‘Respect us’: PNG’s warning as gas giant comes drilling
PNG locals are demanding they reap the rewards from a nation-changing LNG project, prompting the Prime Minister to insist he is ‘not an imbecile’.
In the remote Papua New Guinea jungle a green carpet of thick vegetation is pierced by sharp mountain peaks rising from crocodile-infested rivers – it’s an ambitious place for a $US10bn LNG project.
Yet, global energy behemoth TotalEnergies is approaching decision time on whether to push ahead with its multi-billion dollar project – dubbed Papua LNG – which it says will benefit the resource-rich but troubled Pacific Island economy.
Since 2012, TotalEnergies has been eyeing off the vast liquefied natural gas reserves buried deep inside PNG’s Gulf Province, about 360km north west of Port Moresby.
The world’s second-largest LNG company this week revealed it would push ahead with front-end engineering and cost-benefit studies before making a final investment decision towards the end of 2023.
Supporters of the nation’s second LNG project say it will inject much-needed investment into the PNG economy while creating thousands of jobs and ensuring energy security in Asia. Demand in the region for LNG is expected to rise between 5 and 7 per cent each year to 2025.
While a final investment decision will be made within 12 months, TotalEnergies and joint-venture partners ExxonMobil and Santos are in early discussions over long-term supply contracts with customers in Asia ahead of the expected first gas in 2027.
The French multinational company says production will equate to about one billion barrels of oil, with the gas to supply four electric liquefaction trains with a combined capacity of 5.6m tonnes per annum.
If the scale of the project isn’t enough, on the ground logistics are also challenging.
Nine production wells and a gas processing plant will be built amid the towering jungle in the country’s Gulf Province before an 60km pipeline slices its way through the scrub to the coast and continues offshore for 260km to Port Moresby.
It’s an ambitious project in a remote environmentally sensitive part of the world where the respect of village chiefs, landowners and the community is hard won and easily lost.
Sitting conspicuously on the banks of the Purari River is TotalEnergies’ Herd Base, the largest track of cleared land within hundreds of kilometres and the only sign of the development to come.
The base is now a staging area, with about 150 people on-site using Chinook helicopters and barges to move hundreds of tonnes of equipment ready for the project’s executives to give the final go ahead.
Once final investment approval is granted, it will swell to 6000 people as workers – which are expected to be about 80 per cent locals – travel north to build nine gas wells and south to construct the pipeline to Port Moresby.
There’s little company in this part of the region for workers, with only a smattering of small villages dotting the river and highlands.
Despite the few inhabitants, the Papua New Guinean government and local leaders insist every landowner is properly identified, consulted and compensated.
Gulf Province Governor Chris Haiveta, who represents the region most affected by the project, said TotalEnergies and its partners must be patient as it works with the government to identify those landowners.
“The price of developers and of people coming there is to respect us, respect our culture and to give back,” he said.
“If you have to give us a year or two, do so, because if we resolve problems now we will not face the problems we had in PNG LNG, which continues to haunt us to this day,” he said.
Faults in how landowners were identified and delays in compensation resulted in violence between villagers and protests after ExxonMobil’s $US19bn PNG LNG – the country’s first major gas project – became operational in 2014.
Now, Mr Haiveta and other dissenting voices within the country are warning the government, and new lead investor TotalEnergies, about letting it happen again.
Identifying land owners might be a run-of-the-mill request in Australia, but it could be a tall order in this ancient part of the world where boundaries are unmarked and customary, meaning land can’t be bought or sold.
It’s a concern shared by Central Governor Rufina Peter, who demanded her people not “miss the opportunities” like those presented by PNG LNG.
TotalEnergies has employed a near-dozen locals in surrounding villages as community liaison officers – who will relay project updates and concerns between both sides.
Herd Base Manager Michael Lehman insists the company has worked hard to win their trust – and to put back in village development and services what it takes in resources.
