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ExxonMobil’s New Guinea Nightmare | The Nation

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ExxonMobil’s New Guinea Nightmare

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Tumbi Quarry, July 2013 (Olivier Pollet)

This report was produced in partnership with the Investigative Fund at the Nation Institute with additional support from the H.D. Lloyd Fund for Investigative Journalism and the Fund for Investigative Journalism. Project Word provided administrative support. Research assistance: Nick Sexton, Shruti Banerjee and Hannah Rappleye. Special thanks to Dr. Kristian Lasslett, of the International State Crime Initiative, for his valuable research assistance.

Monday, January 23, 2012, was a routine day for 15-year-old Jackson Piwago. Like every other weekday, his father met him after school, and the two walked hand in hand back to their home in Tumbi, a small village in the remote, mountainous Hela Province of Papua New Guinea. There, at the foot of the Gigira Mountain Range, Jackson went about his chores: looking after the family’s pigs, collecting firewood, fetching water and cooking sweet potatoes. He chatted with some of his father’s nine wives, as well as his many brothers and cousins. As on most evenings, dinner was boisterous and joyful.

Then, just as he did every night, Jackson fell asleep alongside his father, using his dad’s arm as a pillow. Jokoya Piwago, a prominent Ware tribal chief, recalled that night vividly in a recent conversation. He remembered his son imploring him, “Please, Daddy, buy me the bicycle that I need to go to school and come back…. Buy me a bicycle tomorrow.”

Jokoya paused and said, “That’s the last word that he spoke to me.”

Jokoya Piwago rose at sunrise on January 24. He was running late for work, and his ride was waiting outside. He woke up Jackson, then jumped into the car, shoes in hand. Minutes later, three loud, rapid-fire cracks filled the air. To some, it sounded like the discharge of an AK-47 rifle. Other villagers said it sounded more like a thunderclap. No one could find words to describe the sound that immediately followed.

It was the sound made by 2 million tons of boulders, limestone, water, mud and trees roaring down from the top of Tumbi Mountain. It was the sound of homes being buried by the landslide, which after only a few minutes had created a debris field a kilometer long, several hundred meters wide and 100 meters deep.

At least twenty-seven people sleeping in their homes died instantly, according to a lawsuit filed by the victims’ families. Twelve of them, including Jackson, were in Jokoya’s family. A precise death count is unknown—no bodies were ever recovered.

The landslide emanated from a quarry operated by a subsidiary of ExxonMobil, Esso Highlands Limited. Since 2010, EHL had been mining limestone for the construction phase of Papua New Guinea’s $19 billion Liquefied Natural Gas (LNG) project. The quarry—which, according to local residents and a former member of the country’s Parliament, had been mined sporadically by other operators for several decades without incident before ExxonMobil’s arrival—was part of a massive endeavor that involved drilling wells for gas extraction and the construction of hundreds of miles of pipeline, storage facilities, processing plants and even an airstrip. The limestone was destined primarily for construction of a nearby airport that would be used to fly in heavy equipment and supplies. ExxonMobil has trumpeted the “multiple benefits” that locals would receive from the project, including jobs for “around 10,000 Papua New Guineans” and “more than 650 million kina [about $300 million] invested in community and infrastructure projects.”

The LNG project, which has been vexed since its inception by civil unrest and huge cost overruns, was made possible in large part by American taxpayers, in the form of a $3 billion loan in 2009 from the Export-Import Bank of the United States—at that point, the largest loan by the bank in its seventy-five-year history. This massive government loan to the ExxonMobil-led project was issued despite sharp rhetoric from the Obama administration on climate change. Indeed, the loan was approved by the administration just four days before the president delivered his address to the December 2009 United Nations Climate Change Conference in Copenhagen. “As the world’s largest economy and the world’s second-largest emitter, America bears our share of responsibility in addressing climate change,” Obama said then. “That is why we have renewed our leadership within international climate negotiations, and worked with other nations to phase out fossil-fuel subsidies.”

The PNG LNG loan was hardly the only exception to the president’s stated position. Since Obama took office, the Export-Import Bank has invested more than $27 billion in fossil-fuel endeavors, while lending less than $2 billion to clean-energy projects.

