Furthers Reports on PNG's Resource Curse

Last Monday LNG WATCH PNG brought to light a recent study by Oxford Policy Management - this study has now been reported on The National.

PNG ‘resource curse’ site

Yehiura Hriehwazi, The National, Wednesday 21st December 2011

PAPUA New Guinea has been identified as among 20 countries in the world that is “most vulnerable” to fall under the “resources curse”.

Countries whose mineral and oil/gas exports account for 25% of their total exports were likely to become victims of the resources curse.

In PNG’s case, mineral, oil and gas account for over 60% of export revenue.

A study carried out by Oxford Policy Management (OPM) of mineral dependent countries – believed to be the first of its kind – found more than 20 low and middle-income countries “have become dangerously dependent on the exports of minerals such as metals and hydrocarbons, leaving the countries highly-vulnerable to a global economic downturn”.

About 75% of all mineral-dependent countries were now low-and middle-income countries, while the number classed as mineral-dependent has increased by 33% since 1996 from 46 to 61 nations, according to the OPM report, “Blessing or curse? The rise of mineral dependence among low- and middle-income countries.”

The study attempted to assess the vulnerability of resource-dependent nations on the so-called resource curse, characterised by weak economic and institutional development.

Six types of minerals were considered, including crude fertilisers, metalliferous ores (ores containing metals) and metal scrap, non-ferrous metals, pearls and semi-precious stones, non-monetary gold, and minerals fuels including natural gas.

The report developed an overall measure of institutional strength of a country by combining the World Bank’s six World Governance Indicators (WGI) with two indices: an economic and institutional development index, and a mineral dependence index.

The World Bank WGI includes voice and accountability, political stability and absence of violence, government effectiveness, regulatory quality, rule of law, and control of corruption.

Mineral-dependent countries were defined as countries which rely on minerals for at least 25% of their tangible exports.

“Excluding Botswana and Chile – both of which have well-established and long-running mining sectors – the average annual GDP per capita of the top-20, non-fuel, mineral-dependent countries was US$3,200 in 2009,” the study said.

The mineral-dependent nations with the lowest GDP per capita included the Democratic Republic of Congo (US$319), Sierra Leone (US$808) and Mozambique (US$885).

The most dramatic changes in the number of mineral-dependent companies occurred from 2005 to 2010, when commodity prices started to soar.

During this period, eight additional nations became dependent on non-fuel minerals: Montenegro, Guyana, Laos, Burkina Faso, Bolivia, Georgia, Somalia and Ghana. Only one country became dependent on fuel-based minerals during the same period: Belize.

In their research, Oxford Policy Management found “a significant negative correlation between overall institutional development and both non-fuel and fuel-dependence.

“This finding is consistent with evidence that there are many fuel-dependent countries with high levels of GDP per capita but with persistent weaknesses of democratic governance and state accountability, such as Equatorial Guinea, Libya and Russia,”

Dan Haglund,  a political economist focused on natural resources policy, generated two matrices which defined countries most at risk from the “resource curse” due to critical reliance on minerals exports for foreign exchange earnings and therefore most vulnerable to international commodity markets.

“They are also the most severely constrained in terms of economic resources and effective institutions,” he observed.

“These countries have limited industrial diversification that would enable either ‘upstream’ supply industries to develop or ‘downstream’ value addition.”

The matrices identified the non-fuel, mineral-dependent countries most at risk were Bolivia, Burkina Faso, the DRC, Ghana, Guyana, Laos, Mali, Mauritania, Mongolia, Papua New Guinea, Tanzania and Zambia.

LNG Site Threatened

LNG Site Threatened

Post-Courier, Monday, 19 December, 2011, p.6

IN the midst of the ongoing political tussle, another storm is slowly brewing as the gateway to the country's multi billion kina LNG project site has been under siege since Thursday last week.

At least 16,000 landowners from the surrounding villagers of the Gobe field engineering site in the Southern Highlands stormed the site demanding that the Government meet their demands of the past 20 years or face its definite closure.

