When agreements are drafted by expat lawyers, they are done in such a way to make traditional Landowners a Government problem, responsibility and risk, that the National government or Provincial government must shoulder, warrant and indemnify against.
There is a culture that a Landowner is a necessary evil, a serious project risk, and an unnecessary nuisance to put up with, tolerate, and an all around fly in the ointment. He seen as the great unknown, leading the hordes of uncivilized savages, that reap where they dont sow, and demand the impossible.
Thus, in international resources conferences, they are viewed as an unnecessary impediment to the march of progress, and as such the big end of town have been reluctant to elevate Landowners to an equal commercial position as a worthy, valuable, and contributing business partner.
Once a project is planned and executed, they are done in such a way to employ maximum government (therefore) lawful security forces to confront, put down and disarm any eventuality of discord or threat from the landowner, while they keep harvesting, digging up or pumping out our oil and gas with impunity.
In all these, short term and long term measures are put in place that involves colonially tested and tried methods of oppression and dispossession, like interposing cumbersome government processes, or other divide and rule tactics using certain prominent and pliant landowners, lucratively contracted, incentivized or employed so that, there will never be any effective opposition by any cohesive group of Landowners to the constant outflow of resources and capital.
Aid funds are used to quietly stack the judicial system with sympathetic ears, expat judges from certain investor countries, in the pretext of institutional strengthening, so that even if the aggrieved landowner runs to the courts for justice, they dont succeed, or are kept going around in circles. The laws are sometimes interpreted by Judges (who once upon a time, as lawyers from the big end of town, acted for some of the big resource companies) to ensure what is black and white in favor of the Landowner means the conducive or convenient opposite, thus setting up bad legal precedents, that would take ages to undo.The Landowner gets nowhere even in his own country's judicial system. The big end of town calls this 'the rule of law'. The landowner, on the contrary, may have a different description for the same set of circumstances he finds himself in, such as institutionalized oppression, or those to the left of the political spectrum may well describe it as neocolonialism.
Even in court cases, the resources extraction companies play big money against Landowners, wherein it is ensured the various factions in the divide and rule regime turn up like a snake with many heads, and entangle everything in a web of haze for years, while they put on more shifts to harvest, dig, drill and pump out to their hearts content.
THE MISSING 3%?
What about the 3 % of the PNGLNG Project State equity anomaly from the exercise of 22.5% option, when the State ended up with only 19.5 %? Well, someone explained it sometime ago. We long forgot both the 3% and the explanation given, even though it may be worth well over USD$2 Billion (K8 Billion) minimum, depending on which, and whose, numbers you are looking at.
ROYALTIES: WHO ARE THE CORRECT LEGAL RECIPIENTS
What about the matter of unpaid royalties? Well the Resource Companies selfrighteously claim they already paid it all in accordance with their and State's unilateral computations, that are usually devoid of any input by Landowners in a Development Forum or a fairly negotiated Development Agreement. They maintain that if landowners have not received any royalty, its not their fault, and they cant be hindered or stopped from keeping on harvesting, digging up or pumping out and shipping off the good stuff!
It does not seem to matter to the PDL Holders and the State that, for instance, Section 47, 48, 49 et al, of the Oil & Gas Act 1989 (as Amended), ("the Act"), makes it the statutory responsibility of the License Holder or Developer to conduct Social Mapping and hold Development Forum, to scientifically identify Landowners entitled to attend a Development Forum, to freely negotiate (with the State and an Applicant to an oil or gas Development License) a commercial array of benefits package documented in a Development Agreement.
They sèem reluctant to attend to this process that makes the Landowner a valuable partner and contributor of value to the overall success of a project, for which he should be fairly recompensed in equal value.
Although those provisions of the Act make this process a Condition Precedent, in plain english, a mandatory process, prior to issuance of a Petroleum Development Licence, the Resource Companies, with the complicity of the State, have breached these provisions, and to this day stand in breach, to the grevious impoverishment of the Landowner.
