ExxonMobil contributed to the landslide claims National Disaster Office!

We have now all learnt that tragedy has struck residents living near ExxonMobil's  Souther Highlands operation. A large landslide 1km long has destroyed dozens of homes. Sadly, the death toll could reach 60. 

                                          Source: ABC News


Clearly our first thoughts must go out to the family of the victims. However, given the scale of this tragedy it would be remiss if we did not consider whether there was a causal link between the landslide and ExxonMobil's operations. When asked by ABC Radio, Exxonmobil denied the link. Nevertheless, disturbing evidence is beginning to emerge. 


For example, in today's Namarong Report it was reported that United Nations PNG Coordinator has pointed the finger at Exxonmobil's operation. However, perhaps most damningly Bill Yomba from the National Disaster Office made the following remark to CNN:

"This is a very huge landslide that covered a 1 kilometer area. We are still trying to find out the cause but at this stage we believe the gas project run by Esso Higlands Limited was a contributor because they had been digging for limestone in the area".

According to the ABC's Liam Fox similar accusations are being levelled by villagers near the landslide:

"There are people - locals are already drawing some links. How correct that is, we're not able to say yet. But they believe that the quarry next to the landslide site caused the landslide. That blasting in the past has, quote, 'softened the ground' as they have said. And that quarry was used by the LNG site for its operations. But Exxon Mobil says that's not the case anymore and hasn't been for about six months."

The Post-Courier is relaying similar views from the ground:

"Locals blamed international contractor Clough Curtain Joint Venture (CCJV) for not developing the Tumbi quarry including proper safety procedures that resulted in the loose rocks and soil from the top of Gigira mountain range to cascade causing severe destructions on its way down." 

In a move that may seem insensitive in light of the tragedy, ExxonMobil has resumed work in the affected area - whether this risks further destabilising the site we are not sure. ExxonMobil's spokesman Rebecca Arnold has informed investors and customers this event will not prevent it from meeting its corporate targets. 


Rest assured LNG Watch will keep readers fully updated on information as it comes to hand. It is absolutely essential for the victims and their family that the accusations again ExxonMobil are thoroughly investigated. 

Landslide in Papua New Guinea: 40 missing

Reuters News Service, 24 January 2012

 A landslide swept through two villages in Papua New Guinea on Tuesday, covering much of the settlements in mud and leaving up to 40 people missing, officials and residents told Australian media.

The accident, which occurred in the island state's Southern Highlands on Tuesday morning, prompted U.S. oil giant Exxon Mobil to stop work at its nearby $15.7 billion liquefied natural gas (PNG LNG) project.

The Australian Broadcasting Corporation said it was unclear how many people had been affected by the landslide due to conflicting local reports.

But local parliamentarian Francis Potape told ABC radio the slide covered two villages in mud, leaving some residents buried. Joseph Warai, a resident of the stricken area, said around 40 people were missing.

The Papua New Guinea police and the National Disaster Centre were unavailable for comment, with officials expected at the landslide site on Wednesday.

Papua New Guinea shares the island of New Guinea with Indonesia, and is Australia's nearest neighbour, directly north. The majority of its people live subsistence lives despite its abundant mineral wealth.

ExxonMobil leads a consortium building the LNG project, the country's biggest-ever resource undertaking due to come on stream in 2014. The project is expected to produce 6.6 million tonnes per annum and could see GDP increase by 20 percent.

Exxon spokeswoman Rebecca Arnold said she had no details on the scale of the landslide or when work would resume on PNG LNG.

"All PNG LNG Project personnel have been accounted for," Arnold said. The company said it would help with any rescue effort.

Police Association Warns: RPNGC Works for Private Patrons

Blinked and you would have missed it, but here is a very interesting posting by NBC news that appeared on Facebook last Sunday:

The Police Association, meanwhile, alleges, a lot of money is being used to keep the Police force responsive to orders the political masters involved in the current political developments. Association General Secretary Clemence Kanau says, the Association is serious concerned, this should not be the case, since the police force is only responsible to the national constitutional. 