“We have a lot of support from the communities. We provide medical evacuations, we provide support, we provide fuel and assistance when and where required – we are good neighbours, or we try to be,” he said.
The gas giant is investing in nearby villages indirectly affected by the project to win broader support in the region.
At Kapuna, close to where the pipeline will pass, funding from TotalEnergies along with investment from several non-government organisations and charities has delivered a new hospital, nursing school and primary school upgrades.
Barbara Calvert has volunteered at Kapuna for nearly four decades.
She said the upgrades to the village’s school and hospital, as well as the instillation of solar panels to reduce the need for diesel generators, were critical to improving health outcomes and growing poor education standards across the region.
Instead of providing people with skills TotalEnergies said it was focused on helping Papua New Guineans develop the skills needed to improve communities.
Early estimates indicate some 600 hectares of trees are set to be destroyed for the Papua LNG project - but TotalEnergies insists it will be as few as possible.
Those trees will be replaced with about 1000 hectares of new teak plantation in other parts of the country.
Is it a new awareness by oil and gas companies of their social responsibilities in the face of a green-energy transition?
No, TotalEnergies Asia Pacific senior vice president for exploration, production and renewables Julien Pouget says.
“I don’t think it’s something new, we want to do it genuinely – to listen to the people to build solutions which are benefiting and corresponding to their needs. This is where we want to put a lot of effort,” he said.
Mr Pouget insists the company’s efforts to rally support for its Papua LNG project won’t be axed when the ink dries and diggers roll in.
“We started several years ago to engage with the communities, to see what we could do in terms of training so that they can benefit from employment on the project … what we are doing today, we intend to continue and to continue for the long term, as we have been doing in many other countries by the way,” he said.
While the economic benefits of the project are generally supported, there is an underlying fear among PNG locals the impoverished island nation will again fail to maximise them.
Regional governors are demanding the Marape government enshrine jobs for nationals and supply contracts within the final agreement with TotalEnergies and its joint-venture partners.
Their concerns come in the context of previous economic failures and worsening living standards across the country.
A defiant Papua New Guinea Prime Minister James Marape, who has faced leadership criticism, said attracting investment to strengthen the economy was his priority.
“I am not an imbecile or amateur, I grew up in the LNG industry I grew up in the mining industry, I know exactly what I’m doing for my country and I can sniff a mile off good investors from bad investors,” he declared.
“Investors like Total, and Exxon are world class good investors.”
Mr Marape noted ExxonMobil’s PNG LNG project had grown the country’s economy from near 1.5 billion kina ($650m) in 2008 to near 70 billion kina following its completion.
“Papua New Guinea is a safe place for investment,” he said.
The government, through state-owned Kumul Petroleum Holdings, also has the opportunity to take a direct 22.5 per cent share in the project.
Kumul Petroleum Holdings would also own and operate an additional LNG train at Caution Bay near Port Moresby, which managing director Wapu Sonk said would create significant national value.
“Commercialisation of additional gas is an opportunity totally in the national interest,” he said.
“It means we can develop these gas discoveries, which to date have been stranded, to earn export income from a nationally-owned LNG train, while at the same time assisting in the development of a domestic gas market in PNG.”
Minister for Petroleum and Resources Kerenga Kua called for TotalEnergies to fast-track investment and inject the first 500 million kina to progress the project this year.
He insisted the warnings of regional leaders would be listened to and the mistakes of PNG LNG not repeated.
“It’s how the state divides, the benefits that it gets with its own stakeholders, like the state, the provincial government, the districts and the landowners,” he said.
However, on Monday night as Mr Marape and the Cabinet joined Papua LNG executives celebrating the next step in the project, cautious optimism remained.
One government member quietly warned there should be no celebration for the project until financial agreements were made “final”.
The Papua LNG project has government leaders walking a tightrope between working to formalise the significant investment while ensuring national benefits are widespread.
With just months before a final investment decision is made, Australia’s nearest neighbour could be on the cusp of a boom.
The reporter travelled as a guest of TotalEnergies.
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