PNG Gas Boom Not Benefiting Locals

PNG Gas Boom Not Benefiting Locals

PNG Gas Boom Not Benefiting Locals Blog, China, Corporations, France, Japan, PNG, Politics, USA
June 22, 2013

Source: Pulitzer Center
By Celine Rouzet

Papua New Guinea: The Gas Boom

A project run by ExxonMobil to supply China and Japan with liquefied gas for the next 30 years is changing life in Papua New Guinea with wildly inequitable results for local people.

Through the cracked windows of the local minibus we watched Port Moresby, the capital of Papua New Guinea, flash past: potholed roads, concrete and sheet metal buildings baking in the sun, weed-covered walls crowned with barbed wire. Port Moresby is dangerous, and foreigners are advised not to travel by bus, by taxi, or on foot.

The slums that surround the city have swollen since ExxonMobil’s huge Papua New Guinea Liquefied Natural Gas (PNG LNG) project started in 2009.


Benjamin, a politics student who used to rob banks, took us to the Badilli slum, his home of the past 11 years, where a group of men gathered around us, chewing betel paste and eyeing us with a mixture of curiosity and distrust. Benjamin said:

“People kill each other here. There are all sorts: people fleeing tribal fighting or accusations of witchcraft in their villages, people looking for a better life in the capital, civil servants, professionals, criminals, prostitutes… we do what we can to survive.”


Has anything changed since the PNG LNG project began?

“We’ve got nothing out of it, the only difference is that now more people live here.”

In four years, the arrival of the second biggest oil company in the world and its $19bn project (20% financed by the government) has transformed the capital. It aims to supply China and Japan with gas for 30 years, and is the biggest development project ever undertaken in the Pacific.

But it has caused a dispute between the US and China.


On 2 March 2011 Secretary of State Hillary Clinton even accused Beijing of trying to push ExxonMobil out of the project. She told the Senate foreign relations committee:

“We are in a competition with China.”

Papua New Guinea is rich in natural resources and has become a strategic pawn for the US in its attempts to counter the growing influence of China, which quadrupled direct investment in the country between 2005 and 2010.

Invisible People


Luxury international hotels and apartment blocks for foreign executives have arrived in Port Moresby with ExxonMobil, raising prices.

An average apartment in this dusty little city now costs $1,300 a week; offices and accommodation are more expensive than in Manhattan. Benjamin said:

“Exxon and its subcontractors only house foreign employees in Moresby; most local workers live with their families in the slums.”

Around us skinny children fought over empty beer bottles on the ground. A drunk staggered by and showed us his finger, stained purple with ink:

“Look, I’ve voted! But our politicians are corrupt; they don’t care about us. In a year or two, this place will probably disappear. ExxonMobil wants to build tower blocks here.”

It is hard to find any of the 8,000 foreigners who work for the company and its partners. Nicolas Garnier, a French anthropologist who has been teaching at the University of Papua New Guinea for almost 10 years (locals call him “the white man who chews betel”), said:


“They are invisible. During colonisation, certain areas were effectively reserved for whites.”

Until 1958 locals were subject to a curfew at night.

“Rents are so high now that entire areas are inhabited only by foreigners and a few local rich people. This has created a de facto apartheid, economic rather than ideological.”


The new apartment blocks stand on the top of Paga Hill, overlooking the centre of Port Moresby, or between the Royal Papua Yacht Club and the headquarters of PNG LNG. These air-conditioned fortresses with ocean views, private pools and security guards house the project’s senior employees. ExxonMobil’s obsession with security means employees staying at the Crown Plaza hotel are not allowed to walk the 30 metres to the office, and there are many “prohibited zones” in the city, considered too dangerous for employees to enter even in their chauffeur-driven cars.

They use different security measures in Hela Province, where the underground gas reserves are.


Robert Dale, a landowner in Hides, a village in the middle of Hela, said:

“Armed squads chased us from our land like we were wild pigs”

Opposite us, the Hides 4 treatment plant cast its shadow over the small reed huts and banana trees; on the horizon, mechanical diggers cut deep brown gashes in the hillside. For weeks Dale had been hanging about the plant’s barbed wire-topped gates hoping to get a job. In March 2012 thousands of people blockaded it to demand infrastructure, jobs and compensation for their lost land. Dale said:

“We protested, but the LNG police shot at us. We want the company to re-house us and provide the public services they promised.”