"When our police members came in from the highlands region,they are not reporting to one or reporting or advocating for the constitution but they are reporting for the interest of individuals. And we are told, lot of funds, lot of money has been used in terms of making sure our policemen are being responsive to the cause of money but not the cause of the constitution. We have tirelessly in the last couple of years, raised salary and allowances of the policemen, three consecutive times and we are happy that the policemen today are highly paid, but because of the money and because of their interest to serve the politicians of the day, force is now divided, we are very much concerned"

Readers will recall similar concerns were raised in 2010 and 2011, when it was found the RPNGC was on Esso Highlands payroll. Indeed on the 10 November 2010, LNG Watch wrote: "A figure of K2 million has been cited as the per month subsidy Exxon Mobil are/will provide the RPNGC for security services". 


Unfortunately, it appears from Kanau's comments the problem persists. This raises the question, if the police are working for their political and economic paymasters, who is policing the powerful?

Hides gas plant site closed

Angry LOs block off road

ANDREW ALPHONSE, The Post Courier, 17 January 2012

ANGRY Hides gas field landowners in Tari, Hela Province have forcefully shut down the operations of the existing Hides gas to electricity plant site as of 2am on Sunday. 

They felled trees and dug a huge drain across the access road at Kulu near Yuni, preventing movement of workmen and vehicles to the plant site and Nogoli camp where operator Oil Search Limited (OSL) is based. 

The Post-Courier visited the site on Sunday afternoon and observed that locals had used spades and steel rods to dig up the road under the cover of darkneww without being detected by OSL security. The locals also chained the gates to the plant site, preventing OSL workmen from gaining access. An OSL security officer at Nogoli confirmed the shutdown to the Post-Courier, stating that the closure of the plant site is placing OSL under extreme pressure as the gas plant operations supplies electricity to power the nearby Porgera gold mine operations in the Enga Province.

Hides PDL 1 landowner leaders from the 17 clans that receive yearly rental royalties are frustrated over certain unresolved issues with the State and decided to take action. Spokesmen Howard Timania (Humani clan), Hengebe Hondope (Pina) and Ekape Andiria (Pina) said the State through its relevant agencies like Department of Petroleum and Energy (DPE), National Planning and Finance and Treasury have failed to address all outstanding Hides PDL 1 issues for nearly 20 years now while attention is shifted to the multi-billion kina PNG LNG project landowners from the neighbouring Hides 4 PDL 7, Angore PDL 8, Juha PDL 9, the proposed Komo LNG international airport and the proposed LNG conditioning plant site near the Hides 4 well pad head.

The leaders said Hides PDL 1 have presented submissions after submissions but these are filing up at DPE and National Planning offices while the State deemed fit to entertain and pay benefits to other landowners like Hides PDL 8 who just received their K16 million business development grants (BDG).

They said last week the 17 landowner groups were paid a mere K14,000 as annual rental payment for the plant site by DPE but this amount is “peanuts” compared to the millions of kina the operations at Hides PDL 1 has being making both for the developer OSL and the State in the past 19 years. The landowners said LNG project developer ExxonMobil has also raised many false and high expectations for the landowners when in fact there is nothing sustainable for the landowners to participate and they are mere spectators in their own land and that it was unfair for Hides PDL 1 landowners as their existing Hides PDL 1 project would supply more than 80 per cent of raw gas in the LNG project. They said OSL was also shifting the blame to ExxonMobil and the State while it (OSL) is also another major partner in the LNG project development. They said because of the failure by the State to address all these outstanding issues at Hides PDL 1, landowners who were marginalised but patient for nearly 20 years had decided to take action to show their frustration.

