand down in December pending an investigation into allegations of misconduct. But PNG's ``grand chief'' still remains very powerful, with his son Arthur and other party lieutenants in control.

The push to remove Somare reflects growing concern among PNG's elder statesmen over Somare's handling of important developments. The LNG project is one, but more controversial is China's Metallurgical Construction Corp nickel mine in the Ramu Valley, which has been given special concessions to dump toxic tailings into the sea.

An investigation on behalf of a major oil company found it cost about $500,000 in payments to landholders and other interests to get an oil permit approved. The company that commissioned the research decided not to invest in the country.

Another emerging concern is that vast tracts of rainforest are being leased to foreign logging companies in opaque arrangements involving corporate fronts controlled by foreign interests. As much as 10 per cent of the country has been handed over through these arrangements.

The Somare family made its first real estate purchase in Cairns in 2007, when Michael Somare bought an apartment in Parramatta Park north of the city for $349,000. The following year, his Australian-educated son, Arthur, minister for public enterprises, bought a home at Trinity Beach north of Cairns for $685,000. Somare's daughter, Dulciana Somare-Brash, then bought a $425,000 Trinity Beach home, also in 2008.

The purchases by Somare's children followed his return to power in August 2007. Arthur Somare's home is listed under his name in the phone book and he returns there regularly.

A Somare spokesman declined to respond to questions about how these properties were purchased.

But Duma tells The Australian he was ``quite well off'' before entering parliament, having been a partner in the Port Moresby office of the law firm Blake Dawson Waldron.

``I purchased a property in Cairns using my personal savings in Port Moresby. I obtained foreign exchange approval from the PNG Central Bank to remit funds to my Australian solicitor's trust account,'' Duma says.

``My Australia solicitors also obtained Foreign Investment Review Board approval before I could purchase the property. There is a clear paper trail showing the origin of the funds which I used to purchase the property.''

Duma says he declared the property to the Ombudsman Commission, which serves as ``the watchdog for leaders in PNG''. But the commission does not publicly release this information.

Duma acknowledges ``there may be a perception that because I am the Minister for Petroleum and Energy, I may have received some form of benefit from ExxonMobil''.

``All that I can say is that I was a wealthy person before I became a politician. The funds I used were from my savings account.''

Duma denies he was ``on the take'' and says ExxonMobil was very rigorous in its running of the project.

``They want to do it the ExxonMobil way -- very bureaucratic, very thorough.''

Businessman Peter Aitsi, who heads the PNG branch of Transparency International, a global anti-corruption watchdog, says MPs are not required to tell the public about these purchases.

``Given we have a general idea of the salary levels of MPs, this raises questions of how they have financed these purchases'' Aitsi says.

``For the man in the street, this should raise serious questions. So let's make this information public.''

Some of Somare's opponents, however, are also among the biggest property owners in Australia. Key opposition figure Mekere Morauata has built up even more assets than Somare from the profits of his fishing business.

Land title records show that Mekere's Australian wife, Roslyn, bought a $3.6m riverside mansion in the Brisbane suburb of New Farm in 2008. This followed a $910,000 purchase of another New Farm property in 1999.

Former minister Allan Marat bought a Brisbane apartment in 1996 for $400,000 and then in 2005 bought a $240,000 apartment in Surfers Paradise.

Marat resigned in May last year after making comments critical of the nickel mine and the benefits for PNG from the LNG project. A spokesman for Marat -- his son Immanuel -- says the properties were acquired with proceeds from Marat's Port Moresby law firm. Immanuel Marat says the purchases have been fully disclosed.

Australia's anti-money laundering body, Austrac, declines to comment on any evidence it may have obtained on real estate purchases by foreign politicians from neighbouring countries.

A spokesman says secrecy provisions prevent it from making any comment.

While some of PNG's political elite are accumulating wealth, life expectancy is falling and infant mortality is rising as the government becomes increasingly dysfunctional, unable to deliver basic services to its poor.

The LNG project is also fanning conflict as landholder groups squabble over the spoils. Earlier this year there was as shoot-out at Port Moresby airport between rival factions of landowners.

AusAID says about 40 per cent of PNG's population lives in poverty, below the international benchmark of less than $US1 a day. HIV-AIDS is rising inexorably. The latest estimate is almost 100,000 or 2.56 per cent of the population.

There is no evidence that Duma, the Somare family or Marat acquired their properties inappropriately, but the federal government has been pushing PNG to consider adopting an anti-corruption regime known as the ``extractive industries transparency initiative''.

This program is designed to produce a set of double accounts showing what the government receives from oil companies and what the companies pay.

The initiative has in-principle support from 32 resource-rich nations, with PNG remaining a notable exception. East Timor, which only became independent eight years ago, has become the third country to fully comply with the demanding regime.

