Report on LNG Project in PNG warns of major challenges

Tuesday 29 May 2012, 6:10PM
By Oxfam

A new report on the impacts of the multi-billion dollar Liquefied Natural Gas (LNG) Project in Papua New Guinea highlights the industry’s achievements in addressing social change but warns of continuing major concerns that need to be addressed, a coalition of NGOs said today.

The report, “The Community Good – Examining the Influence of the PNG LNG Project in the Hela Region of Papua New Guinea”, finds that, although the project has boosted the local economy through employment, the project is fuelling community tensions because of inadequate community awareness-raising, belief that the process of landowner identification is flawed and community concern about how project benefits will be shared. At the same time, the report notes the potential for resolution through constructive stakeholder dialogue.

The Liquefied Natural Gas Project (LNGP) will extract natural gas from the Hela region in the Highlands, condition and send it to the coast for liquefaction before exporting the gas to overseas markets. The initial construction phase of the LNGP began in 2010, with its completion expected in 2014.

Oxfam New Zealand’s Executive Director, Barry Coates said this report was an important reminder that while large-scale resource-extraction projects could deliver economic development benefits, it was vital that they also resulted in enduring improvements to human well-being. This was not always an easy task, but it certainly was possible.

“Throughout this research, the voices of the people of Hela Province can be heard – loud and clear,” Mr Coates said. “We hope that decision makers give proper consideration to this important study to ensure that benefits from the LNG project are maximised for all citizens of Papua New Guinea, particularly women and children in those communities where the impact of the project will be the greatest.”

“All stakeholders must take responsibility to ensure that the project does not cause harm to local people. The New Zealand Government has an opportunity to help resolve some of the challenges fuelled by the LNG project by engaging in constructive dialogue with the Papua New Guinea Government, and other agencies, including the Australian Government that has supported the project to the tune of $350 million.“

Key findings include:

•       Inadequate awareness raising about the project and dissatisfaction with the information conveyed

•       Lack of comprehensive social mapping and landowner identification, meaning some legitimate landowners have not been identified and therefore will miss out on project benefits

•       Whilst there have been efforts to maximise opportunities for business and employment, a poor process for assigning business development grants has resulted in accusations of misappropriation and litigation in the courts

•       Cash ‘windfalls’ received by families are quickly spent.  Some argue this is leading to increased family breakdowns and social problems, while others recognise the positive impact they were having on many people’s lives

•       Teachers and healthcare workers are leaving to work for the LNGP, stretching resources in the community

•       While the contribution of the LNGP and increased police presence has led to a reduction in serious crime, there is concern about increases in petty crime and other forms of criminality, with more people feeling unsafe since the LNGP arrived

•       Issues regarding resettlement of people include unhappiness with their new locality, and problems with the distribution and management of large payments in the absence of proper financial guidance and banking facilities

•       While the LNGP has brought optimism to the area, there is fear the situation will deteriorate into conflict, especially if landowner issues are not resolved satisfactorily

Otago University National Centre for Peace and Conflict Studies Director, Professor Kevin Clements, said the Hela region presented especially challenging circumstances, with the potential to increase social tensions.

“While the company and government have made a considerable contribution, there are widespread concerns about transferable skills and the sustainability of business and employment in the absence of the heightened needs of the LNGP construction period,” Mr Clements said.  “We need to keep working together to resolve these.”

“The billions of dollars of revenue from the PNG LNG project should guarantee that all Papua New Guineans can enjoy access to essential health services, decent education, sustainable livelihoods and safe communities,” Mr Clements said.  “Sadly the history of resource development in PNG provides no such guarantee.”

The report is a joint research project conducted by Oxfam, National Centre for Peace and Conflict Studies at the University of Otago, PNG Church Partnership Program, ChildFund Australia, Jubilee Australia, UnitingWorld and the Melanesian Institute.

The report: “The Community Good– Examining the Influence of the PNG LNG Project in the Hela Region of Papua New Guinea” is online here:

In another, earlier report from the same region, Oxfam shed light on local perceptions of the extreme levels of insecurity – its nature, triggers and impacts – and foreshadowed that in the Highlands, the LNG project was likely to exacerbate tensions through an influx of both cash and people into the area. The report, “Violence and insecurity in the Southern Highlands of PNG”, warned that, amongst other factors, the availability of large amounts of cash was likely to result in increased use and abuse of alcohol, and the large imported (and mainly male) workforce needed for construction, would further disrupt social relations, posing increased dangers for women. The report is here: