Papua New Guinea LNG project under threat

Source: The National, Tuesday 23rd April 2013

The state and the developer of PNG’s first liquefied natural gas project, ExxonMobil, were yesterday given 30 days to address their obligations under various agreements or face legal action to shut down the project.

Hon Richard Maru

This ultimatum was contained in a petition handed to Commerce and Industry Minister Richard Maru by Hela Governor Anderson Agiru in Tari.
Maru accepted and supported the petition, promising to bring it to the attention of cabinet next week.

“It has been forced by the negligence on the part of the state and the developer to undertake clearly stipulated obligations as outlined in various agreements and commitments,” Agiru said.

Hon Governor Anderson Agiru

“I supported this project and I supported the national government on the premise and the promise that they will fund core infrastructure that will be the basis to grow from.
“I hear of K500 million for Port Moresby roads and K500 million for Highlands Highway but we have not got anything. Where will they get the money to fund these projects? “We have to stop this (LNG) project to bring some sense to government.” Maru sympathised with the Agiru and the resource owners of Hela. “I support this petition. 

The home of gas (Tari) is full of dust. Gas from Hides has been powering Porgera mine,” he said. “Yet there is no power to the people’s homes here. They have no permanent homes. The sheer neglect is indescribable. I am
horrified.

• Heavy haulage road from Hides 4 to the now completed Komo international airport which has not started;
• Business opportunity for Angore;
• Transfer of Kikori-Kutubu-Tari road to National Roads Authority;Completion of 21 bridges;
• Komo Airport perimeter road;
• Water supply system for Komo Airport site villages; 
• Failure to deliver college output as discussed at Juni Technical College.
• Local business content plans which remain unknown;
• Tari to Komo road sealing yet to be undertaken;
• K29 million for PDL 1 seed capital still outstanding;
• Failure to fund Tari Airport;
• Failure to build provincial Hela Hospital at Tari as per Hides MoA of 1996;
• Hela province has not been considered for public investment programme funding in 2013;
• Failure to declare Hela city as tax free zone as per Kokopo UBSA; 
• There is no clear demarcation as to what Hela and SHP gets as all high impact funds are for Hela except for Mendi, Ialibu and Gulf SHP highway; and
• Failure to fund commitments made by ministers and members of gas and economic committees.

 The petition separately lists nine failures on the part of ExxonMobil and lists over 20 against the state.

Agiru said: “I understand the enormity of the cause of action my people and I have undertaken today but my hands have been forced.

“It is a crime against our own people.” Among key obligations Exxon is said to have reneged on are:

This was followed by the LBBSA (licence-based benefits sharing agreements) for the six licences – PDL 1 Hides, PDL 5 Morgan, PDL 6 Northwest Moran, PDL 7 South Hides, PDL 8 Angore and PDL 9 Juha which together contribute 88% of the PNG LNG. Agiru said since the signing for PDL 1, which will contribute 57% of the gas next year, no key player had returned to Hela province. 

The states’ obligations are far longer and more serious. They include:

The PNG LNG project is the single biggest democratically negotiated project agreements involving five provincial governments and more than 3,000 landowners. 

The UBSA (umbrella benefits sharing agreement) was concluded in Kokopo in May 2009 following the execution of the Gas Agreement 12 months earlier. 

He called for the government’s and developer’s assistance in direct funding, sovereign guarantee, tax credits, development incentives and tax concessions, execution of project infrastructure indemnity over ownership transfer, materialise PNG LNG project commitments, public investment projects funding and timely appropriation and release of PNG LNG negotiated benefits.