* * *

In the months before the landslide, villagers in Tumbi had been complaining to quarry officials about the operation—which they believed was unsafe and contaminating their water—with no results. But immediately after the disaster, government officials swung into action, dispatching additional police to Tumbi along with a team from the National Disaster Center. “This is a very huge landslide,” Bill Yomba, an NDC spokesman, told CNN the next day. “We are still trying to find out the cause, but at this stage, we believe the gas project run by Esso Highlands Limited was a contributor because they had been digging for limestone in this area.”

That was the last time the NDC would publicly connect ExxonMobil’s subsidiary with the landslide. By the next day, the official story was in place. The NDC released a report stating: “The Tumbi Landslide was caused by continuous heavy rainfall which weakened, or undermined, the existing topography and the limestone formation. Naturally occurring geological weaknesses assisted by abnormally high rainfall combined to cause subsidence to the immediate North West of the Quarry, triggering a landslide of composite debris.” The report specifically discredited Yomba, saying that “unauthorized statements by NDC officers [have] resulted in widespread community confusion.”

ExxonMobil insists that its quarry operations “were conducted in a safe and prudent manner…consistent with governmental approval” and denies that they “played any role in the landslide.” With few exceptions, media outlets in Papua New Guinea and Australia have gone along with this claim, calling the landslide “a natural disaster” in their coverage. Then, less than a week later, the story was quickly upstaged when a former PNG prime minister attempted a coup d’état. Days later, more than 100 people drowned when a ferry sank off the country’s northern coast. The Tumbi disaster vanished from the news cycle.


Mobile Police Squad, April 2012. Human rights groups have reported flagrant, systemic abuses by PNG police. (Oscar Mareve)

But suspicion over ExxonMobil’s role in the landslide, and the demands for an independent investigation, persist. There are many in Tumbi, including Jokoya Piwago, who firmly believe that the quarry operation was responsible. A year-long investigation by The Nation and the Nation Institute’s Investigative Fund sheds new light on the disaster, unearthing evidence that implicates shoddy mining practices and revealing that the company had been warned by its own contractors that mining operations might trigger a landslide.

Evidence shows that the project was deeply troubled in other ways. Landowners at various sites claim that ExxonMobil and a compliant PNG government cheated them out of their rightful compensation and other promised benefits. And sources close to the project implicate ExxonMobil in subsidizing a notorious police unit with a long record of human rights abuses that has provided security for the project.

* * *

ExxonMobil hired a number of contractors to work on the project. One of these was MCJV, an Australian firm hired in 2009 to operate the quarry. On his first visit to the site, in March 2011, Gerson Yakasa, an engineer employed by MCJV, was taken aback by several things he saw there, including limestone being extracted from a steep slope high at the top of the quarry where there were also large piles of topsoil. Yakasa immediately noticed there were not enough “benches” (a series of steps cut into a quarry slope to stabilize it, contain rockfalls and prevent landslides) to allow the extraction to be done safely. The benches, he said, were too few and far apart to meet accepted industry standards. “My analysis was that someone was in a hurry,” Yakasa said.

It was a view shared by D’Appolonia, an independent consulting firm hired in 2010 by the project’s creditors, including the Export-Import Bank, to monitor the project’s compliance with international social and environmental protocols. In a March 2011 report, the firm found that Esso Highlands quarry workers were under tremendous pressure to meet deadlines. “The overall impression…is that incidents and situations have developed because the Project has circumvented correct procedures in the interest of schedule,” D’Appolonia said in its report. “The Project will need to make sure that schedule does not dominate decisions.” (In a subsequent visit three months before the landslide, D’Appolonia concluded that conditions at the quarry had improved.)

Even more troubling, Yakasa said, he saw numerous large cracks in the quarry face. He said MCJV had installed culverts to redirect the flow of Tumbi Creek, a large underground stream that flowed out of the quarry face, with the point of exit adjacent to the largest of these fissures. Most disturbing to him, however, was clear evidence of “settlement,” meaning the quarry face was slowly shifting downward—a sure sign of slope instability. The quarry, Yakasa concluded, was not safe.

