Challenging spin over PNG LNG vital in age of resource curse

A key theme of my disaster capitalism book (out 2013) is the role of Western multinationals in exploiting resources and people in poor nations. A focus is Papua New Guinea. A report released today by NGO Jubilee Australia called Pipe Dreams… challenges the many myths about the supposed benefits of the soon to begin LNG operation. I’m honoured to have many of my own PNG photographs featured in the report and provided some advice on various sections.

Here’s the Fairfax story:

The … economic benefit of Papua New Guinea’s biggest natural resources project has been questioned, with a report warning that ordinary citizens risk missing out because of corruption and contracts that favour the lead proponent, ExxonMobil.

A report by anti-poverty group Jubilee Australia, to be released Wednesday, examines the predicted economic benefit of PNG’s liquefied natural gas project and the Australian government’s provision of $500 million towards it.

The report highlights endemic corruption in PNG and warns that a government sovereign wealth fund and other official bodies established to handle billions of dollars in revenues could be defrauded.

”The governance and public life of PNG are to this day beset by political intrigue, self-interest of politicians and gross misuse of public funds,” the report warns.

Scheduled to begin production in 2014, the LNG project is valued at $22 billion and predicted to double PNG’s gross domestic product.

Australian companies Santos and Oil Search are prominent players in the joint venture project led by US giant ExxonMobil.

The report by Jubilee Australia – whose supporters include World Vision and the National Coalition of Churches – includes allegations that the PNG government was ”pressured into the signing” of agreements by the joint-venture companies.

Former PNG attorney-general Allan Marat is quoted in the report as saying he and his office had less than 24 hours to analyse a 200-page agreement before determining whether it was in the best interests of his country. ”This gas agreement was drawn up overseas. It was taken away from our government negotiating team and structured overseas. And, we are now forced to dance to the music of foreigners,” he said.

In response to questions from Jubilee Australia, ExxonMobil disputed the claims and argued that the fast negotiations could be explained by the fact the PNG government relied on many of the same fiscal terms as previously agreed to in a defunct 2006 proposal.

The report found mixed economic benefits for PNG people as a result of the massive investments already being made for the project.

It stated that although PNG citizens fortunate enough to have been directly employed by the project had reported that their livelihoods had improved, there was a strong view that ”an educated and well-connected elite” had captured most of the benefits.

The West Australian report:

A Papua New Guinean oil and gas venture supported by $333 million of Australian taxpayer money has been linked to violent deaths and tensions that could lead to widespread fighting.

Research-based advocacy organisation Jubilee Australia, which today releases its Pipe Dreams report on the ExxonMobil PNG Southern Highlands LNG project, found the $18.24 billion venture would not deliver all the predicted economic gains to Papua New Guineans.

It also warned that tribal disputes over land use and royalties could escalate tensions.

Jubilee research director Luke Fletcher said yesterday conditions were ripe for greater local violence over project-related disputes in the vein of an incident when a rival tribe allegedly gunned down 11 villagers in January.

The report prompted WA Greens Senator Scott Ludlam to vent new concerns about the Federal Government’s Export Finance and Insurance Corporation, which was a key backer of the project.

He said EFIC, which in the past two years has come under fire over alleged corruption in an Iraqi oil venture and an African environmental dispute, needed reforms.

“EFIC’s job should be to address market failure and deliver fair and equitable economic opportunities, not to provide a trough of poorly regulated corporate welfare,” Senator Ludlam said.

In June, an Australian Productivity Commission report recommended measures “to enhance the transparency of EFIC’s activities to the Trade Minister, the Australian Government and the public”.

A spokeswoman for Trade Minister Craig Emerson said the Government’s response to the commission’s findings was “imminent”.

Mr Fletcher said Jubilee’s report found the nation’s GDP would not double, as predicted, and that inflation could hurt vulnerable segments of the PNG community.

An EFIC spokeswoman said the “project’s impact on the wider PNG economy” and “the distribution of royalties and levies” was a matter for the PNG Government.

ExxonMobil said the January deaths were linked to a long tribal dispute and not the project.

What matters here is how Western nations and multinationals pressure impoverished states to progress with resource projects when the evidence for locals to benefit is questionable at best. Just this week Australian Foreign Minister Bob Carr announced this:

Foreign Minister Bob Carr announced on Human Rights Day that Australia will join a global initiative to promote human rights while ensuring the security of mining projects.

The… Voluntary Principles… on Security and Human Rights provide practical guidance to mining, oil and gas companies on managing security while respecting human rights and preventing conflict.

Senator Carr said Australia is proud to join the United States, United Kingdom, Canada, Norway, Netherlands, Colombia and Switzerland in this initiative.

“Australian mining companies are expanding overseas, often into unstable environments,” Senator Carr said.

“This initiative can help these companies lower risks and manage mine security in a way that respects the human rights and freedoms of local communities.

“As a country with renowned expertise in responsible mining, Australia has a lot to offer.

“Many Australian companies, such as BHP Billiton and Rio Tinto, already use the Voluntary Principles and the number is expected to grow as more companies realise the benefits.

“Joining this initiative will help Australian companies maintain the highest international standards in managing their operations abroad.”

This sounds great in theory but Canberra sees its role as promoting Australian businesses first and other concerns as far less important. Besides, the record of countless Australian energy companies in places like PNG are deeply troubling.

The Jubilee Australia report should warn us that the spin offered by resource corporations, Canberra and the PNG government itself is just that. The people of PNG deserve far better.