But Australia's Oil Search, one of PNG's main oil developers for the past 20 years, is not a member of the initiative because the PNG government does not support it. Oil Search operates the Kutubu oilfield in the southern highlands and is a minority shareholder in the LNG project.

A spokesman for ExxonMobil says the company has never given any special benefits to Duma or Arthur Somare. He says there is no connection between their real estate purchases and negotiations on the LNG project.

Villagers' attack shuts PNG gas plant

LNGWATCH PNG: A news report from ABC Asia Pacific (24/1/11) ... Unfortunatley, too many of the elite have already started to spend all the wealth they expect to reap from LNG (if not in reality, certainly in their imagination). These sort of interventions by local villagers will be tolerated in the short term, but any serious threat to the project's timely development will be met with military force, if the past is anything to go by.

The developer of Papua New Guinea's multi-billion dollar liquefied natural gas project has shut down construction work on a site following an attack on its workers.

It is the second attack following a forced shutdown by landowners last week.

Hundreds of villagers attacked four employees of the Australian -based international contractor to the gas project, Clough Curtain JV, last Friday.

The employees received treatment on site for serious injuries.

Authorities say PNG highland villagers attacked the workmen.

They are angry over the death of a child allegedly from chemicals spilled from the construction work,

The developer, ExxonMobil, has confirmed the attacks on its workmen at the Hides gas conditioning plant as work of ''illegal intruders''.

Spokesman Miles Shaw says the reasons for the attack are unknown and police are investigating.

He says construction work has been shut down while the employees' safety is being addressed.

Confidence sinks deeper than the gas wells

Sydney Morning Herald 22/1/2011

http://www.smh.com.au/opinion/politics/confidence-sinks-deeper-than-gas-wells-20110121-19zyb.html

POLITICIANS often count on the public having a short memory span, but a record was set this week by Papua New Guinea's Prime Minister, Sir Michael Somare.

The ''Grand Chief'', as the independence-transition leader is honoured, returned to office explaining he had been away on holiday to use up his accrued leave.

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This struck a lot of his countrymen as odd, because when he left work five weeks earlier, they distinctly remember him saying he was standing aside to face a tribunal that would decide if he had violated leadership rules.

Some unkind reporters dug out the press release from his office which said Somare said would ''now voluntarily step aside and allow the Deputy Prime Minister, Sam Abal, to assume full function and responsibility of the Office of the Prime Minister while he attends to clearing his name''.

Somare has been referred to a leadership tribunal to face charges that he didn't submit statements of his income and assets between 1994 and 1997 and that statements he put

in between 1998 and 2004 were filed late. This was the culmination of a long skirmish with PNG's official watchdog, the Ombudsman Commission.

His daughter and media officer, Betha Somare, eventually acknowledged the changed story. ''We issued a statement earlier that he had stepped aside but we have been advised by the lawyers that he could not step aside, he just took his leave," she told reporters. Her father would now step down once the chief justice set up a tribunal.

For now, the wily old man of Port Moresby politics seems to have wriggled out of trouble.

The opposition had hoped to mount a no-confidence motion against Somare in a rare meeting of Parliament late last week, following the defection of some senior figures from the government last year and Somare's dismissal of his former deputy, the powerful Highlands leader Don Polye.

The Parliament had been adjourned in November until May, precisely to stave off such a possibility. But it had to be recalled for one day after the Supreme Court deemed as invalid its vote last June to extend the term of the then governor-general Sir Paulias Matane. Last week the MPs voted in someone else, a controversial former forests minister and sitting MP, Michael Ogio. He will shortly fly off to London to get his appointment from Queen Elizabeth, and be made a Knight of the British Empire - the usual gong.

All of which could be amusing, except that the leadership antics of Somare and his family - his son Arthur holds the key public enterprises portfolio - are conducted against a declining public faith in the honesty of Papua New Guinea's government.

Transparency International, the respected monitor of these things, has just issued its latest ''Global Corruption Barometer'', which shows an almost universal feeling around the world that bribery and corruption are getting worse.

Some 91,500 people in 86 countries were asked whether the level of corruption had increased in their country over the last three years. The global financial crisis, and its revelations of deep-seated fraud and cover-ups, have taken a toll even in the most developed societies.

A majority of Australians (54 per cent) and Canadians (62 per cent) thought corruption had increased since 2006. In European countries it was in the high 60s and 70s. Bizarrely, 73 per cent of New Zealanders thought corruption was worse, even though their country is rated worldwide as one of the very cleanest, along with Singapore, Sweden and Denmark.

About one in four people worldwide said they had paid a bribe, rising to one in two in Africa, in the last year for services in nine areas, ranging from health to taxation but mostly to police. In a lot of Third World countries, fewer people said corruption had got worse, probably because it was bad to start with. Corruption hits the world's poor the worst.