Anger is growing in this wild highland region where 20,000 landowners are affected by the project.

Land is passed down through generations and still represents the main source of livelihood for most of the population, who own almost 97% of the territory.

The oil company protects its investment by giving logistical support to well-paid special police units known as “mobile squads”.


They have been accused of human rights abuses, including the killing of a local employee of a French subcontractor, Spiecapag, a subsidiary of the Vinci group, on 3 April 2012, when villagers invaded the pipeline construction site at Tamadigi; there has been no independent inquiry.

A French Spiecapag employee, who asked to remain anonymous, said:

“The company aggravates the locals, and calls out the mobile squads whenever there is a problem. There is no dialogue. Everyone stays on their own side of the fence. The worst thing is the contempt they treat the Papuans with. When the Moro camp up the hill was divided in two, I was asked to separate the whites from the “monkeys” — that’s what we call the locals.”

‘The poor get poorer’

The pipeline penetrates deeper into the jungle every day and will soon reach the territory of the Huli, a highland tribe with a warlike reputation.


Tari, the province’s tiny capital, is half an hour from Hides by pick-up truck, which costs $260 to hire for the day, not including petrol: the LNG project has raised prices and created winners and losers.

Tari is a muddy, dusty, Wild West town. Outside a sheet metal grocery, we saw an old man in rubber boots, the dirty tatters of what was once a traditional skirt hanging around his thin legs. Men who once wore the headdresses of flowers and bird of paradise feathers, so celebrated in the West, now get drunk and play cards. Tari has no bank, no supermarket worthy of the name and just one hospital with no electricity or running water to serve the whole town of Hela Province. Illiteracy is over 60%, street fights are common and the air smells of alcohol: prohibition means people can make a small fortune selling drink on the black market.

At the side of the gravel road, in the dust thrown up by the PNG LNG vehicles, a man told me:

“The poor get poorer while the rich grow fat. People living in the villages affected will get royalties but where will the rest of Hela get money from?”

Hope is gradually giving way to frustration, money is making people mad and jealousy is turning them against each other. Inhabitants of a nearby village quickly put up some houses along the road built to supply the project, so they could claim compensation. Another family demanded a huge amount of money from the project operator after a vehicle ran over their dog.

“People are losing all sense of proportion. They hear about this project worth billions, and they want their share,”

said Andrew Alphonse, a local who reports for the national newspaper.

“Four or five years ago, Tari was a tiny ghost town. But today — just look at the traffic, the lorries, the foreign workers, the planes, the road… It’s an opportunity for us, there is money to be made.”

‘The locals want to learn skills’

Some locals have found jobs as security guards, chauffeurs, traffic controllers or lumberjacks. They earn a lot of money and share it within their tribe. But as Alphonse said, it gets spent very quickly:

“There is no bank here, but we really need one. People go to the towns of Mendi and Hagen, further east, to deposit their money, but they get robbed along the way. Women get raped. The government doesn’t help us. We have no reliable police or courts. We also need roads, the internet, proper supermarkets…”


As men gathered around us, Alphonse called them to witness:

“Our young people want to be trained. The locals want to learn the skills to work on the production phase of the project, not just eat dust at the side of the road or play at being security guards.”

The locals see employment as compensation for losing their land.

ExxonMobil signed an agreement with the government to train local people, particularly those directly affected by the project. The company has already put in more than a million hours, but not everyone in the region can be trained or employed and the number of employees, currently around 17,000, including 8,000 foreigners, is due to drop to 1,000 in 2014 when the construction phase is completed. Alphonse said:

“ExxonMobil should remember that they have not yet had any gas from our land, and if they don’t do anything for the local people, they never will.”

Roads blocked, work brought to a standstill, a pipeline construction site occupied, two foreign employees attacked with machetes at the Komo site in Hela: the list of incidents goes on. What would happen if the gas were not delivered on time? The government would pay: in its 2011 budget, it assumes financial liability of up to $2.6bn until 2014. The first compensation from the project was distributed in 2010, but $58m promised by the government to local landowners disappeared. In January 2011 thousands of exasperated landowners brought work to a standstill at the Hides site. The courts ordered a temporary freeze on all payments to “prevent fraud and corruption”. In February landowners demonstrated in the capital to demand their money and took three oil ministry employees hostage.

