Topic:
“Promises And Undertaking”: Challenges Of
Benefit Sharing In The PNG Kutubu Oil And Gas
Development Licence Area
Map of
PNG’s
Petroleum
Projects
Hitelai D Polume-Kiele
IUCN Conference, Tarragona, Spain
30 June-5 July 2014
1
Overview
• Background:
•
•
Resources of PNG
Current arrangements for benefit sharing
• Case Studies:
•
•
•
Kutubu Oil Project Landowners
Oil Search Limited
Papua New Guinea Sustainable Development
Program
• Challenges for communities
• Governance and Institutional Frameworks
• Recommendations
Hitelai D Polume-Kiele
IUCN Conference, Tarragona, Spain
30 June-5 July 2014
2
Background
Map of
Papua
New
Guinea
Hitelai D Polume-Kiele
IUCN Conference, Tarragona, Spain
30 June-5 July 2014
3
Resources of Papua New Guinea
Figure 3 – Map of PNG’s Petroleum Projects
Hitelai D Polume-Kiele
IUCN Conference, Tarragona, Spain
30 June-5 July 2014
4
Resources of Papua New Guinea
(continued…)
Figure 4 – Map of PNG Mining Projects
Hitelai D Polume-Kiele
IUCN Conference, Tarragona, Spain
30 June-5 July 2014
5
Current Arrangement for Benefit Sharing
Chart 1: Legal Framework: Customary Law
Resource Ownership (Customary Law)
Customary Land
Landowning Clans
Customary Land
State Acquires Land under Western Law (Land Act)
Communal ownership
Compensation
Compensation
Lease to Developer
Under Lease to Developer from State
Developer has title and full access for life of project
Developer has full access rights for life of project
Hitelai D Polume-Kiele
IUCN Conference, Tarragona, Spain
30 June-5 July 2014
6
Current Arrangement for Benefit Sharing
(Cont.…)
Chart 2 – Legal Framework: Western (Introduced) Law – Oil and Gas Act 1998
Resource Ownership (W estern Law)
Benefits
State
Resource Rent
Taxes
Developer
Equity (Option to acquire 30%)
Benefits to be negotiated with State
Provincial Governments
Landowners
Equity
Equity
Royalty
Royalty
Special Support Grants
Compensation
Hitelai D Polume-Kiele
IUCN Conference, Tarragona, Spain
30 June-5 July 2014
7
Case Studies
(1)
Kutubu Oil Project:
Three principles used to share benefits:
•
Land area covered by Petroleum Development Licence (PDL) and
Pipeline Licence(PL);
•
Equal proportion of benefit flows amongst clan members;
•
Size of population
Landowners:
Fasu, Lower and Upper Foi
•
Fasu own 90% of land
•
Foi own 10% of land
Hitelai D Polume-Kiele
IUCN Conference, Tarragona, Spain
30 June-5 July 2014
8
Case studies
(1). Kutubu Landowners (cont.…)
Current Equity Benefit Distributions:
•
•
•
Fasu landowners (10%);
Lower and Upper Foi Landowners
(3%);
Southern Highlands (Hela) Provincial
Government
and
Local-level
Governments (12%);
Hitelai D Polume-Kiele
IUCN Conference, Tarragona, Spain
30 June-5 July 2014
9
Case Studies (Cont….)
(1)
Kutubu Oil Project (cont….)
Hitelai D Polume-Kiele
IUCN Conference, Tarragona, Spain
30 June-5 July 2014
10
Case Studies:
(1).
Kutubu Oil Project (Cont.…)
Hitelai D Polume-Kiele
IUCN Conference, Tarragona, Spain
30 June-5 July 2014
11
Case Studies (Cont….)
(2). Oil Search Limited
• Community Engagement
• Investing in successful relationships;
• Building Deep Cultural Understanding;
• Open And Collaborative Development
Efforts;
Hitelai D Polume-Kiele
IUCN Conference, Tarragona, Spain
30 June-5 July 2014
12
Case Studies (Cont….)
(2). Oil Search Limited (cont.….)
• Cultural expectations;
• Face of Oil Search Limited;
• Human Rights
Hitelai D Polume-Kiele
IUCN Conference, Tarragona, Spain
30 June-5 July 2014
13
Case Studies (Cont….)
(2). Oil Search Limited (cont.….)
Community
Engagement:
Village
Liaison
Officer (VLOs)
Hitelai D Polume-Kiele
IUCN Conference, Tarragona, Spain
30 June-5 July 2014
14
Case Studies: (Cont.….)
(2). Oil Search Limited (Cont…)
Stakeholder
management
Hitelai D Polume-Kiele
IUCN Conference, Tarragona, Spain
30 June-5 July 2014
15
Case Studies: (Cont.….)
(2). Oil Search Limited (cont.….)
Health and
Community
Hitelai D Polume-Kiele
IUCN Conference, Tarragona, Spain
30 June-5 July 2014
16
Case Studies: (Cont.….)
(3). Papua New Guinea Sustainable Development
Program:
Trust Fund: Funding Social And Economic
Development Projects Particularly Along The Fly
River Area And Other Parts Of PNG
Hitelai D Polume-Kiele
IUCN Conference, Tarragona, Spain
30 June-5 July 2014
17
Case Studies: (Cont.….)
(3). Papua New Guinea Sustainable
Development Program (Cont….)
Mainohana
School Clinic
Kairuku, Central
Province.
Hitelai D Polume-Kiele
IUCN Conference, Tarragona, Spain
30 June-5 July 2014
18
Case Studies (cont.….)
