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13 May 2018


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I think Sections 47-48 and Section 169 of the Oil and Gas Act can be interpreted in several ways Dave. A lot depends upon who is doing the interpreting.

The government’s own guide to social mapping studies says: “Social mapping has to be undertaken to obtain the necessary information about societies and land ownership to enable the effective administration of the Oil and Gas Act 1998. This is primarily discussed under section 47 of the Oil and Gas Act. Section 47 lays the foundation of social mapping, as the basis of understanding the cultural groups in the area of a Petroleum Prospecting Licence, Petroleum retention Licence, or Petroleum Development Licence.

Section 48 on development forums and section 169 (A) requires the identification of project beneficiaries to whom royalty and equity payments are made. Social mapping therefore establishes the basis of dealings between the State and the customary landowners in the project area. Therefore, from the perspective of the State, data related to social mapping should be relevant for the needs of the Department of Petroleum and Energy” (p10, 2003).

Section 169 (2) of the Act states that:
“Prior to convening or during a development forum under Section 48, the Minister shall determine, by instrument–
(a) the persons (other than affected Local-level Governments or affected Provincial Governments) who shall receive the benefits granted by Sections 167 and 168.”

I haven’t done any social mapping for quite a while now and I’ve never been involved in anything as large and complex as the LNG project but I’ve also never attended a development forum where the Minister rocks up with a completed landowner list or who sits down and actually works out who the legitimate landowners are.

What the Minister does is check with the landowners that the social mapping study and landowner identification studies are accurate and if he is convinced endorses the findings. That is, he endorses the landowners identified in the landowner study.

To me this means the onus for identifying landowners lies with the licensee and the study it pays to have done.

Any company that thinks it can leave the process of identifying landowners to the government is asking for trouble. This is PNG for goodness sake!

As for the rest of the things you point out I am in total agreement. The Huli, through all their machinations, have effectively pissed in their own bed when it comes to royalties.

The process under the Act doesn’t work and needs to be replaced.

I can understand some people swooning at every utterance of organisations such as the Jubilee Australia but Phil is quite wrong with his comments regarding Social Mapping and Land Owner Identification studies for the PNGLNG project.

Under Section 47 of the Oil and Gas Act, it is a condition of every petroleum prospecting, retention or development licence that SM&LI studies, as prescribed by the Minister, be undertaken. If the minister grants a licence without such studies, he has acted illegally.

Neither OSL nor EM has undertaken any project development without having the pre-requisite licences. They have been meticulous in complying with Section 47 in respect to both preliminary and full scale SMLI.

Phil claims to be a social mapper and therefore should understand that the spirit of Section 47 is not to identify individuals.

Amongst other things, the studies generally identify the location and history of existing and clans, boundaries, leadership, etc.

Under the Huli land tenure system, land is “owned” by clans. Individuals have rights of usage subject to their membership or relationship to clans and sub-clans.

Huli are also “multi-local” and have rights based on clan membership even if they have never resided in an area directly affected by a project.

This means that most of the people in the Tari Basin could probably claim to be a “landowner” of the project area. In PDL1 and PDL7, early BP and OSL initiated SMLI studies identified the stock clans and their leadership.

Royalties and land rentals were paid without argument for 14 years to the clans and distributed by the leadership to members of those clans far and wide.

Under Sections 169-171 of the O&GA, identification of individuals is actually a function of the State who take into account the SMSLI studies, local agreements, ILG’s and numerous representations. Also relevant is Section 48.

When the Government teams went to Hides in 2013 to list individuals for benefits purposes, they hit a brick wall. Instead of the recognised 12 stock clans in PDL1, they were confronted by 44 “clans” before giving up.

Sub-clans and nuclear families and some individuals claimed clan status. The smell of money corrupted the whole process.

Bribes and threats on all sides were rampant. Genealogies were fudged, newly arrived settlers claimed residency and so it went on.

The traditional clan leaders know exactly who is entitled to benefits but they are too timid or corrupted. Over the last nine years, the new, ever-evolving, mobile “leaders” have blatantly bluffed and deprived the grassroots and gone off to POM with hundreds of millions in business development grants, compensation payments and anything else they could get their grubby hands on.

I seriously doubt if there can ever be consensus on who or who is not entitled to a benefit from the project. The rich will get richer and the grass roots will get a few crumbs. For those of us who spent a lot of our working life in PNG and know those grass roots as gracious, generous and trusting, the situation is heart breaking.

