Comments

Interesting also the impact this has on the relatively high cost of aid operations in the Pacific and PNG, especially if a blunt cost-per-beneficiary ratio is being applied. I recall an interesting ethical debate with Peter Singer in the wake of his writings on aid, where he seemed to be implying that if it cost less to save a life in Bangladesh then in PNG then we should all divert our aid funds to Bangladesh. Not sure where this would leave the poor in remote parts of PNG and the Pacific.

Vailala, Thank you for the very good comments. What is important for the project is that parties of any agreement (PNGLNG Gas Agreement signed on 22 May 2008) must take responsibility for their decision and fix the problem they created. In this instance, the State and Exxon Mobil agrees with letters confirming that no full scale social mapping and landowner identification study was done and their failure to appeal the National Court Decision for the ADR/Mediation confirms that. Exxon Mobil must confirm that it failed to comply with Section 47(5) requirement of the Oil & Gas Act to get the PDL and the Government failed to assess ExxonMobil's failure to do the right thing from the onset. Therefore, until such time the ADR/mediation is completed, technically Exxon does not have legal license to operate and it is serious. Exxon Mobil has been warned already and I know they are aware of the issue but it is playing a 'wait and see' game when it is responsible for all the landowners benefit issues in the PNG LNG areas and it is only a matter of time, when we see a "mobilized community resistance". We have seen few of it and Bougainville experience is very fresh in peoples mind and it will happen soon, if social license engineering requirement is ignored. Generally, in PNG no project is safe until and unless social engineering is done from the onset. regards john

Thankyou John for your comments. I do think that your analysis of statutory law is on point and that your conclusion is reasonable. But what needs next to be considered is where may things go from here? I conjecture that if the matter were to come before a court we may assume that the court would simply order that the parties (GoPNG – ExxonMobil) take remedial action to bring themselves within statutory compliance. The court would note that Justice Kandakasi has stepped into the breach and would likely hand down an order that the parties jointly support Justice Kandakasi’s initiative. As to whether an action may be brought against ExxonMobil for trespass and damages the legal implications are too complex, and uncertain, to make them suitable for discussion on a blog-site. ExxonMobil would be well-advised to draw some lessons from this fiasco. Project developers usually like to draw a bright line between engineering and social engineering. On the one side, they say, is petroleum engineering, which we do, and on the other side is social engineering, which we don’t do. I think it fair to say, after reviewing recent court decisions that touch on custom law and customary landownership, that ExxonMobil needs to re-draw this line and recognise that it’s legal obligations to landowners may be a great deal more extensive than it has been prepared to acknowledge to date. Obviously, these obligations may include taking a much more effective role in landowner identification, as well as facilitating landowner organisation for the receipt of project benefits and ensuring that the benefit distribution is satisfactory to the legally entitled recipients. The ‘social licence to operate’ (SLO) is a judicial construct. It may be understood as an abstraction derived from the legislative scheme for customary law and customary land ownership law. It may also be understood as an elaboration of the PIC doctrine, which is old and settled PNG law. The intent and effect of the SLO construct is to recognise and bridge the divide, or chasm, between a statutory law concept of ownership of property by documented proof (e.g. an entry in the land titles register) and the customary law concept of property where land-based rights and entitlements emerge as an outcome of discussion, consensus and agreement, by custom of the parties, without reference to either statute or document. More generally, from a development studies point of view, we should assume that any PNG development project that touches on customary land needs to pursue a policy of ongoing landowner engagement. This engagement must be such that it meets and supports on a continuing basis a landowner-based standard of satisfaction. It is only when this landowner standard is continuously maintained that the developer can then claim that it has a ‘social licence to operate’ on project-affected customary owned land. We should also note that the FPIC doctrine (arising from the Awas Tingni Case, which in turn gave legs to the UNDRIP), that is now of great interest to the mineral resource extraction industries has been embedded within PNG law for many decades. Cheers Vailala

I need to add, a very big THANK YOU Professor Stephen Howes and Sachini Muller for all the work that you do to help advance and address key policy issues re: the SWP. This scheme is impacting rural lives in Vanuatu in more ways than one, at least for the guys that we have sent to Australia since 2015.

Hi Stephen, Been following all your posts on the blog and have browsed through your previous research reports. My partner is an agent here in Vanuatu, and she's sending four ladies to Australia next month, which we're very pleased about. BTW, I was in your 'Governments, Markets and Global Change' course at Crawford in 2011.

Really interesting post Stephen. Great graph. You touch on the currency issue, but I'd say that it is very influential factor in Kiribati, Tuvalu and Nauru since they all use the Australian Dollar and therefore can't have any monetary policy. That, coupled with the high reliance on imports and the inflationary effect that aid and remittances can have in small economies, certainly goes a long way to explaining high prices. I am not up to speed on wage rates, but i know that a number of years ago the average public servant (teacher/nurse) in Kiribati was earning around $8,000 per year. Very difficult to make ends meet when you are paying essentially Australian prices for sugar, flour, rice.

Excellent post Tess - thanks! All those accolades for Sean are well deserved.

