Magnitude 7.0 earthquake hits Papua New Guinea, no tsunami alert

(Reuters) - A 7.0 magnitude earthquake struck off the north coast of Papua New Guinea on Tuesday, the U.S. Geological Survey reported. The quake struck at a depth of 125.5 miles and was centered 137 km north of Lae, Papua New Guinea's second-largest city,
The Pacific Tsunami Warning Center said no destructive Pacific-wide tsunami was expected.
Papua New Guinea is on the geologically active Pacific Ring of Fire and suffers many earthquakes but often avoids major damage and casualties because most of its people live in light and flexible housing.
However, more than 2,000 people were killed in 1998 when a 7.0 magnitude quake struck off Papua New Guinea's north coast, causing a tsunami that smashed into isolated villages.

Drama, intrigue mark InterOil's Gulf LNG proposal in PNG

From PLATTS

The veil of political intrigue around InterOil Corporation's Gulf LNG project in Papua New Guinea has thickened, with Prime Minister Peter O'Neill denying a statement issued by his office last Friday that claimed the National Executive Council had not rejected the company's plans for the project.
PNG newspaper the Post-Courier reported today that O'Neill has denied releasing any statement in support of the Gulf LNG project and was "furious" that it had been issued without his knowledge and authorization.
The statement released Friday was given to Platts and other news agencies by Susuve Laumaea, media and public affairs adviser in O'Neill's office. At the time, Laumaea said the statement, delivered via email, would be sent on the Prime minister's official letterhead later that evening, although no follow-up communication was received by Platts.
When contacted by Platts today, a spokeswoman in the Prime Minister's office in Port Moresby said "we were not aware" of the statement and referred questions to Laumaea, who has not yet responded to email and telephone queries.
In the contentious statement, O'Neill was quoted as saying that InterOil's LNG project in the Gulf province would "go ahead when all pre-conditions set by government and the 2009 Project Agreement are fully satisfied." He added, "there is no National Executive Council decision rejecting the Gulf LNG project."
The document went on to say that the Prime Minister "reiterated his earlier statement in August last year that the government under his watch would assist InterOil to secure a strategic operating partner, rescope the project agreement to enable phased LNG development, and to locate the project in Gulf province."
O'Neill also "directed the ministry and Department of Petroleum and Energy to cooperate with InterOil and desist from confusing the investment community and Gulf province government and landowners with media statements about rejection of the project."
Questions about the status of InterOil's Gulf LNG proposal have been swirling since last September, when the NEC rejected its plans for a phased development. According to a copy of the NEC's decision NG37/2011, obtained earlier this week by Platts, InterOil's plan would be "an inefficient use of the state's gas resources" and "inconsistent with the project agreement."
The NEC's decision, which was signed by O'Neill as chairman of the executive body, also endorsed the views of and actions taken by Minister for Petroleum & Energy William Duma "to ensure that the gas resources of PNG are developed according to the project agreement, in particular, if LNGL/InterOil proceeds with the Gulf project, and takes a final investment decision in relation to any of the projects that make up the Gulf project or otherwise commits a repudiatory breach of the project agreement."
The NEC comprises about 30 politicians who meet regularly. September's decision has not subsequently been overturned, local sources said.
The Gulf LNG project proponent is Liquid Niugini Gas Limited or LNGL, a joint venture between US-listed InterOil and Clarion Finanz affiliate Pacific LNG, which is also a large shareholder in InterOil.
On Friday, Duma told Platts he wanted to "remind" InterOil of his comments last September, when he pointed out that the project agreement called for InterOil to deliver a 7.6 million-10.6 million mt/year LNG facility based on its Elk and Antelope gas reserves, using internationally recognized technology and operators. Instead, the company was proposing a three-phase development and did not have an internationally reputable partner on board, Duma said.
As it currently stands, InterOil's overall development plan for its gas resources would see it acting as the upstream field operator. A condensate stripping plant is planned with Japan's Mitsui, to be followed by the LNG project with Australia-based Energy World Corporation.
In February 2011, InterOil signed an agreement with EWC for a modular LNG plant to be developed in two phases -- 2 million mt/year, with a later expansion of 1 million mt/year. The agreement, which was originally conditional on a final investment decision on the project being taken by December 31, 2011, provided for a possible expansion of upto 8 million mt/year.
That deal followed an agreement in August 2010 by InterOil and Mitsui for a $550 million liquids stripping project at the Elk and Antelope fields that would be a precursor to the LNG development.
Under its project agreement, InterOil has until June 2013 for an FID on the LNG project, but both it and the liquids stripping proposal are running way behind schedule.
The projects had been due for FID by March 31, 2012, but InterOil has now extended the deadline for the liquids plant to June 30, 2012, with provision for a possible further delay to December 31, 2012. The deadline for an FID on the LNG project has also been pushed back to the end of this year.
Duma said last week he had urged InterOil to talk to Shell and other majors about its plans for the LNG project, rather than pursue its proposed phased development with EWC, or talks with a Korea Gas Corporation-led group that includes Mitsui and Japan Petroleum Exploration Company. "Kogas is not an LNG plant operator, it is an importer of LNG," he added.
Shell is an obvious potential partner for InterOil, as it has a strategic alliance with PNG's state-owned Petromin, signed last August, and is actively pursuing LNG opportunities through a Port Moresby office opened in February this year. "Shell believes that PNG offers the potential for upstream development and is very keen to invest and develop business opportunities in PNG," a company spokesman said this week.
ExxonMobil is also active in PNG, and is looking for gas reserves to support an expansion of its two-train LNG plant currently under construction near Port Moresby. The US oil and gas giant's $15.7 billion project will put PNG on the map as an LNG producer, pumping out 6.6 million mt/year from 2014.
InterOil CEO Phil Mulacek said Friday that international investment banks Morgan Stanley, Macquarie Capital and UBS were working to secure a project partner "to accelerate the LNG capacity [of the Gulf project] to 8 million mt/year, with them as lead operator." But he said talks with "Shell or other LNG partners" were all under confidentiality agreements and so could not comment further.
Mulacek said the plan to bring in a partner might involve the incoming party buying part of the Elk and Antelope gas assets, a proposal which had been "outlined to the PNG government and was accepted."
Local industry observers said InterOil's determination to remain the operator of the upstream development at Elk and Antelope may have been one of the hurdles to the company concluding a deal with a major partner. InterOil, which is the operator of PNG's sole 36,000 b/d oil refinery, is seen as lacking experience as an upstream operator, they added.
Papua New Guinea has been in the grip of a constitutional crisis since August 2011, when O'Neill took the helm after a power struggle with incumbent prime minister Michael Somare. General elections are scheduled to be held in the impoverished but resource-rich nation in June