Afraid “the mountain could come down,” Yakasa spoke to the MCJV project supervisor, who dismissed his concerns. “He was not an engineer; he was a go-forward kind of a guy,” Yakasa said. So he put his concerns in writing and, in April 2011, sent them by e-mail to his construction manager and about a dozen other supervisors, including construction managers at both MCJV and Esso Highlands. Yakasa attached an explanatory sketch, along with photos of the cracks and water gushing from the mountain. “I told them the quarry was risky and should be shut down immediately,” he recalled. “I thought the quarry could collapse.” Yakasa said he never received a response from anyone.

A lawsuit filed in the National Court last October on behalf of 435 surviving villagers alleges that no environmental impact study for the quarry was ever conducted, and that instead the PNG government issued a “blanket permit” for all of the project’s construction sites. (The government has not responded to numerous requests for comment.) The lawsuit also alleges that “poor workmanship standards and negligent acts and omissions…triggered” the landslide. A document attached to the complaint—the Tumbi Quarry Landslide Investigation Report, which was commissioned by a local clan chief shortly after the disaster—also alleges that ExxonMobil had been warned that the quarry was dangerous.

“The contractor was mining there when the landowners complained that the practice was not right because below it there is a deep cut into the earth with hanging rocks like an open cave,” said the report, which was conducted by a team of engineers, scientists and lawyers, adding: “The locals also recalled that one national supervisor even mentioned the risk of this and was terminated from his job.”

In September 2011, Yakasa was transferred to another site within the project. He said he heard from colleagues after he left that an internal investigation of the quarry was being conducted, which he assumed was at the direction of MCJV or Esso Highlands. Around the same time, three or four months before the landslide, according to the Investigation Report, MCJV shut down quarry operations. During the months that followed, villagers began to observe troubling signs.

In a 2013 sworn statement, whose key elements he confirmed in an interview last July, Jokoya Piwago recalled an ominous event that took place about a month before the landslide: “A huge boulder weighing about 30 tonnes burst out of the quarry rock wall and rolled down the Tumbi mountain down to the LNG road,” he said in the affidavit. “At that time [the quarry operator] for unknown reasons withdrew its machineries…at the Tumbi quarry without informing us, the employees and the villagers the reason as to why.” The Investigation Report notes that three to four days before the landslide, local landowners complained to quarry operators that Tumbi Creek, the stream running under the quarry face, was blocked, prompting MCJV to remove its equipment from the site with the aid of the police.

In its initial legal response to the lawsuit, ExxonMobil denied that “the landslide was caused or contributed [to] by the acts or omissions” of its subsidiary or any of its contractors. The company has filed a motion to dismiss the suit, saying it “lacks any legal or factual merit.”

David Petley, a geographer and landslide expert at Durham University in Britain, closely followed the Tumbi landslide and wrote about it numerous times on his blog. Petley has consistently criticized the NDC’s conclusion that the disaster was the result of excessive rainfall, arguing that the agency’s key assumptions don’t hold up scientifically. In a recent interview, he said that the Investigation Report, which lays blame for the landslide on unsafe practices at the quarry, presents a much stronger premise.

“Without wanting to prejudge the outcome, my view is that the claim is well-made and just, and the basis of the claim is correct,” Petley said. “Poor quarry management appears to have led to instability; the instability was manifested as a result of excessive water pressures, a weakening of the rock mass and changes to the stress state. These combined [to cause] a catastrophic failure of the slope and a long-run-out landslide. There is a wide range of very well-established techniques available to quarry managers to avoid exactly this problem.”

Petley said the only way to put the matter to rest would be to conduct an independent scientific investigation, which has yet to materialize. According to a source with direct knowledge of the quarry operations, Esso Highlands quietly commissioned its own investigation into the cause of the landslide and dispatched a team of geological experts to the quarry in the summer of 2012. The findings of that report have not been made public, and requests to ExxonMobil to confirm the existence of an internal investigation, and to provide a copy of the report if there is one, were ignored.

* * *

The day after the landslide, PNG Prime Minister Peter O’Neill, accompanied by Esso Highlands managing director Peter Graham, flew to the site, where 3,000 mourners had gathered. “I came here today to say sorry to the relatives and families of those buried in this landslip,” O’Neill announced, before promising that he would immediately initiate recovery of the bodies and establish an independent investigative team to determine the cause of the landslide. Neither ever occurred.