The leaders also demand a positive response from Petroleum and Energy Minister in the O’Neill-Namah government, William Duma to honour their K500 million outstanding Hides MOU claim be paid while another K40 million golden handshake’’ for the old Hides chiefs as per the Kokopo 2009 umbrella benefit sharing agreement (UBSA) commitment be paid too.

The landowners said they would still hold the road in ransom until the State, OSL and ExxonMobil comes to heed their plight.

Hides chief and Komo LLG deputy president Peter Pureni yesterday called on Mr Duma and Treasurer Don Polye to immediately go to Hides and meet the landowners. Mr Pureni said several times he has advised the State on their failure to address issues at Hides and now the landowners have resorted to taking the action to shut down the plant site.

Police mobile squads attached with LNG security operations are monitoring the situation, but could not remove the road blocks.

The closure of the plant site is affecting all EPC 4 international contractors working at Hides 4, conditioning plant sites, well pad, access roads, Kobalu, Komo and related quarry developments to come to a standstill as they could not get diesel supplies for the heavy machinery, equipment, trucks and vehicles. Post-Courier travelled to Hides 4 on Sunday afternoon and saw machines, equipment and trucks grounded while only light 4WD trucks were doing other odd jobs in the normally busy and hectic project area. 

These contractors depend on the mini refinery at Hides plant for their diesel supply.

ExxonMobil’s Neo-Colonial Views on Papua New Guinea

In a speech that would have made former Minister of Territories, Charles Barnes blush, Project Manager for the PNG LNG project, Decie Autin, has demonstrated that neo-colonialism is alive and well (as if we didn’t know).

Presenting at a Chamber of Mines and Petroleum seminar (one organisational centre for the natural resource swindle) in early December 2011, Autin made predictable remarks about Exxon’s corporate social responsibility (we still await for the Post-Courier to transcribe these remarks as a ‘news report’) – however, punctuating her speech were a series of patronising comments and implicit threats (clothed of course in business euphemisms).

She begins with the observation:

Gas projects are very capital intensive. Unlike most mining Projects we have to build  vast infrastructure up front at great costs in the expectation that we will see a return on  the investment over the life of the Project.  So in order to attract the huge capital investment required, and to gain the gas  customers’ confidence, we have to convince them that we can do this … and we can do  it on schedule,  while delivering on our commitments in the areas of safety, health,  environment and social management ... Reputation is everything in this business. 

Autin then identifies a series of threats to the LNG operation, that she suggests could potentially undo the project’s reputation. At one stage PNG’s culture enters Autin's crosshair. She claims, “Papua New Guinea’s unique geographical, social and cultural characteristics have  always presented issues and challenges for any business operating in the country”.

To flip the argument, would Americans appreciate it if a Papua New Guinean claimed that “the United States’ unique geopgraphical, social and cultural characteristics have always presented issues and challenges for any business operating in the country”. What exactly is it about Papua New Guinea’s culture and society that is so ‘challenging’? That  Papua New Guineans stand up for their rights? That  Papua New Guineans value their land? That  Papua New Guineans protect their environment for future generations? 

Austin’s speech continues:

  

 I have been disappointed to see issues, almost completely unrelated to the  Project itself, flaring up and disrupting our progress.  For example, we have seen an increase in security incidents along the Highlands Highway, that is affecting our ability to transport equipment and supplies via road. Damage to bridges and infrastructure is [also] a serious issue.

Note the almost! Please Ms Autin clearly distinguish between common criminality and legitimate direction action by landowners. There is a rather large difference between landowners blockading an airstrip due to concerns over corrupt and inadequate corporate practices, and hold-ups on the Highlands Highway. Nevertheless, we suspect this is part of Exxon’s strategy, treat all forms of protest as criminal actions and demand landowners be arrested.

However,  Autin is confident that these problems can be resolved by Exxon’s partner, the PNG government:

I would like to thank the Gov’t of Papua New Guinea for all of their support.  You have been an instrumental partner on so many  fronts, and play such a critical role in the success of the Project.  We look forward to continuing to work with you as we bring this Project online.

