THE COURT REPORT
Gobe oil owners still in the dark as another SABL falls
In a tale of government neglect and incompetence, the rightful owners of the Gobe oilfields who are entitled to tens millions of kina in unpaid royalties have still to be identified almost 25 years after oil started flowing from their land.
The Gobe oilfields straddle the border of the Southern Highlands and Gulf Provinces and comprise 3 separate deposits discovered in the early 1990s. Oil production started in 1998. The production licences are majority owned by the Japanese conglomerate JX Nippon, with smaller stakes variously held by Oil Search Limited, Exxon Mobil, Santos and the State. The oilfields also produce natural gas which is fed into the PNG LNG project.
Although the oil production is now managed by Oil Search, it was originally Chevron Niugini that led attempts to identify the landowning clans and the boundaries of their land. This initial process resulted in eight incorporated land groups from Gulf Province being registered in 1994. When landowners from the Southern Highlands protested that they had been ignored, the government intervened. In 1995 a Special Land Titles Commission was set up to determine ownership rights. It was headed by Justice Salika.
Unfortunately Salika’s determination of the clans and their boundaries did not settle the matter. The commission’s determination was successfully appealed not just once, but twice, by aggrieved landowners. In 2000 the National Court remitted the whole matter back to the Special Land Titles Commission to hold new hearings. That process has seemingly never been commenced, leading the Supreme Court to make similar orders in 2016, orders that have also been ignored.
Instead, different landowner factions have been left to try and assert their rights and lay claim to their royalties through various court actions, whilst different government officials and Ministers have muddied the waters by making their own adjudications in favour of one or other of the groups.
The latest attempt by one group of landowners, the Wolutou land group, to have their rights confirmed by the courts has recently failed.
The court decision lays bare the history of the landowner identification process, the conflicting political and administrative decisions that have plagued the landscape and the failure by government agencies to act on previous court orders.
SABL not legal
Earlier this month the National Court refused to endorse as legally valid a Special Agriculture Business Lease covering 81,000 hectares of the oilfield land known as Portion 7C, that was issued to the Wolutou group in 2011.
If the Wolutou group’s claim that their SABL lease was legal and valid had been upheld, it would have established their entitlement to more than 50% of all the Gobe oilfield equity and royalty payments.
In a decision handed down on April 6th, Justice Canning refused to declare the SABL lease a valid legal title. Canning said ‘there was insufficient evidence the SABL had been lawfully granted’ and he refused to declare that the Minister’s decision to grant the SABL was correct and lawful.
Justice Canning pointed out that the grant of an SABL is dependent on securing the agreement of the customary landowners at each stage of the ‘complex and elaborate’ procedures that must be followed under the Land Act. The judge found there was insufficient evidence that the Wolutou clan is the proper customary landowner of Portion 7C.
“Indeed, the unresolved question about who are the proper customary owners of the disputed land, including Portion 7C, is the main reason that this case has been filed.”
The court also found that even if the Wolutou clan were the rightful owners of the Portion 7C land, there was in any event insufficient evidence that the procedures in the Land Act, which governs the grant of an SABL, had been complied with.
Such a finding is perhaps unsurprising given that in 2013 a Commission of Inquiry into the issuing of SABL’s found the administration of the whole scheme was tainted by mismanagement and incompetence, with government officials failing to ensure compliance, accountability and transparency. There were widespread allegations of corruption and political interference. The Commission found most SABL leases were unlawful and recommended they should be revoked.
Declarations and determinations invalid
It was not just the Wolutou group’s SABL that the court refused to endorse. The court also refused the plaintiffs application for an order declaring correct and lawful a 2016 decision by the Land Titles Chief Commissioner that the Wolutou land group was the lawful owner of the SABL over Portion 7C.
The court found that the Commissioner’s declaration, despite being advertised in the National Gazette, had been revoked shortly after being advertised. In any event the statutory powers purportedly relied on in making the declaration did not actually support making such a decision. The powers relied on were “irrelevant and ineffective sources of jurisdiction” said the court.
What has not been explained is why Kutt Paonga, the Acting Chief Commissioner, made his declaration in favour of the Wolutou Land Group in the first place, how he managed to rely on powers that did not support his decision, nor why, just 10 days later, he chose to revoke his declaration.
