PNG LNG Boss speaks out on jobs and landowner businesses | Pacific Beat

PNG LNG Boss speaks out on jobs and landowner businesses

PNG LNG Boss speaks out on jobs and landowner businesses

Updated 15 February 2012, 12:25 AEDT

There has been much talk in Papua New Guinea about whether the benefits of the Exxon Mobil-led PNG LNG project will get down to the people.

While the benefit stream directed through the PNG government is causing political ructions, money that goes direct from the project to its employees and to the businesses it contracts, is having a more positive impact.

The PNG LNG project currently has 5,500 PNG citizens working for it, quite a number of whom have never had a job before.

It also has two new umbrella landowner companies that must corale the business oportunities for a host of subsidiary companies, also owned by landowners.

Presenter:Jemima Garrett

Speaker:Peter Graham, Managing Director, PNG LNG project

GRAHAM: I think as a matter of priority we have decided to take a very comprehensice approach to national content. We would like to maximise the opportunities for Papue New Guinea citizens to participate in the project so we have invested heavily in creating 2 substantial training institutions in PNG to help develop the skills of Papua New Guineans during the construction phase. We've done that in a way that will make those skills marketable in the long-term so that the people arfe being trained to Australian TAFE (Technical and Further Education) standards so when they leave the training they'll have a certificate that certifies that they've achieved certain standards. So a very large investment in training of construction workers but, not only that, but a commitment to training our longer term operations and maintenance personnel. We've got, to date, 75 wonderful young people in a training college in Pt Moresby undertaking a multi-year program. They are one-year complete and at the end of this year, that group goes to Canada for a year, to further their training. So some great opportunities for Papua New Guineans to develop their skills and we find there is a huge thirst for that, in the country.

GARRETT: Now in terms of business development you are sponsoring an independent Enterprise Centre. What is that all about?

GRAHAM: When you look back over the history, certainly of the oil and gas industry in Papua New Guinea, there have been some great successes and there have been some areas where business development hasn't been quite as good as it might have been, you know, companies failing. And we'd like to do everything we can to ensure we do not have business failures in Papua New Guinea associated with the project. So we set up what we call the Enterprise Centre, but basically it is a resource centre. Its an organistion, a physical institution with resources in it, provided free of charge, to landowner companies in particular to develop their business skills, to develop a sound business plan, understand the roles of directors and officers of the company again to ensure that once they get started there is a sustainability about what is developed and we don't have to deal with collapsed companies and the debris that can come from that.

GARRETT: Now ExxonMobil actually sees having a postive impact in the community as one of its comparative advantages compared with other oil and gas companies. What do you mean by that?

GRAHAM: Long-term the security of the project is really driven by the relationships you have with the people in the communities in which you are dealing. We recognise that, we understand that we need to be seen as good corporate citizens within those communities, to be a participant in the community and to have a sense of ownership by the people in the communities, of the project. We nurture that sort of relationship with communities. We have police, for example, who are in the communities providing law and order, but ultimately the security comes from the community itself so we are just investing substantially and I don't just mean in monetary terms but I mean in terms of working with communities to build that relationship because longer term that is what gives us the confidence that we can operate this facility for 30 years.

GARRETT: When it comes to business development you have a 3-tiered approach -why is that?

GRAHAM: Its really recognising we are dealing here with a very large project - $15 billion plus - and it's a fast moving project. Its not as if we can spend a lot of time triying to bring many, many companies up a learning curve to be effective businesses in a short period of time so to facilitate that we set up what we call umbrella companies - large overarching companies - they'll be the companies that will contract with the major contractors that we deal with. And then beneath that there are then 2 further tiers of landowner companies, a licence based level and then a clan based level of companies. Its just impractical for us to expect major contractors to be dealing with hundreds of clans, each wanting to rent a couple of landcruisers, something like that so this aggregation facilitates that process.

GARRETT: So just how far have you come with landowner companies and how does it compare with what happens elsewhere in the world, on these sorts of projects?

GRAHAM: As far as I am aware the approach here is unique. I am not aware of other countries where there is this particular approach to developing landowner companies. Certainly micro-businesses are developed in other countries but here there has been and we've made a major push, as has Oil Search and others, in developing business opportunities associated with the project. I think we've made good headway. It was challenging certainly to start. As you can impagine a start-up company that really doesn't exist , has no management, has no management processes, no cash, no nothing, trying to be postioned to take up what is a pretty substantial business, in anyones terms. We allocated a number of reserved areas to give them a leg up so they could start with confidence to develop skills in those areas, things like catering, camp maintenance, security, labour hire, and get them focussed on that rather than spreading their interests focussed across a very broad spectrum of business opportunities. And I think we've seen our two major landowner companies Laba, at the LNG plant site and HDGC in the highlands both prosper. I mean they've got some challenges in front of them and they've made great progress.

GARRETT: So just how much input are these landowner companies having into the project?

GRAHAM: A lot, when you look at the financial input, or the business they are doing with us, they are a pretty significant portion of the total spend in-country , I mean several hundred million kina being spent through the landowner companies. And they are critical at this stage, because the businesses they are in are enabling busineses, as I say, catering, camp maintenance, security, ground transportation. We can't do withour those businesses so they have to be stood up and be effective and, thankfully, they are getting there.

GARRETT: And in fact if you are locked up in a gas camp and the food is not good you've got trouble. How hard is it for those companies to get up to the international standards that you require?

GRAHAM: The strategy we have encouraged and certainly the landowner companies have been very willing participants is through joint ventures. I mean it would be impossible to develop the technical skills to perform in all those fields, so typically what happens is they form a joint venture with an established catering company for example, who bring the skills and the expertise and the know how to deliver that sort of product to the standard that we expexct and then over the period of the 4 years of construction progressively the landowner companies take the lion's share of that business and we would like to think, at the end of the construction period, they can stand on their own feet, probably without the support of the joint venture partner.

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