Money illegally invested in Australia by former management of MVIL

Statement by  Minister for Public Enterprises Rt Hon Mekere Morauta, KCMG MP
Mr Speaker, when the O’Neill-Namah Government was elected on the floor of Parliament last year, we faced a tremendous task of reconstruction and reform after 10 years of waste, neglect and lost opportunity.

I have spoken previously about the areas where this waste and neglect, and indeed corruption, was most prevalent and caused the most damage – in the State Owned Enterprises supervised by the Independent Public Business Corporation under the stewardship of the suspended Member for Angoram and his outrigger Mr Glen Blake who during that time claimed to be (and probably still is) the Somare family financial adviser.

Since we were elected in August last year, much of the focus of my efforts, as Minister for State Enterprises, has been on finding out how big a mess the State Owned Enterprises are in; and where they have lost money, how that money was lost, where the money went to, and to try to get as much of that lost money back as we can.

Mr Speaker, this is public money we are talking about, which should have been used for the benefit of all Papua New Guineans, building roads and bridges, schools and hospitals, but which instead has been frittered away, wasted, lost through incompetence, or in some cases, simply stolen.

We quickly discovered that one of the worst State Owned Enterprises in this respect was Motor Vehicle Insurances Limited, which we all know as MVIL. Mr Speaker, MVIL has a vital function within government and as the third party motor vehicle insurer, it must maintain large financial reserves in order to pay out insurance claims for years into the future.

This made MVIL a tempting target for highly dubious so-called “investment managers” from overseas to extract a large slice of MVIL’s investment funds, 96 million kina, and place that money at the disposal of these “investment managers”, initially in a bank account in a New South Wales country town. Regrettably, Mr Speaker, the “investment managers”, Woodlawn Capital Pty Ltd, appear to have been ably assisted by the then Managing Director of MVIL, Dr John Mua, in their endeavours to extract money from MVIL.

When this 96 million kina was “invested” with Woodlawn in July 2009, Woodlawn Capital Pty Ltd had been incorporated for only a few weeks; it was a classic “two dollar company” – that is, it has a paid up share capital of only two, one dollar shares; it did not hold any financial services licence which, under Australian law, every such investment manager must have; and it had no other funds under investment.