And herein lies the problem, with corporate predators circling PNG’s national wealth, how on earth are the people to protect their rights when the regulator (the national government) is a partner and financial beneficiary of these operations.

Nevertheless, we thank Autin for finishing her speech in a language Papua New Guineans can understand (sarcasm emphasised) – clearly she has read her Lonely Planet guide to PNG: “As I have already pointed out, this is like the ‘Rugby World Cup’ of Projects – and as a  team we are only as good as our weakest player so we must ensure we are all on our  game, aligned and pushing forward to reach our goal”.

There is no need to use patronising sporting metaphors Ms Autin, Papua New Guineans are quite capable of understanding your arguments, and they know exactly what you are saying and to whom. Shall we summarise, “keep the locals in line, or LNG's investors will be mighty upset”! Simple.

Voices from Central Province - A Review of Oxfam's Research on PNG LNG

Listening to the Impacts of the PNG LNG Project: Central Province, Papua New Guinea by Iris Wielders for Oxfam, 2011.

Reviewed by LNG Watch Papua New Guinea

In 2011 Oxfam launched their LNG Impact Listening Project. In the words of Oxfam, the project's aim is to “understand people’s experiences and views of the impacts of the PNG LNG Project, and how they are responding to these impacts” (p.2). The listening project has focused on four villages affected by the LNG operation in Central Province; Lea lea, Papa, Boera and Porebada. A welcomed emphasis is given to the voice of women.

                                Source: Oxfam (2011)

Oxfam's researchers encountered mixed feelings on the project. While some villagers were happy to have new employment and training opportunities, there were concerns over pay and conditions:

The youth that are working complain about the hard work and the salary, they work seven days per week in construction and general labour. Their contracts are with the contractor companies but they are being paid by Laba [Holdings]. When they first started work they got paid 800/900 [kina], now they get only 400 [kina]. The rates between the trainees that later work and those that are hired directly are different. People think this is because the money for the trainees goes through Laba and they get less. Why are they contracted to other companies but Laba pays them? The employees have already been on strike two or three times because of these issues.

               

                            - Young man from Lea Lea (p.15)

Concerns were  raised over perceived racism in the workplace: "The outsiders coming into the PNG LNG Project are allowed in the mess. We [as employees] are not allowed in the mess. Our lunches are given in the open places" (Man from Porebada, p.15).

Oxfam researchers also found that while people welcomed the benefits money generating opportunities brought to the village, there were worries over the effect of the project on community resources, community relations, and traditional life.

Men and women from Papa told Oxfam: “There are no teachers at schools as most of them have been employed by the project, which has resulted in the school being closed in the village” (p.16). A women from Porebada added: “Law and order is not carried out properly/correctly due to the experienced ones being engaged by the PNG LNG Project” (p.16).

People also felt the project was creating divisions in and between communities, as families struggled to obtain a fair share of the project benefits. A young man from Porebada remarks: “Because of the PNG LNG Project some of the clans or even families have broken up. They give first preference to their immediate families to be trained to work. Some are being left out — have never had any chance yet” (p.16).

This echoes the history of Bougainville, where communities experienced similar problem. Ex-Bougainville President, James Tanis, recalls: “The people started seeing each other not as brothers and sisters and clan mates with common ownership of wealth, but more as business competitors, with only the fittest to survive. This contributed to inequality, to social gaps and to hatred”.

And like on Bougainville, many villagers raised concerns over the increased abuse of alcohol, and the influx of outsiders. A woman from Porebada claims, “outsiders [are] coming in renting shops in the village. Liquor sold 24 hours. Making business in the village” (p.17).

Oxfam found there are also concerns in Central Province over how the gas pipeline and plant will affect the local environment - an anxiety that is shared by those in Madang confronting the Ramu nickel mine. A man from Boera remarked: “The pipeline may cause the sand to rise especially in areas where construction is done. The awareness on environmental issues on pipeline is not true” (p.17).