Today they wander the streets of Port Moresby like landless, souless, strange creatures from some prehistoric time, living off the charity and goodness of others, and more often than not, silently dying, slipping away, and falling thru the cracks of time, and forgotten.
But what does all this really mean for any government, any serious leader, for a PM from Hela, and for this country's oil and gas industry?
It has many meanings to whoever you speak to, but five (5) that immediately stand out are:
SOCIAL MAPPING MISSING
1. No government can, today justly and fairly distribute royalty funds, without first overseeing full compliance with Social Mapping & Landowner Identification and holding the Development Forum contemplated by the Oil & Gas Act.
The Kokopo Agreements, say in the case of Hides fields, does not satisfy the requirements of the Act for social mapping and development forum, nor can they be substitutes therefor. This process CANNOT BE DONE AFTER A PDL is issued. Except by way of a proper court ordered Judicial process of social mapping, (after the event of a PDL issue) the State and the PDL Holders are stuck.
THE STATE CURRENTLY DOES NOT HAVE A PROPERLY IDENTIFIED LIST OF tribes by social scientists and land tenure experts, and proper clan names of landowners of PDL License areas, demarcations of rights proportionate to their landholdings, and other bundles of customary rights, to correctly distribute the royalty funds between. BY CUSTOMARY LAW AND LAND TENURE, NO TRUELY LANDOWNING TRIBE OR CLAN LIVES IN "GROUPS"OR "BLOCKS" OR "REGION" AND CAN BE DESCRIBED AS SUCH in reference to landownership rights. Yet successive Ministers of Petroleum have tried to make Determinations to these effects. Any politician can call for as many meetings as possible, and make many unilateral Determinations as possible, but they are stuck, with all eyes are on the bag of cash as elections loom high in the horizon.
NO DEVELOPMENT FORUM & DEVELOPMENT AGREEMENT RESULTING IN PERMANENT COMMERCIAL LOSS & DISADVANTAGE.
2. The historical wrong in depriving correctly identified land owners from negotiating freely their benefits package (prior to issuance of a Petroleum Development License, where the issue of issuance or non issuance of a PDL is dependant upon a successfully negotiated outcome of a Development Agreement in a Development Forum) is a very serious and permanent commercial injustice done to the Land owners, that can never be adequately recompensed after the event.
The right to be identified in a social mapping exercise as owners, is not a right granted by the Oil & Gas Act provisions, as the status of owner, and custodian of traditional lands, predates the Oil & Gas Act, and for that matter the Constitution. The mandatory process outlined by the Act is to correctly identify who owns what proportion of land (and rights therein), so that in consideration for permission to intrude and remain on his land, a commercial deal is struck at a Development Forum, reduced to a Development Agreement.
In this process of bargain under the Act, the Landowner always has the right not to allow a PDL to be issued over his land, if he is not happy with the terms of the Development Forum or the Development Agreement. The right to honourably withdraw from a bargain is a very valuable and fundamental right of a landowner. The ability to significantly impact a project's success or failure, makes the landowner a very worthy development partner of value in any commercial language. It is after all his land, and he decides who to allow in and remain, and who not to. This is supported by Customary Law, as well as the Constitution of PNG. The Parliament intended to give effect to, recognize, and elevate landowners and their rights in this manner, as worthy commercial partners, by Sections 47, 48, 49, et al of the Act.
What has happened so far remains a serious breach and obfuscation of these legal requirements to date by the State and the big end of town. The landowners have been permanently disadvantaged, and deprived of their commercial and property rights, and to that extent, a trespass upon their lands because they have not given any proper legal permission to anyone to enter, remain or take from their lands.
Their right to negotiate a fair bargain has been lost forever. Today they are told they have K1Billion Kina in royalties, but who is to say it could have been double or tripple that, and what about direct equity in the project, ownership of pipelines, stake in commercial shipping and other lucrative contracts? How do they get compensated for loss of a very valuable commercial right such as that, to freely negotiate, which only comes once in a project?