Papua New Guinea almost took the prize for the plummeting faith in honest government - 85 per cent of those surveyed said corruption had got worse, a level beaten only in Venezuela (86 per cent), Romania (87 per cent) and the West African nation of Senegal (88 per cent).

That's quite a vote of no-confidence, whatever may happen when its Parliament is allowed to sit again.

It's important to Australia, because Papua New Guinea is about to enjoy a bonanza that corrupt politicians could easily squander. The liquefied natural gas project in the Southern Highlands and Gulf of Papua is coming on stream over the next three years, doubling gross domestic product and giving a huge lift to government revenues.

But inflation is rising, expected to increase to more than 8 per cent this year. The

6.7 million population is growing fast, likely to almost double by mid-century.

The government has more to spend, but in key social areas such as education it is still well below what it was more than a decade ago. ''Despite large funding increases, service delivery is still chronically inadequate for a large part of the population,'' writes a development economist, Aaron Batten, on the Australian National University's East Asia Forum website.

And corrupt, he might have added. Into this system, Canberra is trying to push $457 million in aid this financial year, just a shade below what we give to Indonesia, such is the priority we attach to stability and development in Papua New Guinea.

Michael Ahrens, the head of Transparency International for Australia, says curbing corruption is an urgent regional need. ''Every dollar misdirected by corruption is a dollar taken from some of the poorest people in the world that was earmarked for education, development, or better health systems,'' he said this week.

A leadership that shuts down its Parliament as much as it can, and has been officially pulled up for not declaring income, hardly inspires confidence it can spread the new petroleum wealth wisely and fairly.

Judge to Hear LNG Issue

Post-Courier 21 January 2011

http://www.postcourier.com.pg/20110121/frhome.htm

The multi-billion kina PNG LNG project’s future is in the balance after Chief Justice Justice Sir Salamo Injia gave the green light for an alternate dispute resolution on Wednesday. 

Following a Supreme Court reference sought by Warner Shand Lawyers for 17 clans of Tuguba in the Hides Gas Project area to determine ownership of resources under customary landownership, Sir Salamo has appointed Justice Ambeng Kandakasi to head an Alternate Dispute Resolution (ADR) to mediate a solution on the reference which could affect the PNG LNG project agreement between the Government and ExxonMobil. Justice Andakasi will head the ADR facilitation process but certain issues raised by the landowners have not been included as part of the terms of reference which has not gone down well with them (landowners) at a gathering at the Unagi oval yesterday.

They (Tuguba landowners) claimed the Chief Justice has arbitrarily decided that all Supreme Court references filed under Section 18(1) of the Constitution challenging the validity of Section 6 of the Oil and Gas Act and other sections including the power of the government to compulsorily acquire customary land for the benefit of oil and gas companies under the Land Act, the Land Registration Act (Customary Land) and the Land Groups Incorporated Act should not be included in the mediation process.

The core issues raised in the constitutional reference included: whether the State owns the resources under customary land; whether the government has the power to compulsorily acquire customary land for the benefit of oil and gas companies; whether the existing benefit sharing system is equitable; and whether the production sharing contracts should be used for the exploitation of all resources in PNG.

The National Gas Corporation has backed the landowners in supporting the production sharing concepts, the brainchild of prominent lawyer Peter Donigi.

“If the above issues are not included in mediation to be co-ordinated by Justice Kandakasi then there are only two options open for our consideration,” NGC chairman Alfred Kaiabe said.
Those two options are suspending all mediation until the Supreme Court deals with the two references (SCGNo5 and SCRNo.7 of 2010) and conversely, they will defer the hearing of the two references until the mediation process is completed.

The parties in the mediation will include Esso Highlands, developer of the PNG LNG project, the Solicitor General, Attorney General, Petroleum and Energy department, National ?Planning and Monitoring, Finance and Treasury, Commerce and Industry, Lands and Physical Planning, works, NGC, affected provincial governments, Hela Transitional Authority, the 17 plaintiff clans and other representatives from each licence areas.

ADR facilitators will be Justice Kandakasi, Callum Campbell and Graig Jones and they will be at liberty to engage the services of other PNG acredited mediators in consultation with parties as and when required.

Some of the issues to be reviewed include the UBSA and LBBSA Agreements and the additional possible gas reserves not committed to the LNG project capped at 6.5 trillion cubic feet (TCF) as per the LNG Agreement.

Condensate issue which is gas field landowners missing out on oil condensate extracted from the gas fields are among others.

ABC Asia Pacific - Work Resumes on PNG LNG

Work has resumed on the construction of a gas condensing plant in Papua New Guinea for the country's $US16 billion dollars PNG Liquefied Natural Gas (LNG) project following a landowner protest.

Hundreds of disgruntled landowners at the Hides gas field in the PNG Highlands forced Australian based international contractor, Clough Curtain Joint Venture to stop work on the project.