It would seem ridiculous for any rational businessman to invest any funds, let alone 96 million kina, with such a company with no history, no backing and no licences, but that is what Dr Mua and MVIL did in 2009.

Mr Speaker, this has not been an easy task, but we are not giving up. And unfortunately, in this we have not always been assisted by everyone at MVIL.

We required Woodlawn to repatriate the total funds to PNG and terminate the investment arrangement, but we received nothing but obfuscation, delay and a refusal even to give us the most basic information about how much of the original investment of 96 million kina is left, or where the funds may be held.

We have complained to the corporate regulator in Australia, ASIC, about Woodlawn’s actions in claiming to hold an Australian Financial Services licence when it did not, and dealing with investment monies when unlicensed. These are clear breaches of Australian securities law.

Mr Speaker, we had been most concerned that all or nearly all of the 96 million kina invested with Woodlawn over two years ago may have been lost. A couple of months ago it appeared that Woodlawn was suggesting it would return only a few million dollars, perhaps only 10 or 15 percent of the original investment , to MVIL. It would be a sad day for Papua New Guinea if we were to lose about 80 million kina to crooked investment advisers overseas – money which should be available for the benefit of the people of PNG and improving their living standards. This is the sad legacy of the Somare regime’s years of waste, neglect and corruption.

However, Mr Speaker, there is some light at the end of the tunnel. With the totally un-cooperative approach from Woodlawn, we had no option but to instruct our legal advisers in New South Wales to commence legal proceedings against Woodlawn and its two directors, McNamara and Breen, to recover the money they had illegally obtained.

Following the institution of legal proceedings, I have now been informed that the New South Wales Supreme Court ordered the remaining MVIL investment portfolio frozen, so Woodlawn and its directors cannot deal with those funds, and Woodlawn has been required to give full information about the current value of the MVIL investments managed by Woodlawn.

While this may sound positive, it is not all goods news. Legal action is expensive, and it is possible, or likely, that more legal action will need to be taken before we get our money back. Also, while we do not yet know precisely how much money is left, it seems that it could be somewhat less than 30 million Australian dollars, which would mean a loss of about one quarter of the original investment two and a half years ago, since 96 million kina then equalled about 40 million Australian dollars.

Of course we are not conceding that this money is necessarily lost – we will do everything we can to pursue Woodlawn for the full value of our investment and the damages we have suffered, but we obviously do not know yet how successful we will be.

This MVIL saga is, Mr Speaker, another example of the Somare regime’s scandalous misuse of public funds – not as newsworthy, but just as bad in its own way, as the Falcon jet fiasco. The people of Papua New Guinea deserve better, and we are making sure they get better than that, by making these most strenuous efforts to get back this money which has been extracted from the public purse.

PNG LNG project on target

By MALUM NALU
Esso Highlands Ltd managing director Peter Graham says the PNG LNG project is on target to start exporting in 2014, despite the many associated problems.
Graham said this during a meeting with senior editorial staff of The National yesterday (Monday), where he gave an update of the project.

Esso Highlands managing director Peter Arnold (right), media advisor Rebecca Arnold and public and government affairs manager Kenneth Freeman.

He said the project was of enormous proportions and the world was watching developments in PNG with interest.
“It’s a big project and it’s very important,” Graham said.
“It means a whole lot more people around the world are watching.
“We’re the biggest development in Papua New Guinea’s history.”
The project is well into accomplishing many components after two years in the construction phase.
The 3.2km long Komo airfield - which will be longer than Port Moresby’s 2.8km long Jackson Airport - has now completed 50% of earthworks to lay the foundation, with the runway aggregate base course pavement commencing.
Graham said installation of the first foundations for the terminal building had also commenced.
“That needs to be completed by the end of this year,” he said,
The completion of Komo would allow the Hides gas conditioning plant to complete construction.
The Komo airfield would be used to transport huge pieces of equipment to complete the conditioning plant.
Gas from Hides and Angore in Southern Highlands, and Juha in Western province, would be piped more than 700km to Port Moresby for export.
Graham said more than 100km of 300km of the onshore pipeline between the gas fields and Kopi in Gulf province had been completed, while laying of the 400km offshore pipeline between Kopi and Port Moresby was proceeding “very fast”.
The massive liquefaction and storage facility site outside Port Moresby is also on target and on track to be completed in early 2014, in time for first exports later that year.
Graham admitted that the project was one of the most-difficult Exxon Mobil had carried out internationally.
“Papua New Guinea is difficult in that the infrastructure is very challenging in most parts of the country,” he said.
“It’s more isolated, it’s more challenging.”