(3). Papua New Guinea Sustainable
Development Program:
Daru Airport
Project,
Western
Province
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IUCN Conference, Tarragona, Spain
30 June-5 July 2014
19
Case Studies (cont.….)
(3). Papua New Guinea Sustainable
Development Program
Community
Climate Change
And Reforestation
Project, Kompri,
Eastern
Highlands
Hitelai D Polume-Kiele
IUCN Conference, Tarragona, Spain
30 June-5 July 2014
20
Case Studies (cont.….)
(3). Papua New Guinea Sustainable
Development Program
HIV & AIDS
Community
Conversation,
Kefamo,
Eastern
Highlands
Province
Hitelai D Polume-Kiele
IUCN Conference, Tarragona, Spain
30 June-5 July 2014
21
Case Studies (cont...)
(3). Papua New Guinea Sustainable
Development Program
Rural
Electrification,
Western Province.
Hitelai D Polume-Kiele
IUCN Conference, Tarragona, Spain
30 June-5 July 2014
22
Case Studies (Cont….)
(3). Papua New Guinea Sustainable
Development Program
Daru Water
Supply
Inspection,
Western
Province
Hitelai D Polume-Kiele
IUCN Conference, Tarragona, Spain
30 June-5 July 2014
23
Challenges For Communities
The Equity Sharing Arrangement Has Served As A
Catalyst For Conflict:
•
Tussle Over Decision-making Involving Intraclan Arguments Over Control Of Clan
Resources;
•
Disputes over Landownership Rights
Entitlements To Benefits And Equity ;
•
Increase
In
Number
Of
Incorporated Land Groups (ILGs)
Hitelai D Polume-Kiele
IUCN Conference, Tarragona, Spain
30 June-5 July 2014
And
Registered
24
Challenges For Communities (cont...)
• Expectations Of Landowners;
• Consultation, Collaboration And Cooperation
Between Government, Investor And Landowner
(Important);
• Empower The Landowners To Invest Their
Benefits
Hitelai D Polume-Kiele
IUCN Conference, Tarragona, Spain
30 June-5 July 2014
25
Challenges For Communities (cont.…)
• Governance And Mismanagement Issues;
• Instability Within Government;
• Inconsistency In Government Policy On
Mineral And Hydrocarbon Industry
Hitelai D Polume-Kiele
IUCN Conference, Tarragona, Spain
30 June-5 July 2014
26
Challenges For Communities (cont.…)
In An Environment Such As These, It Is
The Operator Or Developers Who Are
Mediating Relationships And Conflicts
Involving Landowners Due To The
Absence Of The State On The Ground
Hitelai D Polume-Kiele
IUCN Conference, Tarragona, Spain
30 June-5 July 2014
27
Governance And Institutional
Frameworks
• Consultation, Collaboration And Cooperation
Between Government, Investor And Landowner –
Important;
• Empower The Landowners To Invest Their
Benefits;
• Eliminate Any Issues Of Governance And Avoid
Conflict Of Interests Issues
Hitelai D Polume-Kiele
IUCN Conference, Tarragona, Spain
30 June-5 July 2014
28
Governance And Institutional
Frameworks
• Review Of The Current Legislation (Flow Of Benefits
Such As Royalties, Development Grants, And Project
Funding);
• Transform The Delivery Of Essential Services;
• Ownership Structure - In Project Equity And Ensures
A Sense Of Project Control And Ownership By The
Clan;
• Processes Of The Methodology Of Identification Of
Beneficiaries And Distribution Of Benefits;
Hitelai D Polume-Kiele
IUCN Conference, Tarragona, Spain
30 June-5 July 2014
29
Governance
And
Frameworks (Cont.…)
Institutional
• Participation - Landowners Want More Influence
On The Decision-making Process That Shapes
The Aspects Of The Equity Not Just The
Distribution Of Benefits;
• Financial Risks Associated With The Funding;
• Implementation Of Government Policies
Regarding Natural Resources Hitelai D Polume-Kiele
IUCN Conference, Tarragona, Spain
30 June-5 July 2014
30
Recommendations
Review:
•
Institutional Frameworks - (Methodology Of
Identification Of Landowners/Beneficiaries)
•
Participation By Landowners;
•
Processes Of Responsibilities - Transparent
And Equitable Distribution Of Benefits To All
Affected Landowners And PNG Citizens
Generally).
Hitelai D Polume-Kiele
IUCN Conference, Tarragona, Spain
30 June-5 July 2014
31
Wealth and Benefit Distribution (Kutubu Landowners)
Hitelai D Polume-Kiele
IUCN Conference, Tarragona, Spain
30 June-5 July 2014
32
Rice Farming (Kutubu)
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IUCN Conference, Tarragona, Spain
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33
Mbuke Island Agricultural Technologies
Project, Manus Island
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IUCN Conference, Tarragona, Spain
30 June-5 July 2014
34
Papua New Guinea LNG
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IUCN Conference, Tarragona, Spain
30 June-5 July 2014
35
Recommendations (Continued…)
‘Meaningful Accountability’:
• Eliminate
Conflicts
Impediments;
Of
Interests
And
• Empower The Landowners To Invest Their
Benefits And Direct These Benefits Towards
The Improvement Of Their Lives.
Hitelai D Polume-Kiele
IUCN Conference, Tarragona, Spain
30 June-5 July 2014
36
THANK YOU
Hitelai D Polume-Kiele
IUCN Conference, Tarragona, Spain
30 June-5 July 2014
37