Similarly, the court also refused the plaintiffs’ application for an order validating a December 2016 determination by the Minister for Petroleum and Energy stating that the Wolutou group were entitled to 54% of the royalty and equity benefits from the Gobe oil project and from part of the PNG LNG pipeline.
The court again found that, like the Commissioner’s declaration, the Minister’s determination had been later revoked, although the Minister took almost three-months before he reversed his position.
These 2016 declarations and determinations were not the first attempts nor the last by bureaucrats and politicians to unilaterally decide the identity of the Gobe landowning clans and the extent of their rights.
In June 2002, Roy Yaki, as Minister for Petroleum, Joseph Gabut the Petroleum Department Secretary, and Thaddeus Kambanei Acting Secretary for Finance, identified 21 Incorporated Land Groups as being entitled to share the equity and royalty benefits from the Gobe oilfields. The largest share, 34%, was to go to Imawe Boasi, the other 20 groups were each awarded between 6.5 to 0.75%.
The determination was published in the National Gazette G102, on 24 June 2002.
This was followed a year later by yet another revised determination made by the new Minister for Petroleum and Energy, Moi Avei.
The latest attempt to try and settle the landownership question by bureaucratic decree seems to have been made in March 2020, but it too soon descended into farce. Fourteen cheques for royalties covering the period from 1999-2003 were issued by the Department of Petroleum to various landowner groups but had to be cancelled before they could be cashed after protests.
Department Secretary, David Manau, claimed the cheques had been issued without his approval or the knowledge of the Minister, Kerenga Kua. The pair promised the cheques would be re-issued in accordance with the Ministerial declaration of 2003, and handed to the respective clan leaders in front of their people to ensure transparency.
Mediated agreements invalid
In its recent decision, the National court also refused to grant a number of other applications made in a cross claim against the Wolutou land group by four other clans and land groups.
The court refused to endorse the enforceability of two mediated agreements as to the customary land boundaries and land ownership signed in 2009 and 2010. These agreements were entered into in an attempt to settle an earlier court case filed by the Wolutou land group in 2007.
The National Court pointed out that as the whole 2007 legal case had eventually been dismissed by the Supreme Court in 2016, any mediated agreement were also invalid.
The 2007 legal case had arisen from the original decision of the Special Land Titles Commission established in 1995 under the leadership of Justice Salika to determine the ownership of the Gobe oilfields.
According to Colin Filer at the Australian national University, Justice Salika, failed to ‘walk the boundaries’ before deciding on the claims of each clan group as required under the Lands Titles Commission Act. Instead, he relied on an arial inspection by helicopter. Salika’s determination ‘was rather odd’ says Filer, and his determination, declared in February 1996, failed to settle the land ownership issues which have ‘been bouncing back and forth between the Land Titles Commission, the National Court and the Supreme Court ever since, with no prospect of any final resolution’.
Aggrieved members of the Yenidou Bogasi clan were the first to successfully file for a review. In 2000, a Review Panel upheld their appeal, quashed the original declarations of the Special Lands Titles Commission and substituted them with its own orders.
That Review Panel’s decision itself was then appealed to the National Court. The appeal was also upheld, the court finding that one of the commissioners on the review panel had been biased and that bias had tainted the whole proceedings of the Review Panel. The Review Panel’s decision was set aside and the matter was remitted back to the Special Lands Title Commission for rehearing.
That rehearing, it seems, has never taken place. This has led a number of different clans to institute their own court proceedings seeking declarations that they be recognised as the Gobe project area landowners. In 2002, the National court refused to make any such declarations, finding that the issue of landownership could only be determined by the Land Titles Commission or the Local Land court.
While the question of customary land ownership still remained unresolved, the Wolutou land group commenced another legal action in 2007. That case alleged that the State had failed to reconvene the Special Lands Title Commission hearings and as a result, royalties and other benefits had been paid out to the wrong landowners under the first Ministerial determinations.
It was those proceedings which resulted in the mediation agreements but they were ultimately overturned by the Supreme Court. The Supreme Court found the agreements and the consent orders that had been filed to end the legal case had not in fact been signed and agreed to by the Wolutou group and were filed by parties who were not even parties to the legal case. In any event, the National court had lacked the jurisdiction to deal with the matter as it involved determining the ownership of customary land.