LEGAL ACCESS TO LAND: TRESPASS
3. As a corollary to the above, is the issue of whether the PDL License holder is currently lawfully on the otherwise customary lands, to carry on its activities? The short answer would have to be in the negative, unless the PDL licenseholder can show otherwise.
This goes back to what the Constitution says about who owns the surface rights of traditional land, and who owns the resources under it. If a person is not lawfully in someone else's garden, or is simply trespassing, does that person then have the right to harvest any food in that garden? Of course not!
Can a person who breaks and enters another persons house, have a right to remain in his house, and avail himself of the chattels and property within? Certainly not!
So how is the PNGLNG Project situation of non compliance with the Act any different?
These is a simple question, that requires a simple YES or NO answer.
The PDL Licenseholders must demonstrate by way of show cause how they may find themselves entitled to be on customary lands, outside the legal permission process authorized by the Act.
PDL 1 COMPULSORY ACQUISITION OF LAND FOR POWER SUPPLY QUESTIONABLE.
4. Relative to this is a little known historical declaration of Compulsory Acquisition of customary Lands of Hides first well head, and power plant, made by the State (Dept of Lands) working with BP Exploration. This was done when Hides was encaptulated in a (small gas to electricity power generation plant for the Porgera Gold Mining project) License then known as PDL1. This was the first ever Petroleum Development Licence issued by the PNG Government.
That Compulsory Acquisition remains to this day questionable, with so many court cases, and a lot of injustice, which only a proper Landowner Social Mapping, landowner Identification and Development Forum process would uncover, and resolve. This includes the legality of a "Compromise Agreement" which the State and BPE forced upon the landowner factions to sign, to benefit from Porgera royalties, irrespective of their relative land ownership rights and holdings within PDL1. It is paramount now in respect of the PNGLNG Project, wherein that convenient Compromise Agreement, made for small gas to power (Porgera) project should never apply to legitimize any parties as legitimate landowners under Section 47, 48 and 49 of the Act. I believe the National Court (Miviri J) recently made a ruling affirming this.
Royalties should always follow proportionate land ownership determined by Social Mapping under the Act. Until that happens, no royalty can be lawfully paid out outside the Oil & Gas Act processes, not even by agreement of landowners, as parties cannot contract out of mandatory statutory requirements.
That aside, the State cannot declare, requisition, or effect compulsory acquisition of private lands, that are not for public purpose. Public purpose has been defined as for purposes of schools, roads, bridges and other public infrastructure, public transport routes, and public spaces. BP Exploration generating power to supply Placer Dome run Porgera gold mine for monetary gain is a PRIVATE COMMERCIAL ENTERPRISE, FOR PRIVATE COMMERCIAL PURPOSE and is hardly a public purpose, that justifies lawful exercise of the Compulsory Acquisition power of the State.
ISSUE OF SAME PDL NUMBER IN HIDES GAS FIELD TO PNGLNG PROJECT IS A GRAVE INJUSTICE TO LANDOWNERS.
5.The Department of Petroleum & Energy wrongfully granted a PDL1 to PNGLNG Project over Hides. This appears to be one of the biggest steals ever as far as landowners are concerned. Analysed properly, the previous PDL1 granted to BP Exploration was under the now repealled Petroleum Act, in respect of a much smaller power generation project, (for Porgera Gold mine) that was issued prior to the enactment of the Oil & Gas Act in 1998.
The PNGLNG Project is a much bigger project with different scope, and unlike power generation to Porgera, it is to pump out, pipe, process and ship out Liquid Natural Gas. The economics, FEED, processing, and Capex is different, and it is done under the Oil & Gas Act.
The PDL1 License, should have been re-scoped by Department of Petroleum and Energy as a new or different PDL, and logically should have gone back to the drawing board for determination of the new development plans, technical evaluation, reserve valuations etc, as a new field. This would naturally bring into play the need for Social Mapping and Development Forum under the Act for Landowners. The fact that this did not happen is a grave injustice to landowners, and that injustice continues to this day.