Gobe is the LNG pipeline gateway into the Gulf Province from Kutubu, Moran and Hides but landowners have said that the current impasse has done very little to appease the build up of tensions as a large number of ExxonMobil employees have been forcefully evacuated, leaving a skeleton' number of staff behind who will eventually be told to leave.

A handful of landowner representatives made up of various ILG Chairman who are currently in Port Moresby, told the media last Friday that it was high time the two factions resolved their issues and agreed on one elected leader to sit with them and discuss these issues or the site would be closed forever.

The landowners, who come from the six surrounding villages, made up of 14 Incorporated Landowner Groups, presented their petition to the Government on the same day they seized the site. "Gobe is the gateway to the outside world and the State needs to consider this," said the Chairman of the Petroleum Development Licence 4, Jerome Kairi.

He criticised the Government for the political tussle that has lasted for the entire week.

He also said that discussions should also include officials from Oil Search, Esso Highlands and the Secretary for Environment and Conservation.

Papua New Guinea "Especially Vulnerable" to the Resource Curse

A recent report produced by Oxford Policy Management’s Extractive Industries team, suggests Papua New Guinea is “especially vulnerable” to the resource curse, as a result of growing dependence on minerals.

The report claims mineral dependence negatively impacts on economic growth, “non-fuel, mineral dependent countries are more likely to have lower economic development than other countries”.

It also argues: “Countries that depend on either non-fuel or fuel minerals are also more likely than other countries to suffer from institutional governance problems such as corruption and political instability”.

However, perhaps most disconcerting from Papua New Guinea’s perspective is the following finding: “More than 20 mineral-dependent countries are especially vulnerable to the ‘resource curse’ – the risk that substantial changes in commodity prices will severely affect their development. Non-fuel, mineral-dependent countries that are most at risk of the resource curse include: Bolivia, Burkino Faso, the DRC, Ghana, Guyana, Laos, Mali, Mauritania, Mongolia, Papua New Guinea, Tanzania and Zambia".

Hopefully this report will be picked up and scrutinised by those in the mass-media and government who are at the forefront of the mining = development brigade - however, given that it raises uncomfortable facts which question this assumption, its findings might be tactically avoided. 

http://www.opml.co.uk/sites/opml/files/OPM%20Blessing%20or%20curse.pdf

The Constitution is Being Breached by ExxonMobil et al!

Constitution of the Independent State of Papua New Guinea

46. FREEDOM OF EXPRESSION.

(1) Every person has the right to freedom of expression and publication…

(2) In Subsection (1), “freedom of expression and publication” includes–

(a) freedom to hold opinions, to receive ideas and information and to

communicate ideas and information, whether to the public generally or to a

person or class of persons; and
          (b) freedom of the press and other mass communications media.

Freedom of expression and information are fundamental human rights inscribed in the constitution. These rights are currently being breached by a network of corporate actors who have undue influence on the press.


Recently on Facebook LNG Watch was criticised by a friend for focusing on Exxon's relationship with the Post-Courier, when more information is desperately needed on communities resisting this operation. We accept the latter criticism, however, LNG Watch still nonetheless believe that it is essential to be vigilant in exposing Exxon's relationship with major media outlets in PNG.

The fact is, LNG Watch PNG is run by volunteers, who lack the resources to fly to the affected regions on a regular basis. Media agencies on the other hand have the resources to make these trips. However, when media agencies are compromised by their relationship with  corporations or state actors, their vital role as circulators of information becomes muted. In PNG we have a free press, yet it often acts in a manner that one would expect in a authoritarian country such as China. This is a product of self-censorship.

Media agencies self-censor in PNG for a variety reasons. At the journalist level, reporters rely on the patronage of major companies, business lobbies, and state agencies, for breaking stories, and they are not about to burn their masters by publishing regular critical commentary. At the managerial level, executives have to worry about generating income and satisfying the ideological ambitions of their corporate owners.

