Stand-off in Hela over royalties

DISGRUNTLED landholders in Papua New Guinea’s Hela province have reportedly locked the gate at the Hides gas plant to protest over what they say is a failure by the government of Prime Minister Peter O’Neill to pay them what they say they are owed.
Stand-off in Hela over royalties Stand-off in Hela over royalties Stand-off in Hela over royalties Stand-off in Hela over royalties Stand-off in Hela over royalties

Haydn Black


The long-standing royalties grievances have regularly flared up since the start-up of the PNG LNG plant, which has now shipped more than 20 cargoes, but while the plant is operating even better than expected for operator ExxonMobil and its partners, including Oil Search and Santos, landholders say after seven years they are tired of waiting to see the benefits promised to them.

Hela landholders have threatened to shut down the entire PNG LNG project over claims that the government has failed to share the wealth it promised from the Pacific region's biggest single commercial development.

A spokesperson for ExxonMobil this morning told PNG Industry News that the company's facilities were continuing to operate.

"ExxonMobil PNG is continuing to monitor the situation regarding the peaceful protest in Hela Province. We respect the right of individuals to peacefully protest, but we also encourage continued dialogue between landowners and the government to resolve their outstanding issues promptly. We are committed to maintaining a positive relationship with landowners, the government and the wider community," the spokesperson said.

PNG media reported that a delegation of landholders presented notice of their intentions to the project operator ExxonMobil at the Hides gas conditioning plant site.

The landowners have given the government seven days to respond with outstanding royalty and equity payments or face a shutdown of the entire LNG operations.

In the meantime, the gates to the Hides plant have been locked down by landowners, who chopped down trees to block access to the project site, Radio NZ reports.

Locals have built a shell house and told ExxonMobil that the gate will not open until the PM arrives with the money they are owed.

The landholders say they are armed and ready to confront PNG security forces, including the notorious flying squad.

Police are reportedly deploying extra security personnel to the Hides area to protect the project sites.

Energy Minister Nixon Duban has acknowledged the petition and landholder concerns, but asked landowners to refrain from doing anything to disrupt the process of the LNG project in the area, which is vital to the PNG economy.

"I want to appeal to the landowners that we have a big investment here and we cannot derail any future prosperity," Duban said.

He admitted there are continuing issues that mean the royalty payments are being held back, because the Landowner Beneficiary Identification Program still needs to be completed to properly define all those who are in line for royalty payments, so there are no issues in the future for PNG LNG, its expansion or Papua LNG.

Duban stressed that the proceeds of past sales are not been squandered by the government, but have been safety parked in the Central Bank, along with $55.7 million in development levies.

Landholders expect to see around $6 billion over the life of the project.

The PNG government said an advance team from the Department of Petroleum and Energy will be heading out to Hela today to talk to protesting landowners.

Dubin is expected to travel to Hela tomorrow to try to help quell thoughts of rebellion.

Last October local chiefs warned of a Bougainville-style uprising if the traditional owners don't start seeing some of the income from the nation's first LNG project, and they then warned they were prepared to "turn off the taps" of the $US19 billion project.

At the time the PNG government blocked a delegation of lawyers arriving in PNG to help negotiate an end to the stand-off, which centres around a 2009 deal that has turned increasingly sour for local tribesmen in the mountainous Hela province, where the majority of the gas is sourced.

The tribes are already concerned by the impact of the project, but were prepared to tolerate wellpads, pipelines and facilities for a chance at a better life.

Six years ago some 6000 tribal leaders negotiated a 7% stake in the project plus royalties and grants - 2.8% would be paid up front and the remaining 4.2% when the gas was flowing.

ExxonMobil, Oil Search and the PNG government have all received profits, but the locals say they are missing out.


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