ExxonMobil extended its condolences by means of a press release, followed quickly by a message that seemed more directed toward creditors and shareholders. “Our hearts go out to the people who have been affected by this tragedy,” it read. “The Project is currently working to get full construction activities back to normal.”

According to interviews with villagers and reports in the blog PNG Watch, Esso Highlands, despite its array of heavy excavating equipment, offered no assistance as the survivors frantically dug through the rubble to find the remains of their loved ones. (ExxonMobil denies this and claims that its subsidiary “provided timely assistance to the response and recovery effort.”) There was, it seems, a more pressing matter to be addressed: the landslide had buried a portion of a major road that connected the quarry to nearby Komo Airfield, which was being built to handle cargo planes bringing in material and heavy equipment for the more than 400 miles of pipeline. The airport and road were essential to the construction phase of the LNG project. But Esso Highlands needed the consent of local landowners to rebuild the road, and the landowners were not in a giving mood.

Protesters blocked access to the road several times in the weeks after the landslide, demanding compensation and an independent probe into the disaster. The government promised millions in humanitarian assistance; at the same time, according to press accounts, additional military and police forces—including the notorious Mobile Police Squads—arrived to quell protests and secure construction to open the road.

“It was getting a bit tense,” said Catherine Wilson, an Australian freelance journalist who visited the site in March 2012. Local landowners told her they were summoned to a community meeting the previous month, where they were informed, she said, that “there is a document at the Mobile Police Squad station, and they are expected to go…and sign that agreement,” which allowed Esso Highlands access to repair the road. Anyone who didn’t, they were told, “will face the full force of the law.”

That same month, Joseph Warai, a local village leader, made similar allegations. According to Radio New Zealand, Warai said that “government and disaster officials, as well as police and military, have told locals that the 10 million kina [then about $5 million] in disaster-response funding promised by the government was conditional on the road being cleared.”

Fearful they would lose the aid, the landowners signed the documents permitting the work. As it turned out, the landowners received only $1.5 million. The remaining $3.5 million was spent on the road, according to both Warai and Jokoya Piwago, who was responsible for receiving and distributing the funds.


The LNG project, which will destroy 7,000 acres of tropical rain forest, has installed more than 400 miles of pipeline. (Olivier Pollet)

By early March, the road reopened—directly above the bodies of the buried victims. “In our culture, when a body is dead under the rock, there should be no one going in there,” Piwago told Wilson that month. “We respect our dead, but the government and companies, they did not listen. They just did the road on top of the bodies.”

Community protests and work stoppages continued, accompanied by frequent clashes with the police. In late March, landowner insurrection forced Esso Highlands to withdraw workers by chartered aircraft from a nearby wellhead and conditioning plant. Prime Minister O’Neill threatened to declare a state of emergency for the entire Hela Province.

Work on the project resumed two weeks later, but the protests and shutdowns were now exacting a financial toll. In late 2012, ExxonMobil announced a $3.3 billion cost blowout for its construction budget, a third of that amount attributed to work stoppages and protests over land access.

* * *

Before the project began in 2009, there were only a handful of police officers in the area. By last year, more than 1,000 Mobile Police Squad officers, as well as army soldiers, were stationed there. Their mission was clear: to quell the frequent protests, over everything from wages and employment to land ownership and despoliation of the local environment, and keep the project running.

For years, human rights monitors have reported flagrant and systematic abuses of civilians by PNG police and soldiers, particularly the Mobile Police Squads. A 2005 Human Rights Watch report noted: “[I]ndividuals we interviewed described mobile squads raiding villages and urban settlements, burning houses, killing pigs, destroying gardens, and beating and sexually assaulting residents.” A 2009 Amnesty International report noted that earlier that year, officers with the Mobile Police Squads burned down at least 130 buildings near a gold mine in Wuangima, and in 2010 AI detailed reports of rape and assault surrounding the eviction of villagers for the project.

Kevin Munday, who was employed by MCJV as the Tumbi Quarry superintendent, said protest and insurrection were commonplace throughout his time there. “You didn’t go more than four days without a shutdown or a disturbance,” he said. According to Tumbi village leader Warai, in February 2012, a month after the landslide, police providing security for the project opened fire at a haus krai, a gathering of family and friends to mourn the deceased. That April, according to Warai, Royal Papua New Guinea Constabulary (RPNGC) officers opened fire on LNG project workers in the wake of a protest by landowners that their only source of water had been contaminated by pipeline construction. One worker was killed and two were injured.