Indeed, in line with our own research in Hela (LNG Watch PNG forthcoming), Oxfam found that people feel as if ExxonMobil has promised a lot, but in fact has delivered very little. A woman from Papa claims: “ExxonMobil raised awareness with people in the village on the building of schools, health (aid post), water supply. Empty promises” (p.17). While a Man from Boera suggests: “A lot has been said and agreed about how the project will affect these infrastructures but we are yet to see things materialising — school, health centre, church and road” (p.17)

Oxfam’s report is sensitive, fair and well researched. While it is not entirely gloomy, it does raise serious concerns over the project. Sadly the media in PNG and Australia has predominantly focused on the project’s positive impacts, while the voice of everyday villagers has been silenced. Oxfam’s report is an important document that gives the concerns of villagers, and women in particular, a little more volume.

The report is available online at: http://www.oxfam.org.au/resources/pages/view.php?ref=655&k=

What happens when a country uses its natural wealth for poverty reduction

ExxonMobil Not Finished With Venezuelan Arbitration; Could Win $7 Billion

International Business Times News, January 3, 2012 Tuesday

ExxonMobil has not thrown in the towel in a controversial arbitration in Venezuela over seizure of its assets, in which the International Chamber of Commerce ruled against it in favour of the government of President Hugo Chavez.

Irving, Tex.-based Exxon Mobil is scheduled to receive $907.6 million from Venezuela's state-owned oil producer PDVSA in compensation for the 2007 seizure of the U.S. company's oil wells and refineries. A certain portion was already credited in the form of debt relief and the remaining $746.9 million could be paid out in the form of cash, further debt relief, or $305 million held in U.S. courts, said Patrick McGinn, a spokesperson for ExxonMobil.

Chavez's government seized the company's assets when it nationalized the country's oil industry. Caracas offered ExxonMobil the book value of its seized assets in the Orinoco River Basin while ExxonMobil demanded more. Government officials said the company's demands were excessive. An impasse ensued, and for years the two have been locked in arbitration.

"This ICC arbitration award represents recovery on a limited, contractual liability of PDVSA that was provided for in the Cerro Negro project agreement. Contract sanctity and respect for the rule of law are core principles used to manage our business over the long term," McGinn said in a statement.

ExxonMobil originally asked for $12 billion, but has since lowered its compensation request to $7 billion.

The arbitration is being hailed as a victory for the Chavez government. PDVSA, on its Web site, said the arbitration is consistent with what Venezuela was initially ready to offer.

"After four years of arbitration, the actual amount determined by the ICC Court is, in fact, less than the exorbitant sum originally claimed," read the statement.

Fedel Gheit, an oil analyst with Oppenheimer, told International Business Times the arbitration is a victory for the Chavez government because it is on the low end of the scale.

That being said, the arbitration sum makes it so that ExxonMobil essentially breaks even on its investment in the country.

"To my recollection, that is the exact book value of the asset," Gheit told IBTimes.

But book value and market value are two very different things, and the company's assets could very well be calculated in billions of dollars, he said. With oil prices higher now than they were previously when ExxonMobil first entered the country, Gheit said he suspects the market vaule of the company's assets could have quadrupled beyond its book value.

The settlement, in a way, goes against the whole principle of investing - one does not invest without the intention of collecting on returns.

"It's unfortunate in a way because it makes it difficult for companies to conduct business," Gheit said.

ExxonMobil could receive more in compensation come February when a larger arbitration hearing between the two is argued in the International Center for Settlement of Investment Disputes for the fair market value of the company's assets in the country, said McGinn.

"We recognize Venezuela's legal right to expropriate assets subject to compensation at fair market value," McGinn said.

Venezuela's state oil company PDVSA, said if ExxonMobil continues its arbitration, it will take all necessary measures to protect itself.

ExxonMobil's shares rose $1.56 to $86.32 in midday trading. They rose nearly 16 percent in 2011.