I appreciate much of what Phil writes but I disagree with him here.

Section 47 of the PNG Oil & Gas Act states that the licensee of a petroleum prospecting licence is responsible for providing a full scale social mapping and landowner identification report of the customary land owners in the licence area.

It does not state that the licensee is responsible for supplying the government with a determination of the identity of the landholders entitled to royalties.

Indeed, Section 169 of the Act makes it clear that the full scale SMLI report is only one of the sources of information that the Minister shall consider in making a determination about the identity of landowner beneficiaries in the licence area.

The Minister may reject recommendations included in the SMLI report.

It is the PNG government and not the licensee that is responsible for identifying landowner beneficiaries. And so it should be.

At least some of the determinations of landowner beneficiaries that were signed off by the Minister prior to the 2009 development forums were not in accord with the relevant SMLI report. Some were seriously inadequate. Some were challenged in court.

Ongoing failures to identify legitimate beneficiaries are, in part, due to inadequate government processes and, in part, due to ongoing legal challenges among the landowner claimants themselves.

On several counts the petroleum companies associated with the PNG LNG project need to improve their performance but it is not helpful to blame them for matters where responsibility lies elsewhere.

Yes Philip and Arthur. Could send for Arthur Somare's expertise to sort it out, He's an expert in PNG skulduggery.

On Jan 1st 2012 The Post Courier posted a report saying ‘PNG LNG project was a rush say Dept. of Petroleum Officials’

It said: ‘Somare Government breached Section 47 of the Oil and Gas Act which stipulates that a full-scale social mapping and landowner identification study must be done by the licensee prior to granting of new petroleum Development License and also prior to the development forum.

Confirming this to the Post-Courier, the officials said without the satisfactory fulfillment of Section 47 of the Oil and Gas Act, it is illegal for the Minister of Petroleum or the government to invite affected landowners, affected LLG’s and affected provincial governments to the development forum.

“A petroleum licence is granted only after section 47 and section 48 of the Oil and Gas Act are fully and satisfactorily met.

'The act is very clear – the only entity that should conduct a full scale SMILS is a license or the company operating that particular license out of which a commercial development is proposed and promoted,” the officers said.’

Exxon uses its massive power to continue to lead other fuel companies. In 2010 The PNG government decided to allow Exxon to avoid import duty during construction phase by the Customs Tariff (2011 Budget) (Amendment) Bill.

The whole saga is just another example of how the giant beats up on small nations. Makes me wonder why in 2009 Australia’s Export Credit Agency, Efic lent A$ 500 million to Exxon. This was to a company that has revenues of over a US$3 billion a week.(US$49 billion Q1 2018)

In 2101 Jan 15 The Drum in P Courier gave a tiny example of this: ‘Another LNG exemption?’--

‘A Lot of amusement about advert seeking “Papuan Spanish speakers”. It says we “need people who can work with our Spanish speaking foreman on site.” How can he have a work permit when the rules normally say you need fluency in English, Tok Pisin or Motu? This suggests he has no such fluency. Just another exemption for the LNG project?’

There has been a big debate about the Tax Credit scheme that Exxon and other resource companies use. It seems to be me to be a way to minimise tax liability to the host nation.

There are all sorts of schemes and perks that the big oil companies like Exxon can use. But why did PNG Government have to bow down to the company.

There was report dated 2016 July 28 that claimed ‘Papua New Guinea has lower costs than rival LNG sources, making it a more-attractive place to invest in….’

So why did our elected leaders and their cohorts of elites bend over backwards to rush through the LNG project, illegally we are told, because of no proper clan vetting or land owner ownership completed BEFORE approval for the project.

More to the point are LO ownership identifications being conducted as I write out by Total, Exxon, OilSearch and others for the other LNG projects they are so eager to grab?

Under the Oil and Gas Act it is the responsibility of the licensee to conduct social mapping studies PRIOR to the commencement of mining development.

Under Section 47 of the Act it makes it clear that the licensee is responsible for supplying the government with the details of the landholders entitled to royalties.

In the case of the LNG project the licensee rushed ahead with the development of the project before the social mapping was done. Among other things this was illegal.

Now it expects the PNG government to be handing out royalties without actually knowing who the right landholders are. Further, they are now saying it is the responsibility of the government to identify the right landholders.

Exxon Mobil is riding roughshod over the PNG government. The PNG government should be telling them to go back and do the social mapping properly.

I don't often side with the PNG government but in this instance they've got right on their side.

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