Papua New Guinea: Apparent lack of benefits from LNG project allegedly lead to violence within project communities; inc co. statements from ExxonMobil and Oil Search

A media report in the Conversation (linked below) has linked the Papua New Guinea Liquefied Natural Gas Project operations of ExxonMobil and Oil Search to negative human rights impacts.

The report alleges concerning impacts of the Papua New Guinea Liquefied Natural Gas Project which include frustration amongst local communities about the absence of promised benefits, leading to escalating violence in the Hela province, facilitated by the widespread proliferation of weapons. 

Business & Human Rights Resource Centre invited both major joint venture shareholders in PNG LNG, ExxonMobil and Oil Search, to respond to the issues raised in the report. The companies each provided a response and these are linked below. 

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Article
30 January 2019

Papua New Guinea: Violence arises over lack of benefits from Exxon's LNG project

Author: Jonathan Barrett & Tom Westbrook, Reuters

"In Papua New Guinea, Exxon's giant LNG project fuels frustration" 17 January 2019

...Exxon-led PNG LNG project....royalties to landowners and development levies to communities, have arrived well below Exxon's own commissioned forecasts...

...[I]n a statement...Exxon said distribution of royalties and benefits to the LNG plant site landowners started in 2017. Cash payments to individual landowners would depend on how many landowners were in a precinct and were just one of the benefits communities received, Exxon said.

...ExxonMobil PNG Managing Director Andrew Barry...said Exxon was hoping royalties would begin flowing in the pipeline and upstream areas "in the not too distant future".

...A 2017 World Bank analysis found the project partners had negotiated favorable methods of calculating royalties to the government that allowed them to take various deductions.

...Exxon did not respond to questions regarding the World Bank findings....

...Exxon said in a statement to Reuters the project has generated 5 billion kina in revenue for the government and landowners via taxes, royalty and benefit payments....

...In its statement, Exxon acknowledged that "distribution of royalties and benefits in some project areas were delayed since the start of production due to court action by a small number of landowners which prevented the relevant government departments from completing their administrative processes."

Exxon said it was committed to assisting the government ensure landowners receive royalty and equity dividends as soon as practicable.

Disputes have broken out within communities near PNG LNG facilities as landowners fight to have their claims recognized.

...[C]lan leader Johnson Tape, one of 16 clan leaders..."Our clans fought each other, but now there is peace; we are one team fighting Exxon," said....

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Article
8 September 2018

Papua New Guinea: Agreement sought to end landowners' protest against Exxon-led LNG project

Author: Lucy EJ Woods, Mongabay

"Deal in sight for PNG landowners protesting Exxon-led gas project", 31 August 2018

Traditional landholders in the Papua New Guinea highlands say they finally see signs of progress in a cycle of contentious negotiations over land rights and royalties at a massive ExxonMobil-led natural gas development.

The PNG LNG project’s operations in Angore, Hela Province, have been suspended since June, when workers were evacuated after protesters set fire to construction equipment.

...[L]andowners say they are now satisfied with the conflict-resolution process, and finally optimistic that an agreement will be reached in the coming weeks.

...Before leasing land to developers, the government is required to go through a process of Social Mapping and Landowner Identification (SMLI)...Angore landowners’ group, Angore Tiddl Appa Landowners Association Inc. (ATALA), said the government did not conduct and complete an accurate SMLI....

According to ATALA, the government then upped its response, sending ATALA a letter recognizing the organization and stating its intention to negotiate and “release money from the trust fund held by the [government-owned] Mineral Resources Development Company (MRDC),” Hayabe said. He added that ATALA was happy with the arrangement.

...[G]overnment representatives met multiple times with ATALA...to complete the SMLI process....

...[A] draft memorandum of understanding between ATALA and the government was now being reviewed and could be signed...soon....

ExxonMobil and the other companies involved in the project are not part of...any MoUs “in relation to landowner benefits.”

...$200 million in unpaid landowner royalties were “being held in trust” until the SMLI process for PNG LNG was complete....

 

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Article
28 July 2018

Papua New Guinea: ExxonMobil halts work on PNG LNG pipeline amid civil unrest

Author: Tom Westbrook, Reuters

"Exxon halts work on PNG gas pipeline amid civil strife in highlands", 6 July 2018

Exxon Mobil Corp stopped construction on its Angore gas pipeline in Papua New Guinea’s strife-hit highlands...after building sites were vandalized....

“All work...has been suspended and all impacted personnel are in the process of being demobilized or reassigned,” an ExxonMobil PNG spokeswoman said...The 11-km (7-mile) pipeline is being built to connect the Angore gas field with the Hides gas conditioning plant, and the stopwork does not affect production there, she added...

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Article
24 June 2018

ExxonMobil confirms machinery damage at PNG gas pipe project

Author: Reuters

22 June 2018

ExxonMobil PNG confirmed...that some heavy equipment had been damaged at its Angore gas pipeline construction project in Papua New Guinea....

...[G]overnment declared a state of emergency in the Southern Highlands province...and sent troops into the region after rioters went on a rampage protesting a failed court challenge to a provincial governor’s election.

...“We confirm vandalism has occurred at Angore well pad A,” an ExxonMobil PNG spokeswoman said via email.

“ExxonMobil PNG is continuing to monitor tension in Angore in Hela Province,” she said.

...The Highlands Region has long been the scene of unrest and protests, especially among landowners who have yet to receive payment from the government out of royalties on the [AUD]$19 billion PNG LNG project....

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Article
20 June 2018

Papua New Guinea: LNG project equipment attacked and road blockaded; frustration over non-payment of project royalties cited

Author: Radio New Zealand

19 June 2018

Landowner groups have blocked a main road and vandalised equipment belonging to ExxonMobil's LNG gas project in Papua New Guinea's Hela province.

Police say landowners frustrated at continued delays in payment by the government of project royalties were behind the attack...They set fire to and damaged earthmoving equipment, and have dug up a main road, hindering access to the project.

A spokesperson for ExxonMobil said the company was investigating the vandalism at Angore and monitoring ongoing tension in the Highlands...

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Article
10 June 2018

Papua New Guinea's Prime Minister rejects LNG report he hadn't read as 'fake news'

Author: Liam Fox, ABC

1 May 2018

Papua New Guinea's Prime Minister Peter O'Neill has rejected as "utter nonsense" a report — he later admitted he hadn't read — that claims his country would have been better off without a massive liquefied natural gas project.

...During a speech...O'Neill dismissed the report as "fake news".

...After his speech, Mr O'Neill said he had not read the Jubilee Australia report.

...One of the co-authors of the Jubilee Australia report, economist Paul Flanagan, was in the audience during Mr O'Neill's speech and described it as "disappointing".

..."That report indicated that on almost all economic criteria, welfare has decreased in PNG because of the PNG LNG project," he said...

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Article
6 June 2018

Warnings of violence over PNG LNG project

Author: Lisa Martin, The Australian

11 May 2018

A partly Australian-funded liquefied natural gas project in Papua New Guinea's southern highlands has the hallmarks of another Bougainville civil war...

...[L]andowners in Hela province are yet to receive royalty payments, resulting in escalating tensions, tribal violence, incidents of hostage-taking, blockades and sabotage.

A report from Jubilee Australia...warns there are risks landowner discontent could "spiral out of control"...

ExxonMobil responded...saying it had been instrumental in driving economic growth in PNG...

...Between 1987-1997, 20,000 people died in a civil war between PNG and its Bougainville province. Panguna, one of the world's largest copper and gold mines, sparked the conflict.

The new report is scathing of undelivered infrastructure projects resource companies promised landowners including roads, airports, hospitals, housing and sewerage projects.

Report...said the vast majority had not been built...

PNG Prime Minister Peter O’Neill dismissed the report as fake news, despite admitting he hadn’t read it, while some of his ministers acknowledged the government had some lessons to learn.

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Report
5 June 2018

On Shaky Ground PNG LNG and the consequences of development failure

Author: Jubilee Australia

May 2018

...investigates the impacts of Australian-backed, Exxon-led PNG LNG project on the local affected communities. Commencing production in 2014, the project extracts gas, condensate and naphtha from PNG’s Highlands and ships these products to a liquefaction plant near Port Moresby by means of a purpose-built pipeline... 

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Company response
18 April 2018

Response by Exxon Mobil

Author: Exxon Mobil

While the PNG LNG Project is not the cause of PNG's or Hela's low socio-economic indicators, when tied to sound national economic policies, it can be part of a solution that helps Papua New Guineans build a more prosperous and sustainable future for themselves. PNG LNG royalty payments due to the government began, and have continued, since the start of production operations in 2014. Payment and distribution of royalties and other benefits due to landowners in the Project is the responsibility of the PNG government and is based upon benefits sharing agreements previously executed between the government and Project area landowners. 

We maintain a social investment program that collaborates with government, donor and civil society priorities around education, community health, and broader socio-economic development. Moreover, we are a lead member of efforts such as the PNG Extractives Industry Transparency Initiative (PNG EITI). In local communities, we have invested more than 800 million PGK (246 million USD) to build infrastructure, develop social programs and implement skills training. Our efforts have a tangible and direct impact on the community.

Our support for local communities also includes disaster response and humanitarian relief in the aftermath of the recent earthquake. In addition to the company's US $1 million contribution for humanitarian relief, we have donated more than 37 tons of food and 14 tones of portable water... Exxon Mobil is committed to respecting human rights as a fundamental value in our company. We comply with applicable laws and regulations, and seek to work with suppliers and business partners who share this commitment. Our operations and approach to human rights are consistent with the goals of the United Nations Guiding Principles on Business and Human Rights and we have been a member of the Voluntary Principles on Security and Human Rights Initiative since 2002.

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Company response
18 April 2018

Response by Oil Search

Author: Oil Search

 We note that ExxonMobil is the operator of the PNG LNG project, and we refer readers to their response on the claims made by the author (see below). The information provided here is intended as supporting information, and to describe the socio-economic impact of broader oil and gas development in the region, and describe our approach to human rights management... [W]hat is good for Oil Search is good for PNG. We have a strategic interest in ensuring that we maintain a stable operating environment based on strong and enduring relationships with local communities... Oil Search has and continues to play an important role in assisting dialogue between government and community stakeholders, and supporting efforts to resolve the complex web of inter-tribal legal and non-legal disputes, and those between government and communities... During 2017, royalty payments were distributed to the PNG LNG plant site and Hides landowners. However, there are still significant payments outstanding. It is a Company priority to actively assist the PNG Government in meeting its obligation to effectively distribute PNG LNG Project benefits to landowners... Oil Search supports and advocates for improved transparency of payments made to governments by extractive companies and demonstrate this by voluntarily disclosing payments to government annually in our Social Responsibility Report, our online data centre, contributing data to the PNG EITI reports, and in 2017 through our Transparency Report.

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