I met Janet Koriama, president of a women’s association in Hela, at the Holiday Inn in the administrative area of Port Moresby. She told me:

“At this hotel a few clever, educated, English-speaking leaders managed to get money from PNG LNG by greasing the palms of members of the government. They just had to fill out a form and walk across to the government offices to make millions. But for everyone else, who couldn’t even get through the gates of the hotel, it was a different story.”

Not properly represented

Back in May 2009 the “development forum” had met on the island of Kokopo, 1,000km from the project zone, to decide how to distribute revenue among the different parties and infrastructure projects the government was planning. According to the Umbrella Benefits Sharing Agreement, landowners were due to receive $9.66bn over 30 years, but a report by Oxfam International reveals that not all the landowners had even been identified at that time. Koriama said:

“The agreement was thrown together, and we were not properly represented. The government chose a handful of villagers at random, paid their air fares and hotel bills, and gave them money and lots of beer.”

The local director of Transparency International and adviser to the oil ministry, Michael McWalter, regrets that his organisation was not able to observe how the forum operated.


“We were originally invited, but then the government got scared of what might happen.”

ExxonMobil says it was present merely as an observer and did not take part in the negotiations. The landowners who stayed at home in their villages are now prepared to do anything to get their share.

Mineral exploitation in this country has a turbulent history. Koriama was part of an armed gang that attacked the gold mine at Mount Kare in Enga province, northern Hela, in 1992.

“We forced the white owners to pour oil on the mine and set fire to it. Then we stripped them naked and tied them to the wire fence with a note for the operators, CRA [now Rio Tinto], ordering them to get out. The people of Hela are just as dangerous as those at Mount Kare. The gas is still under our feet. Perhaps the people at ExxonMobil don’t know what’s going on, or maybe they think everything is fine. We are not against them, we need them to help us build new public services.”

Many hope the arrival of the top US company will compensate for the inadequacy of the government, and deliver long promised development.

After much negotiation and an initial refusal, the head of communication at ExxonMobil, Rebecca Arnolds, agreed to see us in her office in Port Moresby. She said the company tried to help communities by putting forward projects to improve their standard of living, but it was up to the government to provide public services and distribute the profits in

“an equitable, just and transparent way … I know you have talked to a lot of people, but many people are very pleased with this project. They can already see a positive impact on their lives, either because they have a new job, or because they benefit from one of the projects we support.”


ExxonMobil is full of goodwill, according to PNG LNG’s glossy brochure. Smiling children in traditional dress illustrate how much good the oil company has done for the people of Papua New Guinea. The brochure tells a story:

“When Janet Mbuda started the Personal Viability Training course in December 2011, she had no idea how different her life would be today. She is one of over 250 people from Hides and the Plant Site communities who participated in the training, focussed on making the best use of the greatest resource: yourself.”

The training gave lessons in respecting others, learning to think positively, managing a family budget and earning money.

Marilyn Tabagua took one of their courses:

“ExxonMobil sent me to the United States to study management and communication, which I really enjoyed, but I don’t work for them now.”

She stands out in Tari: educated, divorced and remarried to a younger man, she got rich by setting up her own stall, and employs society’s rejects, drug addicts and prostitutes.

“The LNG project is really good for business. People have money. Every morning employees from PNG LNG and men working in the area buy chips, doughnuts and coffee. But if you look at the young women, they are so poor they turn to prostitution. Things change so quickly. They need a mobile phone or nail varnish to be like everyone else. They sell their bodies and sometimes get HIV.”

Royalties will start flowing as soon as the gas is sold, so from 2014, and for the next 30 years, some families in the project area will receive not millions, but billions. Money already rules. After dark, in the casinos of Port Moresby, you can see the fluorescent green dollar signs of the slot machines reflected on the faces of newly rich villagers. Land, women and food are being traded for cash. But in the Badilli slum an old man told me:

“We were living here before the company arrived, and we’ll still be here when they go.”

***This article was originally published in French in Le Monde Diplomatique in the February 2013 issue.


posted by:

Leave feedback

Spread the Word

Related Posts


, , , , , , , , , , , , , , , , , , , , ,

Leave a Comment