Collectively these factors generate a system of self-censorship that is arguably more effective than state initiated censorship. Nevertheless, nothing is inevitable. If we resist, expose, and critique these systems of corporate power, there is the possibility that we can begin to change the way information is generated and distributed in PNG. Civil society is doing this by developing alternative mediums of information circulation, such as blogs and Facebook. However, just because we are developing other forms of social media we should not be prepared to surrender our radios and newspapers to the multinationals and the national elite.

On that front, we would like to finsih this blog with ANOTHER!!!! example of the Post-Courier publishing ExxonMobil press releases as news.

The question is how can we begin to mobilise against the iron grip multinationals have on our media so that information can circulate freely? After all freedom of information is a fundamental human right which is inscribed into our constitution. Yet it is being breached on a daily basis, not because of censorship laws imposed by the state, but because corporate actors have taken control of the media via the backdoor and have through a variety of tactics restricted the free flow of information!

 The Press Release

The Press Release as 'News Report'

73 Graduate

Konopa Kana

Post-Courier, Thursday, 8 December 2011

http://www.postcourier.com.pg/20111208/business08.htm 

SEVENTY-three student trainees of the PNG LNG technician trainees completed their 18 months of basic operation and Maintenance training program.

The graduation was held on Monday night at the Gateway Hotel to commemorate the trainees' efforts and commitment with parents, loved ones and the media who where invited to witness the inspirational event.

The trainees are the first intake, and have spent the last 18 months undertaking training in Port Moresby.

In January next year they will travel to Canada for further advanced skills training.

On completion of their training, the trainees will be responsible for operating the LNG Plant and Hides Gas conditioning plant in the Hela Province.

Manager of production operation training centre, Tom Hooper said that he had the opportunity to train one of PNG's finest batches of students who are pioneers of the training. He said he was happy with the raw talent and intelligence they have shown during training, which he termed as a priceless commodity for this country.

He said in the last 18 months of training and observation the students have gained a lot to become one of the best teams in the entire world.

"Building your trade in specific skills will be useful for the rest of your life and I urge you to start embarking on them now before you leave for the training facility in Canada so you can be confident in what you do," Hooper said.

He said that he is very optimistic of the trainees and has high expectations in their advance training program in Canada because they have demonstrated that they are capable of strong leadership and can adhere to safety which is the paramount culture of Exxon Mobil in the PNG LNG project.

'LNG aids women', The Post-Courier aids LNG!

If you didn't laugh at the following article, you would have to cry. The Post-Courier are now acknowledging they are glorified stenographers for Exxon Mobil, publishing press releases as news.

Note the opening statement of 'facts', followed by the  embarrassing qualification, "this is according to a media release yesterday from Port Moresby". Well at least the Post-Courier are now owning up to it. 

However, when a company proclaims a fact, surely it isn't the journalist's job to act as a glorified parrot? Surely their job is to get out into the field and actually talk to the people, to the women on the ground to see if all these grandiose claims are true?

If you want to save time, you can easily not read the following story and simply go to the original press release: http://pnglng.com/media/pdfs/media_releases/media_release20111130_PNGLNG3Q2011.pdf

LNG aids women

Andrew Alphonse

Post-Courier, Friday, 2 December 2011

THE multi-billion kina PNG LNG project is providing opportunities to empower Papua New Guinea women in the establishment of community development initiatives in areas throughout the PNG LNG project in its commitment to empowering women.

This is according to a media release yesterday from Port Moresby.

According to the LNG project's third quarter 2011 environmental and social report features many examples of women helping to drive the country's economy with support from the LNG project.

PNG LNG project executive Ms Decie Autin said the LNG project recognises that women are important to the workforce, communities and the nation.

"In addition to the 900 Papua New Guinean women who are part of the PNG LNG project workforce, women are engaged in establishing a broad range of community development initiatives in areas such as education, health and safety, and community infrastructure.

"The project also continues to support many initiatives to help empower PNG women and support women's groups this quarter."

