Weekly Commentaries

This is Sunday Chronicle's weekly commentaries on various issues of interest affecting the country. All individual commentators are done by elite Papua New Guineans from diverse educational backgrounds.

Monday, February 15, 2010

Too much of a good thing can create problems

PNG RESOURCES WEEKLY
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  YEHIURA HRIEHWAZI Freelance Reporter

"HAVING too much of a good thing can create problems".

This is the case with LNG projects in Australia and Papua New Guinea, according to analysts last week.

The excitement created by LNG projects in PNG is overwhelming with all government focus and attention on the projects and the onus is on the contractors to search the world for skilled workers to build the extraction facilities, conditioning plant, pipelines and the processing and export ports.

Same is being done in Australia with Chevron's Gorgon LNG project in Western Australia which ExxonMobil has an interest. Woodside is also building its LNG plant. There are several others going into Front End Engineering and Design while others are at Final Investment Decision stage.

There is also the coal energy scheme spearheaded by Queensland's richest man, Clive Palmer who is spending some of his wealth on petroleum exploration licenses in the PNG's Papua basin. Late last year Palmer watched his top soccer team lose in Brisbane and was rushed to hospital for cardiovascular checks. He invests hundreds of millions (or billions) of dollars on mining and energy projects and is among the people who are driving up the demand for skilled workers. Wonder what might happen to him if there aren't enough skilled workers for his billion-dollar projects.

Skilled workers are in high demand for the 12-plus LNG projects in the Oceania region - two of them in PNG which are being driven almost simultaneously.

 "With all the law and order problems in PNG getting wide media attention overseas and the associated problems causing disruption to early ground works on the PNG LNG project, the signals going overseas are very disturbing," according to an industry observer.

"With that kind of negative perception, skilled workers may not want to come here. They will most probably prefer to go and work in Australia," he said.

Just as an example, PNG LNG project wants 1,000 drivers, 400 welders, 300 crane operators and hundreds of engineers and thousands of other skilled men and women. The InterOil LNG project will also require similar number of workers. Our projects are small by comparison to the Gorgon and the Woodside projects and their requirement for skilled workers are mindboggling.

Bloomberg reported last week that skills shortage may increase costs and cause delays for companies developing the LNG in Australia.

 Industry analyst, Fitch Ratings said ventures in Western Australia and PNG and Queensland's coal seams projects will need up to 60,000 workers at the peak of construction.

 "First movers will have a distinct advantage," they said. This means PNG LNG is among them. However our project is attracting attention world-wide for all the wrong reasons with headlines like "Tribal war stops PNG LNG project."

And the most worrying is the "chilling effect" on one of the world's largest LNG plant construction and engineering groups, Chiyoda of Japan, which got an order from ExxonMobil for about $US5 billion to build the LNG plant outside Port Moresby. The Japanese are by nature very security conscious people and they are watching the law and order problems associated with our LNG projects very closely.

Our government's security agencies ought to wake up and do the necessary to re-assure the world that their safety is guaranteed at project sites. Failing that, the skilled workers will fly over PNG to work in Australia for Santos Ltd., BG Group Plc, Exxon Mobil Corp., ConocoPhillips and Origin Energy Ltd, Chevron, Resourceshouse and others.

Coupled with our law and order issues is the fact that skilled workers could be in short supply and this will increase cost and delay projects. That is why Flitch warns that while we are excited about the LNG projects and the rising Asian demand for cleaner-burning fuels, "having too much of a good thing can create problems."
Seven LNG projects aim to make final investment decisions this year, John Hirjee, an analyst at Deutsche Bank in Melbourne said recently. Australia may struggle to find skilled workers as increasing numbers of resources proposals are advanced, according to analysts including Hirjee.

And if Australia struggles to find skilled workers, what chance does PNG have given our law and order situation? While on our state of lawlessness, last week I spoke to a very humble and interesting person in Mr Andrew Makano - the chief of the Juha Pakaiyo tribe where the Juha gas field is located.

He represents about 25800 people of the upper and lower Strickland River basin who live in very isolated communities and hardly ever interact with the outside world due to inaccessibility.

Makano and his people are worried that they could become "non existent" by government failure to conduct social mapping and genealogical studies as required by the Oil and Gas Act and there could be tribal war against people rushing in to occupy their land in order to claim ownership and benefit from the gas project development.

Two weeks ago Makano and his group walked into Petroleum and Energy Minister Mr William Duma's office and presented him a petition calling on the state to recognize them is a group of people that are living and with genuine and legitimate rights over their land.

To get to Port Moresby, they had to trek for three days to the Frieda River area in Sandaun province to pan for alluvial gold nuggets which they sold to pay for their airfares to Ok Tedi's mining township of Tabubil and then to Port Moresby where they are housed by a relative at the Morata settlement.

Speaking in Tok Pisin Mr Makano expressed concern that if they did not make their presence felt, they would be forgotten and other communities like the vocal Huli people would represent their interest and take away benefits that should rightfully belong to them.

As an example, he said the Hides Gas Development Corporation owned by Hides gas landowners of the Huli people have registered a company called Juha Joint Venture Ltd as a subsidiary company which he said did not involve them.

"We are not educated, we are not able to read and write. We don't want the educated people to take over what is ours'. We are asking the government to respect us and help us by recognizing our existence as landowners of the Juha gas project and treat us as equals with the other project landowners," Mr Makano said.

Speaking softly but firmly, he said: "We are not dead, we are alive and we expect the other people to respect our existence and our rights."

They have a registered name with the Investment Promotion Authority - Kulini Strickland Resources Holders Association Inc; which has been fighting for compensation for environmental degradation of the Strickland River system from dumping of treated tailings by the Porgera gold mine.

He said a claim of K60m has been with the government for almost 20 years, but that he said, should now be increased to K500m.

In their petition to Mr Duma they humbly ask for recognition as a legitimate landowning group that is "in existence" and asked that any other groups should work in harmony with their group.

Meanwhile Solicitor-General Mr George Minjihau has written to the Department of Environment and Conservation  advising it that the Strickland river communities were entitled to compensation if proven that their environment had been affected by the Porgera mine.

For comments, information and interaction: email - yehiura@gmail.com

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