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Exxon Mobil in PNG: Shady stories at the Holiday Inn

Celine RouzetCELINE ROUZET | The Pulitzer Center | Huffington Post

“WE ARE A VERY FRIENDLY PEOPLE, but the government and Exxon Mobil better not forget what we are capable of when it comes to our land,” said Janett Koriama, president of a women’s association in the Hela region of Papua New Guinea.

She smiled, but a strange light of both pride and anger shone in her russet eyes. Koriama was there when an armed gang attacked the Mount Kare gold mine site in 1992.

“We forced the boss and some employees to pour kerosene onto the infrastructures and burn it. Then we left those white men naked, their hands on the fences, with a note to the CRA developer ordering them to go away.”

In July 2012 we were in the coffee shop of the quiet and luxurious Holiday Inn in Waigani, the administrative quarters of Port Moresby, PNG’s dusty capital. Two years ago, Exxon Mobil started its multi-billion dollar energy project in the country, affecting more than 60,000 customary landowners.

In PNG, more than 95% of the territory belongs to local communities and has been governed according to their customs. Land that is inherited from one’s ancestors not only becomes part of the people’s identity, but it also represents the main source of sustenance for the 85% of the population who are farmers.

“We are the same landowners as in Mount Kare, and today gas and oil are still under our feet,” Koriama, one of the customary landowners, explained. “My daughter, don’t be afraid to disclose all the information I am giving you to Exxon Mobil because they need help too! You’re going to help them by providing the information that we’re giving you because they might not know—they might think that they are doing everything right. We’re not against the company. Company is OK. Company is there to develop better services.”

Looking out over the hotel swimming pool and the terrace bathed in sunlight, she continued: “The majority of the landowners who should get benefits from the LNG [liquefied natural gas] project led by Exxon Mobil are uneducated people living in remote areas. Only a few cunning, English-speaking and literate landowners already managed to win the first cash windfalls by coming to this hotel and negotiating deals under the table with people from the government.

“Afterwards they just needed to fill out a form and go a few kilometers away in Waigani to the government departments to get business grants worth a few million kina. Very easy! But for those poor landowners who can’t afford to come to Port Moresby and who are not even allowed inside that hotel, reality is slightly different.”

These business development grants have become a source of contention throughout the country. The government has promised 120 million kina to help landowner companies located in the impacted area competitively service the Exxon Mobil consortium’s gas project.

The first distribution of these grants in September and December 2010 triggered resentment. It was quickly alleged that the grants were not distributed fairly and that they were used for improper purposes by “paper landowners” who negotiated them through “locked door deals.”

In January 2011, a thousand people shut down work at the Hides 4 wellhead and the LNG conditioning plant site at Para village in the Hela region. The National Court issued orders to temporarily freeze all LNG associated payments to “prevent fraud and misappropriation.”

The next month, landowner groups led a protest in the capital demanding payments of the grants and taking three Petroleum and Energy Department officers hostage. National Planning Secretary Joseph Lelang also made accusations of political interference in the allocation of the grants.

After several petitions, fraud allegations and demonstrations, the then Deputy Prime Minister Sam Abal declared that some government departments involved in administering business development grants would be “cut off from having a direct involvement with landowner payments."

The outraged landowners haven’t forgotten: “Because there is no proper social mapping and landowner identification, the landowners are still out there crying," Koriama said. “Now the LNG project is owned by big men, only 50 or 60 big shots who can speak English and get the payments, not legitimate landowners who live in poor areas.”

Social Mapping and Landowner Identification (SMLI) is a prerequisite for any resource development project in PNG. If this process is not done properly, some rightful landowners would miss out on project benefits.

After Exxon Mobil sent its own experts to lead the SMLI research, its SMLI reports were submitted to the minister for Petroleum and Energy to be validated. Located in the capital’s Newtown Konedubu area, near LNG project headquarters, the Department of Petroleum and Energy consists of a handful of corrugated buildings covered with blue and yellow paint. Andrew Suru, a project officer in the coordination branch, welcomed me into an empty office.

“Most of the project area landowners have been identified. Just a minority not,” Suru admitted. “The difficulties we encounter are the following: Although some people are living outside of the license area they may own the land within it, and there are some people who reside within the license area who don’t own it. The first ones will be considered beneficiaries. But how do we deal with the others?”

After they are identified, landowners need to register as part of an Incorporated Land Group (ILG), the legal entity that will be used by the state to distribute the benefits to the people. “Education about ILG is the state’s duty,” explained Suru. “We’ve done some awareness, but we have yet to carry out the ILG exercise for the PNG LNG project. We’re budgeting the next phase. It’s going to be costly.”

When asked whether there is enough dialogue between the state, the company and the landowners on the ground, Suru's face suddenly became gloomy.

“There is enough dialogue. But in terms of the state, we are the ones who are supposed to go to the field. And yet we don’t have sufficient funds for this. Otherwise we would be going there on a daily basis to deal with landowners. Instead of that, we stay in the office in Port Moresby,” he said.

The ILG system promoted by the Department of Petroleum and Energy is the subject of much criticism with some people saying it marginalizes those who have a traditional right to use the land. Such a system creates a divide between the haves and have-nots.

