"We declare our first goal to be for every person to be dynamically involved in the process of freeing himself or herself from every form of domination or oppression so that each man or woman will have the opportunity to develop as a whole person in relationship with others".


- Papua New Guinea National Goals and Directive Principles




Monday, 13 June 2011

LNG Spin, the Echo of History and the Real Questions the ABC Should Be Asking!

In a recent infomercial ... ahem interview ... on ABC Radio for LNG PNG, Esso Highlands boss Peter Graham celebrated the innovative range of benefits being devolved to local communities as a result of the LNG project. For those versed in the history of mining in PNG, however, there was a definite echo. The very innovations which Graham suggests will endear the LNG project to local communities, are a carbon copy of Bougainville Copper Limited’s (BCL) localisation policy, which to put it mildly was an abject failure. Here are a few examples of their shared approach to localisation:

Corporate Social Responsibility

Peter Graham: “Long-term the security of the project is really driven by the relationships you have with the people in the communities in which you are dealing. We recognise that, we understand that we need to be seen as good corporate citizens within those communities, to be a participant in the community and to have a sense of ownership by the people in the communities, of the project. We nurture that sort of relationship with communities”.

BCL: The first boss of BCL, Frank Espie claimed, “[c]ontrary to some impressions, the Chairman of a multinational company can be a responsible citizen ... I am best able, in the long run, to ensure the return on my shareholders’ investment by conducting our business in a way which satisfies local requirements”. 

Training and Employment

Peter Graham:  “I think as a matter of priority we have decided to take a very comprehensive approach to national content. We would like to maximise the opportunities for Papua New Guinea citizens to participate in the project so we have invested heavily in creating substantial training institutions in PNG to help develop the skills of Papua New Guineans during the construction phase.”

BCL: According to former BCL Managing Director, Paul Quodling, BCL actively localised its staff, consequently by 1988 83% of the company’s employees were Papua New Guinea nationals, with preference informally being given to Bougainvilleans. Moreover, according to two former BCL Chairmen, Don Vernon and Don Carruthers, during the life of the mine BCL trained over 12,000 Papua New Guinean citizens.

Local Business Assistance

Peter Graham:"When you look back over the history, certainly of the oil and gas industry in Papua New Guinea, there have been some great successes and there have been some areas where business development hasn't been quite as good as it might have been, you know, companies failing. And we'd like to do everything we can to ensure we do not have business failures in Papua New Guinea associated with the project. So we set up what we call the Enterprise Centre, but basically it is a resource centre. Its an organistion, a physical institution with resources in it, provided free of charge, to landowner companies in particular to develop their business skills, to develop a sound business plan, understand the roles of directors and officers of the company again to ensure that once they get started there is a sustainability about what is developed and we don't have to deal with collapsed companies and the debris that can come from that."

BCL: BCL created both a business advisory service in order to foster small business, and a community relations department. Additionally, BCL also helped to initiate and fund the Bougainville Copper Foundation, a charitable body constructed with the broad aim of improving the welfare and development of the people of Papua New Guinea.

Landowner Companies

Peter Graham:  “As far as I am aware the approach here is unique. I am not aware of other countries where there is this particular approach to developing landowner companies. Certainly micro-businesses are developed in other countries but here there has been and we've made a major push, as has Oil Search and others, in developing business opportunities associated with the project. I think we've made good headway ...  We allocated a number of reserved areas to give them a leg up so they could start with confidence to develop skills in those areas, things like catering, camp maintenance, security, labour hire, and get them focussed on that rather than spreading their interests focussed across a very broad spectrum of business opportunities. .

BCL: According to former BCL Managing Director, Paul Quodling:  “The organization of mess food-buying through rural consolidation agencies opened up a lucrative market for garden-style cash crops. Service functions ancillary to BCL’s mainstream operations were devolved to local contractors. Labour contracts, transport, security services and building were typical industries that attracted individual or community involvement. Since not all business opportunities were within the competence of such groups, provincial planners incorporated the Bougainville Development Corporation to develop middle-size ventures often in partnership with offshore experts”.

The Elephant in the Room: The Questions Resource Operators Wont Answer

Behind these elegant defences of the LNG project, Graham fails to address, what all major resource developers in PNG fail to address:


Who will bare the environmental costs of the project?

How will rapid urbanisation and mass migration be addressed?

Why should we think that the taxation revenue will not be squandered by a corrupt and inept state?

How will Exxon ensure that local benefits are not monopolised by a small minority of local elites, leaving women, young people and other marginalised community members on the periphery (whilst also placing stress on intra and inter community relations)?

What safeguards are in place to ensure communities are not dispossessed of their land through the rapid, uneven development of the rural economy, fostered by the project (e.g. due to new demographic pressures and new land use practices)?

These issues are of everyday concerns for communities in PNG, for resource operators these are issues to be danced around and avoided for the duration of the project (pesky NGOs that raise these issues, can be accused of having hidden agendas, because as we know multinational corporations are pure of heart Papua New Guinean nationalists). Unfortunately while resource operators can cut and run when the realities of social dislocation, dispossession, inequalities and cronyism reaches its peak, local communities cannot.

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