In June 2013, Alfred Kaiabe, a lawyer and former member of Parliament, sent a letter to Peter Graham, the Esso Highlands managing director. Among several complaints, he addressed the use of Mobile Police Squads. “In recent times, your contractors have engaged the service of the police…to arrest landowners along the pipeline route and Angore wellhead areas and locked them up at Tari police cells…. They were beaten for standing up to [protest] intruders on their customary land.”

Police Superintendent Jimmy Onopia, the Hela Province commander for the RPNGC, made a similar assertion in an interview last year. He said ExxonMobil not only pays for the food and living expenses of the Mobile Police Squads; it also pays for their weapons. And former PNG police commissioner Gari Baki was even more direct in a 2010 interview with Radio Australia: “The LNG operations up in the southern highlands [are] basically being funded by ExxonMobil,” he said. “All police operations up there [are] entirely funded by ExxonMobil.”

If Onopia is correct about the weapons, it would violate ExxonMobil’s memorandum of understanding with the RPNGC, which specifies the “types of assistance that can be provided by EHL (food, lodging, fuel, vehicles, travel) and types of assistance that are prohibited (provision of weapons, ammunition).” If ExxonMobil has been paying for weapons for the Mobile Police Squads, “then clearly that’s outrageous,” said Kristian Lasslett, a lecturer with the University of Ulster and a PNG coordinator for the International State Crime Initiative. “If that is accurate, then Exxon is becoming complicit in crimes that are being committed by the mobile squads.”

ExxonMobil says that its Esso Highlands subsidiary, now called ExxonMobil PNG Limited, “is committed to conducting business in a way that protects the safety and security of its personnel, facilities and operations, and respects human rights.” It notes that the PNG government “has responsibility for maintaining law and order” and says that “EMPNG cannot, and does not, control the day-to-day operations or decisions of the PNG police or any other security personnel.” Furthermore, it insists that while “we may provide support in prescribed areas, for example, transportation,” such support “specifically excludes provision of weapons.”

* * *

ExxonMobil’s relentless pursuit of new oil and natural gas reserves around the globe has often led the firm into treacherous terrain, requiring it to make alliances with unstable, corrupt governments and their security forces in places like Indonesia, Equatorial Guinea, Chad and Nigeria. According to Steve Coll, author of Private Empire: ExxonMobil and American Power, the company “has tried to wring as much risk out of its operations as is humanly possible to do, through rule-making, manuals and a rigid corporate culture. But the dilemma they have is, their business model keeps driving them into places that are full of political risk.”

In Papua New Guinea, ExxonMobil went deep into the remote highlands of a country known for tribal conflict, violence and political corruption. More than 97 percent of the region is controlled by indigenous communities, in which land is owned and administered in accordance with tribal customs and conveyed to the next generation orally. It is a complex and delicate arrangement that has endured for centuries in an agrarian society that consists of hundreds of different tribes and languages, and where land disputes have often been resolved through violence. It is not a system that’s convenient for a foreign multinational looking to install 400 miles of pipeline, wellheads and a huge liquefaction plant on deadline.

In its contract with the PNG government, and in accordance with the PNG Oil and Gas Act of 1998, ExxonMobil was required to carry out “social mapping and landowner identification” (SMLI) studies, which would have to be approved by the PNG government before petroleum development licenses could be granted. For the LNG project, this task was enormous, affecting 117 villages, including some 3,000 landowners and nearly 34,000 residents. That critical SMLI process would determine who would get land compensation payments up front and, now that gas production has begun, equity interest and royalty payments. From the outset, the project was plagued by disputes over land ownership and appropriate compensation. ExxonMobil claims that its surveys “were compiled by highly regarded Australian anthropologists with extensive experience in PNG cultures, and the reports were reviewed and approved by the Department of Petroleum and Energy.”

From scores of interviews with PNG landowners and tribal chiefs, a different story emerges: the SMLI was rushed and incomplete, and it depended heavily on questionable “paper owners”—many of them residing hundreds of miles from the sites, in the capital city of Port Moresby—who signed over their “rights” without a proper claim to the land. These assertions came from landowners along the pipeline and wellheads, as well as those around the new airport in Komo and the liquefaction plant near Port Moresby.