Exxon's Outstanding Corporate Social Responsibility Shines Through Again

Exxon's deal with the Kurds inflames Baghdad

Patrick Cockburn

The Independent, Friday, 09 December 2011

The great Iraqi oil rush has started to exacerbate dangerous communal tensions after a major oil company ignored the wishes of the central government in Baghdad and decided to do business with its main regional rival.

The bombshell exploded last month when Exxon Mobil, the world's largest oil company, defied the instructions of the Baghdad government and signed a deal with the Iraqi Kurds to search for oil in the northern area of Iraq they control. To make matters worse, three of the areas Exxon has signed up to explore are on territory the two authorities dispute. The government must now decide if it will retaliate by kicking Exxon out of a giant oilfield it is developing in the south of Iraq.

Political leaders in Baghdad say the company is putting the unity of their country at risk. Hussain Shahristani, the Deputy Prime Minister in charge of energy matters, told The Independent in an interview in Baghdad that any oil or gas field development contract in Iraq "needs the approval of the federal government, and any contract that has not been presented to the federal government has no standing and the companies are not advised to work on Iraqi territory in breach of Iraqi laws".

Baghdad has had oil disputes before with the Kurdistan Regional Government (KRG), but the present row is far more serious because it is the first time "Big Oil" has moved into Kurdistan, showing that at least one of the major oil companies is prepared to disregard threats from the government of Nouri al-Maliki. Previously, only small independent foreign oil companies, without other interests to protect in the rest of the country, have risked signing contracts with the Kurds.

"Exxon Mobil was aware of the position of the Iraqi government," says Mr Shahristani, a former nuclear scientist who was tortured and imprisoned by Saddam Hussein. "We hear from the American government that they've advised all American companies, including Exxon Mobil, that contracts should not be signed without the approval of the federal government."

Whatever the prospects of finding oil in the north of Iraq, observers are surprised that Exxon is prepared to hang its future in Iraq on the outcome of the power struggle between Iraqi Kurdistan and the central government. Control of the right to explore for oil and exploit it is crucial to the authorities on both sides since they have virtually no other source of revenue.

The Kurds have won a degree of autonomy close to independence since the fall of Saddam, and the ability to sign oil contracts without reference to Baghdad will be another step towards practical independence and the break-up of Iraq. A parallel would be if the Scottish government were to sign exploration contracts in the North Sea without consulting London.

What makes the Exxon-KRG deal particularly inflammatory, says Mr Shahristani, is that three of the six blocs where Exxon is planning to drill are understood to be "across the blue line – that is outside the border of the KRG". This means they are in the large areas in northern Iraq disputed between Arabs and Kurds since 2003, but where the Kurds have military control.

The government must now decide if it will make good on its threats and replace Exxon at a mammoth oil field called West Qurna 1 at the other end of the country, north of Basra. Iraqi oil officials hint that Royal Dutch Shell might replace the American company.

Both sides have much at stake. The Iraqi government is totally reliant on its oil revenues to pay its soldiers, police force and civilian officials. It needs vast sums to rebuild the country after 30 years of war, civil war and sanctions. In 2009, it began to expand its oil industry by signing contracts with firms such as BP, Royal Dutch Shell and Exxon to boost production in under-exploited and poorly maintained fields.

These companies thereby gained access to some of the largest fields in the world, each with reserves of more than five billion barrels. Vast sums are being invested, mostly around Basra in the south of Iraq. Oil output, now at 2.9 million barrels a day, is due to rise to a production capacity of 12 million b/d by 2017, potentially putting Iraq on a par with Saudi Arabia as an oil exporter.

Mr Shahristani is pleased with progress so far, saying that what "we are doing in Basra is at least five times larger than the largest oil projects in the history of the oil industry so far."

Sitting in his vast office in a cavernous palace originally designed for one of Saddam's senior lieutenants, he holds up a chart showing the surging production from the Rumaila oilfield of 1.4 million b/d, more than Britain's entire current output of crude from the North Sea.

