Opposition MPs raise questions

Peter Niesi
Papua New Guinea’s haste to have what is the largest investment project ever—the US$10 billion Liquified Natural Gas Project—come onshore has encountered rough waters with the Opposition lobbying MPs to boycott an early recall of the crucial Parliament session.

Parliament had been adjourned to September 23. But now Prime Minister Sir Michael Somare and his cabinet recognising the need for legislative amendments to create a niche and effect the LNG Agreement have decided they want the 109-MP Parliament Assembly to meet on September 18 instead.

The Opposition is miffed by reports that the LNG Gas Agreement—which establishes the project’s fiscal regime and legal framework—had not been legally vetted adequately by the Attorney-General or the State Solicitor before it was signed with Esso Highlands Ltd, an Exxon Mobil Corporation subsidiary, and its joint venture partners.

The partners and their interests at the signing include: ExxonMobil with Esso Highlands Limited as operator—41.5%; Oil Search Ltd—34.0%; Santos—17.7%; AGL—3.6%; Nippon Oil—1.8%; landowner interests—1.2%; and Eda Oil—0.2%.

Governor-General Sir Paulias Matane and Minister for Petroleum and Energy William Duma signed the LNG Agreement with the international consortium on May 22 and formally presented it to Prime Minister Sir Michael Somare.

On August 28, led by Deputy Leader of Opposition and former Treasurer and Finance Minister Bart Philemon, former Prime Minister Sir Julius Chan, and new but highly respected Opposition MPs—Kairuku-Hiri MP Paru Aihi and Bulolo MP Sam Basil—alled on MPs not to allow themselves to be used to legally accommodate the agreement.

“We support foreign investment and will attempt to ensure the environment is conducive for that,” Philemon said, adding the LNG Agreement was so hastily done that questions of compliance with due process and legal scrutiny still hover above it.

“It is our role to ensure that Papua New Guinea’s interests—the interests of the 6.2 million people—is protected so they benefit now and in the future,” Philemon added.

The Opposition says that reports gathered indicate that the State Solicitor George Minjihau was given the 200-page LNG Agreement on the morning of May 21, 2008 and told to provide a legal brief at 6 pm on the same day to the National Executive Council.

After a preliminary look, Minjihau wrote requesting for a delay in the signing for a week. All this was bulldozed aside by NEC who endorsed the LNG Agreement. It was signed the next day on May 22, 2008 after Parliament adjourned.

Parliament resumed session on July 1, 2008 and was adjourned to September 23, 2008 on a motion by National Planning Minister and Leader of Government Business, Paul Tiensten.

Government ministers led by Deputy Prime Minister Dr Puka Temu, Duma and Tiensten have defended the LNG agreement and argued that membership of the Ministerial Gas Committee by the Attorney-General and the fact that the State Solicitor was a member in the state technical team proved their participation.

Opposition MPs want to avoid similar mistakes made previously locking the State into an agreement backing Napa Napa Oil Refinery to set fuel prices based on world fluctuations in crude oil prices.

That 30-year-binding agreement means that PNG, despite its oil production spearheaded by Oil Search Ltd, cannot enjoy the benefit of its own crude oil. Napa Napa Oil Refinery Ltd, a subsidiary of Inter-Oil Ltd, has to join the bidding at international auctions for the tapis crude from PNG.

Oil Search Ltd sold 3.75 million barrels of PNG crude at US$114.99 per barrel in the first six months of 2008 compared to US$70.69 in the same period last year of which very little trickled back to Napa Napa.

Philemon is adamant against a repeat of this knee-jerk decision-making that penalises Papua New Guineans and resource owners in particular.

He said the LNG Gas Agreement, with its cutting corners on legitimate PNG due diligence, due process of governance, and avoidance of legal scrutiny, is on the same run-away track as the Inter-Oil Agreement which gives no fuel price relief while we export oil,” Philemon said.

“We will not be a party to that. And we call on all MPs with conscience, and with concern for the people and future of PNG, to boycott this early recall of Parliament,” Philemon said.

The Government has yet to appoint their own State nominee in the US$10 billion project that could double PNG’s current GDP with a whole host of spin-off benefits to the nation.