“The confusion now is that those educated people or consultants who come to our lands are bringing a Western concept of land ownership and they call it ILG,” said Mogolo Wagi, a project area landowner.

“ILG will never work in our society. In Hela society, the people know their genealogy tracing back to 16 generations, and they know which land belongs to which clan; even the bush, the rivers, the mountains, every single area is named and owned by a clan.”

Wagi explained that only a select number of people who live inside a proscribed area can benefit. “In Hela, we don’t live in villages. We live in hamlets. I can have land here, but then live 50 miles away. That’s why there is so much land dispute. That’s something foreigners would not understand,” he said.

The first phase of PNG’s massive gas and oil project does not bode well for the future. In May 2009 landowners from the project area and representatives of state, local and provincial governments met for a Development Forum in Kokopo, on a remote PNG island, to sign the Umbrella Benefit Sharing Agreement (UBSA).

The state then committed itself to implementing infrastructure projects and started to issue Petroleum Development Licenses (PDLs) for the PNG LNG project on December 8, 2009. The state regulator for these steps was the Department of Petroleum and Energy.

And yet it seems that the Social Mapping and Landowner Identification (SMLI) process was not completed when the government organized the meeting. While the State accepted the SMLI conducted by Exxon Mobil prior to the Development Forums in 2009, a research report on the social impact of the PNG LNG project entitled The Community Good reveals that the landowner identification was still ongoing two years after the signing of the UBSA.

Therefore the government breached section 47 of the Oil and Gas Act, which says a full-scale SMLI study must be achieved by the licensee before the granting of a new Petroleum Development License.

Furthermore, the agreement was signed under dubious conditions. “The signing was not by the people.” Koriama said, “It was by whoever was invited, government authorities and the people who were selected by them, not the legitimate landowners…

"People who went there and came back told us they were paid for saying nothing! The forum's organizers gave them a ticket, [put] them in hotels, gave them money, gave them beer… And the only men who fought to not sign the agreement were chased by the police.”

As the board director of Transparency International PNG, Michael McWalter, who is also the petroleum adviser for the Department of Petroleum and Energy in PNG, explained, “The assertions that all was not well with the Kokopo forum may be the opinion of quite divergent people, ranging from purists, who would like to see some kind of formal democratic representative process of customary landowners of the LNG Project area, to antagonists comprised of disenfranchised landowners who have inadvertently or purposefully been left out, political oppositionists and those against resource development, and to those without a Melanesian perception.

“So rather than dwelling on what went wrong, why can you not dwell on what went right?" McWalter continued. “A Western observer might say that the Kokopo forum was a disgraceful mess, but a PNG observer might say it was a great event of Melanesian discussion and consensus gathering.

"The fact is that thousands of landowners, landowner representatives and would-be representatives, both appointed and self-appointed, met and discussed the project and more or less gave their assent."

“This was a great achievement that represents PNG's extraordinary democracy and equally extraordinary society at the frontier of modern society and the frontier of tribal society.

"Many developing nations achieve their resource development at the point of a gun wielded by the military that defends the government against its people when it should be defending the people from harm. PNG has not done so badly, when the fog of Western cultural prejudice is taken away.”

Today landowner groups are demanding a restructuring of the Umbrella Benefit Sharing Agreement. They ask for further compensations, the rapid delivery of public services, increased local employment, and training in the impacted areas.

Most of these demands fall inside the agreement, but the inability of the national government to honour its commitments and Exxon Mobil’s refusal to endorse any of these responsibilities are pushing the landowners in impacted areas to find extreme solutions, including destabilising the project.

It is a method that already proved effective in the 1990s, when angry landowners chased mining giant Rio Tinto out of the Panguna copper mine and BHP Billiton out of Ok Tedi gold and copper mine.


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Tim Ashton

Fly in, fly out, huff and puff it may well be - and I know nothing of what happened at Mt Kare - but I do have andecdotal evidence (from land owners, planters and the general populace) of what went on regarding Bougainville.

I found the article covered many important aspects; so more power to the Huffington Post in getting involved and creating what could be slightly flawed but otherwise very important awareness of many of the issues.

Harry Topham

The author’s credibility would appear to be somewhat flawed, as her story appears to have been based upon anecdotal rather than factual accounts.

The reader’s first attention is pivoted upon her opening statement relating to the events surrounding the Mt Kare goldmine.

The information portrayed in her introduction to the essay is in strong contrast to the facts contained in Andy Flower’s book “Mt Kare”.

Andy Flower’s book on Mt Kare was well researched and very definitive in content and should perhaps be utilised as a bible by would be miners who are considering how to do business in PNG.

Andy Flower in his recounts of the events at Mt Kare when a group of young mercenary thugs attacked the company’s HQ make no mention of the assailants alleged brutal treatment of the company staff concerned as reported by Celine Rouzet in her article.

In fact, his accounts indicate that the staff concerned were treated fairly being only locked up and only the helicopter based there was burnt.

I think the mercenaries involved are still awaiting their payment for services rendered, as they were not local to the area.

As such the author appears to have based her story on a quick on a fly in fly out visit to Port Moresby which is a shame considering her obvious literary ability which leads to reader to surmise that the article is nothing more than a bit of huff and puff.

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