Business Council of PNG doesn’t support another protest

The Business Council of PNG strongly opposes a planned protest march for Thursday this week, said to be organised by activist Noel Anjo. “The Business Council of PNG supported the initial sit-in protest held at the Sir John Guise Stadium earlier this month during which the Prime Minister and his senior cabinet members attended and received the petition signed by the citizen groups,” council president Ernie Gangloff said in a letter to NCD police operations commander Andy Bawa.

Business Council of PNG president Ernie Gangloff

“Dialogue with the government is continuing and we are monitoring the progress to date.
“At this point in time we are not convinced that another protest march is warranted.
“A coordinated march arranged in conjunction with the RPNGC (Royal Papua New Guinea Constabulary) will succeed and if required, we will seek the support and assistance from your officers to ensure that the outcomes are achieved.
“Our members, the business community also seek to conduct their daily business without the risk of opportunists taking advantage of any uncoordinated protest march.”

End the cargo-cult aid mentality that has ruined our neighbours

By HELEN HUGHES


THE villagers of Papua New Guinea, Solomon Islands and Vanuatu, together with those of Fiji's military dictatorship where living standards have been dropping precipitously, make up most of the population of the Melanesian Spearhead Group. They are now among the very poorest people in the world.
Women and their babies die in childbirth in the bush. Children are wracked by diarrhoea and chest catarrhs. HIV/AIDS in PNG compares with Mali and Burkina Faso. Illnesses no longer evident in most of the world plague adults. Cholera outbreaks in Madang and Lae threaten Australian travellers. Drug-resistant tuberculosis has crossed to Australia's Sabai and other Torres Strait islands.
The gardens worked by women still ensure sufficient food but, because agriculture has not developed, more than a million men hang out without work, bored, dispirited and seething with frustration.
Pacific village women are among the most world's most deprived. Economic stagnation has been followed by social breakdown so that rape has spread from towns. Female teachers are often not safe and girls cannot walk to school. Violence is held at bay only by the presence of Australian policemen in the Solomons.
It is endemic in the PNG highlands where it is still common to see women breastfeeding piglets because they are more valuable than children!
Only 60 per cent of voters are enrolled in PNG. Elections mean a changing roster of "Big Men" to exploit parliamentary power. Senior public servants share in the spoils.
The Regional Assistance Mission to Solomon Islands presides over a stalled economy and fraught politics.
In the Fiji economy, the pickings are more constrained, but all island elites enjoy wealthy lifestyles, travel abroad and shopping. Their real estate includes escape-hatch mansions in Australia and further afield. They have very considerable investments abroad. They educate their children in Australia and fly to Brisbane if they are sick.
Leading Vanuatu families send their children to the Sorbonne. Pacific elites dine and play golf with Australian associates who have benefited from Pacific ventures.
These entrepreneurs support the bureaucracy in Canberra, which is more concerned with Pacific votes in the UN than with how villagers live.
The Australian Strategic Policy Institute is following the calls of Australian business lobbyists with property in Fiji in calling for a thaw in relations with Frank Bainimarama.
Everyone should have decent living standards. Every country needs a private sector and a middle class. But Pacific elites have appropriated the bulk of aid, mineral, forestry and other incomes to become immensely wealthy at the cost of villagers.
The Pacific islands have minerals, forests, agricultural land and marine wealth. They have remarkable tourism potential and are situated near the fast-growing east Asian markets.
They could have been the most rapidly growing developing countries in the world. Instead their elites have created their economic and political stagnation, and Australia, with New Zealand's help, is also responsible.
Since the 1970s the Pacific has received the world's highest aid per head of population. Australia has been by far the highest donor, with aid to the Pacific now running at more than $1 billion a year.
PNG, the Solomons and Vanuatu are the largest recipients. Aid transfers have not been monitored and aid has not supported development. Australian advice has largely been limited to macroeconomic stability to avoid short-term upheavals on our doorstep. Island attempts to reform land tenure to kick-start agriculture have not been backed. Not surprisingly, aid is regarded as "cargo" to be rorted.
The vacuum created by economic and political stagnation is making the Pacific into a Chinese lake. In the absence of local business, Chinatown shopkeepers from Taiwan and China provide goods and services for the rich and for armies of highly paid aid workers. The Chinese government is interested in minerals and influence -- Bainimarama has followed North Korea and Burma in turning to China for patronage. Chinese public and private investment is flowing into Fiji with Chinese workers replacing the skilled emigrants -- Fijian and Fijian Indians -- who are fleeing in large numbers.
Ministers of foreign affairs can make a difference.
Bill Hayden's Jackson committee turned an arm of a defunct colonial department of territories into an aid agency. Against the formidable opposition of a minister of education, Hayden persuaded the Hawke government to create a foreign student industry that not only contributed substantially to export and tourist income, but provided economies of scale for graduate studies and research.
Despite instances of laziness and greed, students from the Pacific and other neighbouring countries who have had the opportunity to study in Australia have greater goodwill towards Australia than that created by all foreign affairs expenditures.
Alexander Downer fought for economic development in the Pacific, only to be repeatedly swamped by the international aid industry's cargo-cult priorities.
After years of efforts to have Australian aid used effectively, he took the brave step of moving some dollars from PNG to Indonesia. Kevin Rudd, immediately on becoming prime minister, visited Port Moresby not only to reinstate this aid, but to begin a round of partnership agreements to weld the Labor government to the exploitative elites of PNG, Solomon Islands and Vanuatu.
Hopefully, Bob Carr will take time from his preoccupation with Australia's influence in world affairs to spare a thought for the Pacific. Peter Ryan, who as a teenager fought behind the Japanese lines in PNG when World War II nearly came to Australia's shores, has been a lone voice for the villagers who saved his life.
Carr will need to go to knowledgeable people such as him, outside the Canberra bureaucracy, and to Australian businessmen with Pacific investments to learn about the misery that Australia has wrought in the Pacific.