Iraqis are split on whether Exxon is being cunning or naive. One explanation is that the oil company feels so powerful, or so essential to Iraqi oil development, that it can disregard the Iraqi government. An alternative argument is that Exxon is dissatisfied with the West Qurna 1 deal and so does not mind walking away from it and looking for oil elsewhere. A third is that the company got suckered by the Kurds.

Iraqi Arabs know that the Iraqi Kurds want to control as much of Iraq's oil reserves as possible to buttress their independence. Less easy to understand is why Exxon should willingly make its activities a central issue in the Arab-Kurdish confrontation which has for so long destabilised Iraq.

Flashpoint: Iraqi military bases

The transfer of Iraq's military bases to local control is another flashpoint between the Kurdistan Regional Government and Baghdad, and some fear the dispute may boil over when US forces pull out at the end of the year.

Last month saw a tense standoff between the Iraqi army and local Kurdish forces at a US airbase in the northern city of Kirkuk, an oil-rich area long a point of dispute. The Kurdish police force reportedly blocked an army team from entering the base for an official handover from the US, unhappy that it was being transferred to Baghdad.

In an effort to calm the drama, the US ambassador, James Jeffrey, met Kirkuk's Governor, Najmaldin Karim, and Iraq's Prime Minister, Nouri al-Maliki, in the capital.

"We did not want a situation where we ended up shooting at each other," said Mr Karim.

The situation was defused when the central government made assurances that the base would be used for 

civilian aircraft only, a key demand of the Kurds.

However, once the base is handed over to Iraqi control, Washington will have little control over whether Baghdad sticks by its verbal agreement. Indeed, Ali Ghaidan, the commander of Iraq's ground forces who led the army team that eventually entered the base, has since publicly ruled out the possibility of the base being turned into a civilian airport – saying it is of too much strategic importance to Iraqi forces.

Reports of Kurdish security forces, known as peshmerga, bolstering their presence in Kirkuk have raised questions over how long the lid can be kept on this simmering conflict.

Post-Courier - Publishing Press Releases as News ... Again.

The Post-Courier is publishing press releases for Exxon-Mobil again.

Last week on 5 December Exxon-Mobil announced on its website: “Trainees graduate from first stage of training”. The link is dead. However, two days later a story on an extremely similar theme, written like a press statement, appears in the Post Courier.  Corporate power is real, it is a shame our major daily is so easily corruptible. The loggers have The National, the miners Post Courier. What paper do the people have?

Skilling the PNG LNG workforce

Post-Courier (7/12/11)

THE LNG workforce from the four impact villages of Portion 152, which are Boera, Papa, Lealea and Porebada, attended a half day workshop on up skilling employees, last Friday at the Shady Rest Hotel.

The four hours workshop was facilitated by Boera Holdings, the landowner company for Boera village with the support of Laba Holdings Limited.

President of the Boera LNG Workforce, Konio Lohia said that the workshop with the theme "Providing Solutions for a Better Tomorrow" basically targeted the management level like managers and supervisors.

She added that both male and female workers attended the workshop which was to up skill and better prepare them for the LNG project as well as discuss other issues.

Other LNG workers representatives from the other three villages were encouraged to also attend the workshop. Lohia added that Boera village contributes about 500 local workers alone who are employed through Laba Holdings in the LNG project.

"We will use the workshop to discuss on issues both social and economical that is affecting our villages and try to find solutions to those problems," she said.

"We at Boera Holdings are taking the lead through the workshop so that our colleagues from the other three villages will be able to learn from the discussions at the workshop and go back to their villages and plan their activities," she said.

"We aim to bring back the fruits of our labour in the LNG Project to benefit our families and the village communities and at the same time try and manage the social problems within our community," Mrs Lohia said.

Since the LNG project construction phase, there have been changes occurring in the lifestyles within the community and we have to be on par with the current trend of change happening here and elsewhere," she said.