Landowners demanded more than $US2 million dollars in Business Development Grants from the Government.

The grants were promised to them under an agreement with the government and the developers.

Landowners claim the funds were paid to false companies in Port Moresby while genuinely affected landowners missed out.

Spokesman Eric Hayule says they have allowed work to resume after construction work on the gas condensing plant was shutdown after three days.

He says Hides landowners want the $US2 million dollars to be paid to individual clans and not one landowner company.

The lead developer of the PNG LNG project ExxonMobil says work has resumed.

Impacted landowners have halted early works on certain project sites in protest over the business development grants and spin off activities.

People Rise Up in Hides for a Small Piece of the Action

LNG WATCH: As the below article demonstrates, when you pump enormous amounts of capital into massively underdeveloped regions, communities are going to use all their customary power and political might to claim a tiny slice of the wealth.

Unfortunately, as we have seen in natural resource developments throughout PNG, this gradually gives way to uneven development, as some households get access to rents, grants and contracts, while others are overlooked.

The former then are able to grow more crops, buy machinery, open small businesses, monopolise the local service industry, while the latter struggle to subsist, often having to sell their labour to clan-mates. Someone then asks, 'why is my uncle able to own a truck, sell coffee and run a security firm, when I can barely get enough land to support my family'.

That is when these types of resource development truly begin  to divide communities and set kin against kin. In the Southern Highlands where high powered weapons circulate  freely, this is a potentially explosive dynamic!


LNG Work Stopped
Post-Courier 19/1/2011

http://www.postcourier.com.pg/20110119/wehome.htm

EARLY works on the multi-billion kina PNG liquefied natural gas (LNG) project at Hides in Tari, has now come to a complete standstill.

As early as 8:00 am yesterday, angry Hides landowners numbering over 1000 people mobilised and staged a peaceful sit-in protest at the gates of the proposed LNG conditioning plant site at Para village and on the access road that leads to the Hides 4 (petroleum development license -PDL 7) wellhead.

Developer Esso Highlands last night acknowledged the problems but said the project has a formal process to manage these dialogues.

“We are aware of the business development grant issues in the Highlands. The PNG LNG project encourages continued co-operation between communities, government and the project to constructively address issues as they arise, without impact to ongoing project activities,” Public Affairs Manager Miles Shaws said in a statement.

The protesting clans are from Taguali, Hagu, Tagobali, Aya, Warabia and Honaga clans that live at Para and Hides 4 area. Police mobile squad (MS) 13 from Lae and MS10 from Mendi ensured that the protests were peaceful and non confrontational. The landowners forced international Australian contractor Clough Curtain Joint Venture (CCJV) to stop work and withdraw all workmen, machines and equipment. CCJV is engaged by LNG project developer ExxonMobil to develop the conditioning plant sites including other early works including engineering, procurement and construction (EPC) stage.

The Post-Courier visited the site yesterday morning and saw machines, equipment and over 300 CCJV workmen ‘asked’ to stand down while the landowners gave 14 days to the State and ExxonMobil to respond. Landowner leader Tony Lambiawi from Taguali/Tagopali clan said the landowners were frustrated that their application for K10 million from the business development grants (BDG) have been turned down while some ‘paper landowners’ based in Port Moresby were paid by the Department of Commerce and Industry. “We the landowners have our own landowner company called Hides 4 Holdings Ltd but our BDG application was rejected. If the government thinks that these ‘paper landowners’ in Port Moresby are legitimate Hides 4 landowners and own the land, then the government can ask them to come to Hides 4 and re-open the project.

“Otherwise, we the genuine landowners here are shutting down the project until we have a round- the table discussion with Petroleum and Energy Minister William Duma and Commerce and Industry Minister Gabriel Kapris to explain to us why we missed out on the BDG,” Mr Lambiawi said.

Another landowner chief Robert Angoya also demanded the State to pay out the ministerial commitments with proper social mapping and landowner identification studies for incorporated landowner groups. He also said currently, they are mere spectators on their land and they want to participate in business spin-offs. They also demanded that if not, ExxonMobil, the State and landowners have to do away with the umbrella benefit sharing (BSA) and licensed based benefit sharing agreements and come up with another one as the State had failed miserably. The landowners also demanded proper resettlement program for the affected landowners as currently, the resettlement package offered by ExxonMobil like K30,000 per traditional houses is unrealistic for a project of such magnitude of world class.

“We want proper housing, electricity, water supply, health care and other social services. Work has already begun and when are we going to have these basic services needed for human life,” Henry Taguali, another landowner leader said.

The landowners now ask the State and the ministers concerned to come to Hides 4 and meet with them within the next 14 days or else the project at Hides 4 and the conditioning plant site would still remain shut. The landowner leaders then told the public to turn the entrance of the condensation plant site and Hides 4 wellhead soft drinks.