Vailala, Thank you for your thoughts. The oil & Gas Act Section 47(5) is very clear on who was/is responsible for Full Scale Social Mapping and Landowner Identification Studies (FSSMLIS). The provision of this Law confirms that the Licensee (Exxon Mobil) was responsible for the FSSMLIS but it (Exxon Mobil) failed to comply with the legal license requirement and somehow got the Petroleum Development License (PDL) without undertaking the FSSMLIS. The government through its agencies also agreed with Exxon's application for the PDL despite the Exxon Mobil not meeting Section 47(5) requirement. It is all wrong here, if everyone including the government was to follow the laws. The landowners then took the matter to court and under OS No.546 of 2010, the national Court Ordered the ADR/Mediation to be conducted for identification of landowners and their land to meet the Section 47 (5) requirement. The State and Exxon Mobil did not appealed the National Court Decision and now the state is yet to provide funds for the ADR/Mediation to be conducted and as we discuss, DPE is said to be organizing logistic and making other travel arrangement. What Exxon Mobil and state failed to realize is that the national Court order automatically nullified Section E(15) of the PNGLNG Gas Agreement which the State and Exxon Mobil signed on 22 May 2008. Therefore, if the FSSMLIS is the pre-requisite to obtaining the PDL license, technically and legally Exxon Mobil is operating illegally and the onus is on Exxon Mobil to agree and do the FSSMLIS itself than anyone else as required by law. Pending Exxon Mobil meeting Section 47(5) requirement of the law, Exxon Mobil is illegally operating on customary land and its operation is unlawful - period. regards

Thank you Stephen for your comment. I am in broad agreement with your view that the LNG project should not have proceeded without prior identification of landowners, an issue of legal significance to all parties. The issue of reception/acceptance is not, I think, in this instance dispositive. What is at issue is not whether I think the studies were inadequate but instead whether or not the submitted studies supported the legal parameters for landowner identification and facilitated a legally sound Ministerial determination. On this point I believe that the developer (and their consultants) proved resistant to advice and unswayed by persuasion, preferring instead to pursue anthropological truths. The result has been a train wreck and, understandably, there are a number of people who don’t want to read the accident report. The Rimbunan Hijau Case conveys some salutary warnings. Firstly, it defines the SMLIS obligations (i.e. the need to identify landowners) as con-joint to both developer/exploiter and government. Secondly, it implies that there is a continuing obligation on the part of the developer/exploiter/government to ensure that the properly identified landowners are paid their entitlements. Thirdly, the Court has given notice that it is open for the Court to find that the joint venture parties (which includes the State) may have failed to either create or maintain a ‘social licence to operate’. This latter point is of considerable importance in the context of the general debate about natural resource development policy in PNG. Cheers, Vailala

I have been fortunate to know Sean for a decent part of my life. He was a couple of years behind me at school and our paths have crossed often since. A person of great integrity and sincerity and it was an honour for me to make a small contribution to The Embarrassed Colonialist.

Stephen, you are right in that the State and Exxon Mobil reached an agreement and they signed the gas Agreement on the basis that Social Mapping landowner Identification Studies was done as per Section E(15)of the PNGLNG GAs Agreement. What I am saying now is that the national Decision OS No.546 of 2010 nullified that particular Section as Exxon Mobil as the Licensee did not comply with Section 47(5) requirement of the Oil & Gas Act. Exxon Mobil and the State did not appealed the National Court Decision and the ADR mediation is progressing in Angore PRL 11/PDL 08 as we have this discussion. Therefore, pending the completion of the ADR/mediation Exxon Mobil as the licensee is yet to comply with Section 47(5) requirement of the Oil & Gas Act. That is why I insist that Exxon Mobil is operating with out legal license. DPE also agrees that Exxon is yet to comply with Section 47(5) requirement and copy of the news paper article by the current secretary was sent to you via your email/gmail. it is an issue Exxon Mobil need to sit down with genuine landowners and talk social license as legal license is too costly and may not be easy to reach. As social engineer, I can assist in this regard if Exxon Mobil can agree on working through the social licensing process. regards john

Vailala, Thank you - this is the case of 'the truth and the honour don't always win' scenario. The fact of the matter is the customary landowners, the State and the project developers are not above the relevant laws contained therein the Oil & Gas Act, especially Section 47 (5) which states clearly that the Licensee (Exxon Mobil) shall complete the full Scale Social Mapping and Landowner Identification Studies (FSSMLIS) and submit that together with the application for Petroleum Development License (PDL). Has Exxon done the FSSMLIS? The fact is that it has not. It only did Preliminary Social Mapping and Landowner Identification Studies at the time when the PNG LNG Gas Agreement was signed on 22 May 2008. That is why on the cover of the agreement, Hides 4, Angore and Juha gas fields where under Petroleum Retention License (PRL) when the agreement was signed. In 2009 the UBSA and LBBSA was signed but some landowner took the matter to court, yet PDL was somehow granted and in 2010 under OS No.546 of 2010 the National Court Order ADR/Mediation. Today as I comment, the State and ADR mediation team a preparing for logistic arrangement to continue the ADR mediation program which was suspended in 2015 due to funding problem. Therefore, technically and legally pending the completion of the ADR/mediation Exxon Mobil is operating without legal license as it is, as the license is yet to comply with Section 47(5) requirement of the Oil & Gas Act and if it continues to ignore this truth it is only inviting jungle justice and this is dangerous in a place like the Hela region. regards