This article was first published by the Australian Newspaper

Helen Hughes is a senior fellow at the Centre for Independent Studies. She developed a Pacific program at the Centre for Development Studies at the Australian National University and served as deputy chairwoman of the Jackson Committee to Review Australian Aid. Her Pacific papers are at http://www.cis.org.au/

PNGSDP and World Bank sign agreement for K12.64 million project in Western

PNG Sustainable Development Program Ltd (PNGSDP) will provide K12.64 million (US$6.11 million) for a pilot project which is set to benefit 280,000 people in rural areas of Western province, with assistance of the World Bank. This project is an important contribution to Western and comes at a time when PNGSDP is focusing substantial efforts in developing a number of community projects to support people’s livelihoods in preparation for closure of the Ok Tedi mine.
PNGSDP is contributing the money towards the pilot Rural Services Delivery and Local Governance Project (RSDLGP).
The RSDLGP will be implemented by the Department of Provincial and Local Government Affairs.
Following the signing of this agreement between PNGSDP and the World Bank, a separate agreement will be signed between the World Bank and the PNG government.
The project aims to pilot a community-driven development approach (CDD) as a way to improve the access, quality and management of basic public services delivered in rural communities in PNG.
The project will work with approximately 14 local level governments (LLGs) in Western and another province yet to be selected, and will provide important information to government on the viability of this approach for possible use elsewhere in the country.
David Sode, CEO of PNGSDP, said the company was happy to support this project because it aimed to build capacities at LLGs to spend funds wisely and in areas that maximise benefits to their communities.

Laura Bailey (left) and David Sode during the signing ceremony

“Development can only be meaningful to communities if they are involved in shaping it themselves,” he said.
The testing of CDD systems and procedures will be done through community grants.
These community grants will be used for a wide-range of small-scale social or economic investments or services.
The specific use of individual grants will determined by communities on an annual basis with the support of trained facilitators.
"This generous financing from PNGSDP will allow the World Bank to bring our global experience in programmes for community level service delivery and customise it for the special needs of communities in Papua New Guinea," said Laura Bailey, World Bank country manager for PNG.”
The project will have three parts:
• Systems and financing of community service-delivery grants;
• Capacity building of national and sub-national government (or non-government) entities; and
• Project management (including monitoring, evaluation and knowledge sharing).
PNGSDP Ltd. was established as a result of an agreement between the Government of PNG and BHP Billiton (the Australian company that ran the Ok Tedi Mine in PNG), which supports sustainable development projects and initiatives to benefit the people of PNG.