Many believe the fix was in from the start. In the spring of 2009, more than 2,000 people identified by the PNG government as the affected landowners gathered for a legally mandated development forum and negotiation in Kokopo—the capital of the island province of East New Britain, and hard to get to from Hela Province. This forum would culminate in the signing of an Umbrella Benefits Sharing Agreement (UBSA), a complex contract outlining terms for the disbursement of billions of dollars in royalties and equity payments, as well as funds for infrastructure improvements and seed capital for landowner businesses. The project’s SMLI was far from complete, but ExxonMobil was staring at a December 8 final investment deadline, and this was one of the key remaining criteria that had to be met before the project could move forward.

Transparency International, the global anticorruption watchdog, was invited to serve as an independent observer of the proceedings in Kokopo, but Esso Highlands withdrew the invitation at the last minute, for no clear reason. What the group missed, according to the accounts of landowners, elected officials and attorneys who attended—accounts that are bolstered by court documents—was an exercise in fraud, crudely orchestrated by the PNG government. The forum was punctuated by chaos, with dissenters forcibly removed by security forces.

One of those in attendance was Alfred Kaiabe, the lawyer and former MP. Kaiabe co-wrote the 1998 PNG Oil and Gas Act, which established guidelines for such projects and required benefit-sharing arrangements between the government and landowners. Kaiabe was evicted from the forum when he protested the legality of the affair.

“The over 2,000 people flown to Kokopo were kept on bribery money under the guise of allowance money, to keep them busy and occupied with liquor and women,” Kaiabe wrote in a letter last year to Peter Graham of Esso Highlands. “Their cheaply and fraudulently obtained signatures iced the Kokopo UBSA fraud.”

Kaiabe and others say the PNG government “handpicked” the participants and flew in people of their own choosing from around the country. The ones from his area, not far from Tumbi, “were picked up at 2 o’clock in the morning while everyone slept,” Kaiabe said. He charges that in return for their signatures, they were given seed-capital money, financial commitments from the relevant ministries and sometimes cash on the spot, interactions he claims to have personally witnessed. (“Official bribery,” Kaiabe calls it.) Jubilee Australia, an NGO that has published two extensive reports on the project, described it this way in the summary of its 2012 report: “Improper consultation, and pressure applied by the Government to force the landowners to sign.”

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A few months after the Kokopo agreement was signed, local media sources reported, millions of dollars meant for landowner compensation under the agreement vanished from government trust accounts. In 2013, according to Radio New Zealand, Commerce and Industry Minister Richard Maru revealed that $50 million intended for business-development grants to landowners had gone missing as well.

ExxonMobil, for its part, says “landowner identification for the purpose of benefits distribution is the responsibility of the Department of Petroleum and Energy,” and that “neither EMPNG nor the other PNG LNG Project participants are signatories to the agreements; the [Benefit Sharing Agreements] are the responsibility of government.” Even so, it insists that signatories to the UBSA “and the subsequent License Based Benefit Sharing Agreements are recognised leaders and community representatives. These agreements were developed in a highly consultative manner” and “overseen by several eminent PNG citizens.” Apparently, the PNG government doesn’t agree: although it received ExxonMobil’s SMLI report in 2009, last summer William Duma, the country’s then-minister of petroleum and energy, declared that the company’s studies were inadequate.

To this day, the Kokopo agreement remains a festering point of contention in Papua New Guinea. Gas has just started flowing through the project’s 400-mile pipeline, headed for a plant where it will be turned into liquid and shipped to customers in China and Japan. Soon, the big money will start flowing for ExxonMobil and its equity partners, including the PNG government and the officially designated landowners. But the landowners who were left out—and the villagers, like Jokoya Piwago, who lost their loved ones in the landslide and have seen their land and water destroyed by the project—will not be happy. Nor is it a safe bet to expect them to go quietly. “We are highlanders, and we are known for fighting,” said Kaiabe. “Fighting is a way of life, and we will fight to the death to protect what is ours if we have been cheated.”

 

Read Next: In “Subterranean Blues: On ExxonMobil,” Kim Phillips-Fein writes that moral indignation is no longer enough to combat the power of Big Oil.

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