NOOSA - At Oil Search's general meeting in Port Moresby on Friday, chairman Rick Lee strongly defended the company's compliance with its accountabilities on the $19 billion PNG LNG project.
Mr Lee said community discontent and violence around project was not Oil Search’s fault but a result of the Papua New Guinea government's failure to distribute royalties.
He said the company pays royalties to the government which is supposed to make the correct payments to landowners.
“Clearly it's the lack of distribution, not the lack of payment, that is the cause of [community discontent],” he said.
But this view has been queried by two men with close knowledge of the Oil and Gas Act under which mining licences are granted, lawyer Sam Koim and commentator Phil Fitzpatrick, who has worked as a social mapper in PNG.
“It’s the non-delegable statutory duty of the licensee to conduct the landowner identification and social mapping, which the government can use to distribute benefits,” said Koim on Twitter, pithily adding, “licensees failed!”
Fitzpatrick went into more detail, commenting that, under the Oil and Gas Act, it is the responsibility of the licensee to conduct social mapping studies before mining development begins.
“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,” he said.
“In the case of the LNG project, the licensee rushed ahead with the development before the social mapping was done.
“Among other things, this did not comply with the Act.
“Now it expects the PNG government to be handing out royalties without knowing who the right landholders are.
“Further, the licensee is saying it is the responsibility of the government to identify the right landholders.
“Exxon Mobil is riding roughshod over the PNG government,” Fitzpatrick said.
“The 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.”
But Dr Peter Dwyer of the University of Melbourne disagrees.
In a comment to PNG Attitude he notes that "Section 47 of the PNG Oil and 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 landowners 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," Dwyer observes.
"It is the PNG government and not the licensee that is responsible for identifying landowner beneficiaries. And so it should be.
"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."
Indeed in 2012, the Department of Petroleum told the Post-Courier newspaper that it was the Somare government that 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 a petroleum development licence.
A petroleum licence can be granted only after Sections 47 and 48 of the Oil and Gas Act are fully and satisfactorily met.
But whatever the wheeling and dealing in 2012, it does seem that – somehow - the law was averted and the required action was not undertaken.
“The whole saga is just another example of how the giant beats up on small nations,” former kiap Arthur Williams said. “There are all sorts of schemes and perks that big oil companies like Exxon can use, but why did the PNG government have to bow down to the company?
“And 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 ownership completed before project approval?”
There are many questions that hang over this matter: a previous government that may have offered excemptions that were not compliant with the law and resource companies that perhaps went along with the non-compliance.
And now there is civil disturbance, violence and death exacerbated, if not caused, by the failure to pay legitimate landowners, whose names may now be lost in the murk of claim and counterclaim.
The outcome is a tragic situation in and around PNG’s southern highlands: community brutality which is not only unresolved but, in the absence of substantive action to fix it, looks like it will get worse.