Why was the Hides Gas reserves handed freely on a golden platter by the State to the current PNGLNG Gas Project Partners by hoodwinking everyone by use of same "PDL 1" description, and to compound and obfuscate the "improper taking", a couple of boundaries were redrawn and new PDLs issued over substantially the same old PDL1 Areas, still held by the PNGLNG Project?
Was there a proper Surrender of the PDL1 License carried out under the Act? Was there full compliance with the requirements of the Act in respect of landowners prior to issuance of new PDLs to PNGLNG Project License Holders? Why was PDL1 not changed and new PDL number issued with project re-scoping? What is the loss to Landowners in Dollars terms as a result of this deliberate obfuscation?
The Hides Gas fields under PNGLNG Project should have been issued a new PDL number and description than PDL 1, because the purpose, scope, economics, development plan, and just about everything has changed in a large way.
The landowners of Hides Gas fields appear to stand permanently disadvantaged to this day by the way the State failed to properly rescope PDL1 for the PNGLNG Project, and renumber the PDL as a new PDL for purposes of compliance with the Act.
CLOSING REMARKS.
All these issues, lead us all back to the question, is SANTOS (Oil Search Limited) lawfully on otherwise, customary lands, and can they lawfully extract hydrocarbons?
Does the PNGLNG project have legitimate rights to extract oil and gas from Hides and other License areas, if they have not complied with the governing laws, in so far as the Landowners are concerned?
I do not think these are mere academic issues, that can be brushed aside easily by pragmatism, as in a set of decisions taken by successive governments like in successive aborted Ministerial Determinations under the Act, engineered to cure a permanent breach of law relating to Sections 47,48, 49, et al, of the Act, SUBSEQUENT to issuance of PDLs. A Ministerial Determination cannot be used to cover up for breach of mandatory processes and Constitutional rights.
It is neccesary to point out the above issues have not been adequately aired in the judicial processes to everyones satisfaction.
Still pending like an ominous cloud suspended over the country is also the issue of the conflict of customary law with the Constitution over the Crown's (State) ownership of resources in the ground.
The judiciary has to be careful that it is not co-opted by the State and the big end of town (in aide of their own present continuing breach of law), to serve commercial and political expediency, to the detriment of our people's property and other traditional rights, both under customary law, the Constitution and statute.
Important in this equation is the recruitment of Judges who are schooled in aspects of Indigenous customs and traditions, who have experience in dealing with indigenous people and their rights, understand our customary tenure over our land and resources, who will assist in developing our underlying law, and who will not glibly pander to the big end of town to the disadvantage of landowners, and in the result become obstructive to our people's desire to take back PNG.
The paradigms of resource development manuals must change to view the Landowner as a truely worthy and valuable development partner in the extractive industry, and not a plague to be avoided.
The landowner brings on board valuable access rights to his customary lands, for now, which must be properly and commercially valued in serious US DOLLARS EQUAL TO CAPITAL, TECHNOLOGY AND NATURAL RESOURCES, and this value must be adequately reflected in project equity and benefits stakes. The current equity and royalty stakes are grossly inadequate, and a slap in their faces, for the great value they contribute. A good test of their value is in the question; what if, a Social Mapping or Development Forum failed to result in a Development Agreement? Would there be a project? The answer is a definite, NO.
It is this very question and anticipated answer, viewed as a risk, that has been used by both the State and License Holders to circumvent the Oil & Gas Act, that is now finding them out. This goes to the root of injustice, deprivation, dispossession and oppression of our people, of their own lands, that I have taken the trouble to highlight for correction.
Landowners must not be denied and disadvantaged anymore. It is time for the State and the License Holders to correct their mess, and pay proper recompense for breach of the Act, and fund the Judiciary to conduct Social Mapping by Court Order, so benefits can be distributed to the rightful tribes and clans. In respect of breach of statute so far, and questionable occupation of their lands, a fitting compensation package must be ironed out after results of Court Ordered social mapping. There is no other option, AFTER a PDL has been issued to cure this continuing breach of law, except by order of Court.
God has blessed Our Country. We have denied our people the fruits of that blessing. Let us humbly correct ourselves, before it is too late.
Great Weekend!
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