The Supreme Court found Justice Kandakasi had ‘erred’ in conducting a mediation without the proper parties in attendance and then issuing consent order, again without the proper parties even having been notified. Kandakasi, J. again ‘erred’ when he refused the Wolutou group’s appeal to have the orders set aside. The Wolutou were ‘were thus driven from the judgment seat without being heard, and were denied natural justice’ said the Supreme Court.
“… the Judge allowed strangers in, who, for their part, kept the proper parties in the dark and negotiated a purported agreement that effectively resolved the competing interests in the subject land. These strangers acted dishonestly and deceitfully, and unfortunately their scheme escaped judicial scrutiny.”
The Supreme Court directed that the “disputes over Gobe Lands be returned to the Land Titles Commission for resolution unless the Head of State declares otherwise”.
To further demonstrate its displeasure, the Supreme Court ordered Ame Lawyers and Mr Ame personally, lawyers for the Luhalipu and Ase Tipurupeke land groups, to pay the costs of the case on an indemnity basis as they and their clients had repeatedly engaged in ‘deliberate and improper conduct’.
Back to square one
The only orders sought by the parties in the latest court action that the judge did agree to issue were orders that no further equity or royalty benefits be paid to anyone until final determination of the competing claims to customary land ownership. The court also reaffirmed the earlier Supreme Court order made in 2016 that the question of customary ownership of the Gobe oilfields be returned to the Land Titles Commission for resolution.
“It is critical that the Supreme Court order be enforced as, once the question of customary land ownership is resolved, the proper landowner beneficiaries of equity and royalty benefits can be identified.”
The court was especially critical of government agencies for failing to implement that earlier Supreme Court orders:
“It seems that the parties to the present proceedings, especially the governmental defendants, have failed to appreciate the import of the Supreme Court decision in SCA 101 of 2011. In fact, there has been a continuing failure on the part of all parties for more than 20 years, since Justice Sheehan’s decision in December 2000 … to appreciate the importance of resolving the question of customary land ownership before making determinations of what equity and royalty benefits are payable to whom and in what proportions.”
Surprisingly, despite the Secretary and the Minister for Petroleum, the Secretary for Finance, the Minister for Lands, the Land Title Chief Commissioner and the State being listed as the first six Defendants in the legal action, none of these parties were present or represented at trial.
To try and ensure that the government finally addresses the question of the customary land ownership of the Gobe oilfields through the legally mandated process, the court made a number of very specific orders.
- That the Registrar of the National Court ensures personal service of the court’s judgment on both the Commissioner for Land Titles and the Solicitor General
- That the Solicitor General is forthwith deemed to represent all the six government defendants and shall appear for those parties
- The Commissioner for Land Titles and the Minister for Lands to take all steps necessary to resolve the question of the customary land ownership of the Gobe oilfields as ordered by the Supreme Court
- The Commissioner for Land Titles and the Minister for Lands to file affidavits by 20 April 2021 setting out in detail the steps they will take in order to comply
- The Commissioner for Land Titles shall appear before the court on 27 April 2021 to confirm the details in his affidavit
- All the first six defendants are restrained from making any equity or royalty payments to any person until further order.
While the National Court seems determined to ensure government agencies finally take their responsibilities seriously and resolve the Gobe landownership issue through a proper Lands Titles Commission process, another legal case is lurking in the background that points to the serious question of where the outstanding monies are currently sitting and how much might already have been frittered away or abused.
Resource dreams and broken promises
The management of oil, gas and mineral royalties/revenues owing to landowners is a general scandal the nation has yet to fully reckon with.
For landowning communities, the monetisation of their natural resources is often seen as the only way of obtaining revenues to counter derelict state services and increase family incomes; resource companies and the government are therefore virtually guaranteed to secure their consent.
For the foreign resource companies the lure of huge profits to be banked in offshore tax havens mean they are eager to get their projects started and for the government, the inrush of foreign capital and feel-good boost to GDP guarantees they will be lauded both at home and abroad.
But in the rush to clear the forests, build the infrastructure and start production, it is the landowners who are quickly forgotten.
Neither the companies’ or the government’s interests are served by taking the time to properly establish the competing rights and interests of different clan groups before their land is invaded.
Indeed, for the politicians and the bureaucrats in Port Moresby, their interests are best served by not settling the land ownership questions. It serves them very well to have large buckets of unallocated royalties slushing around Waigani in unaudited trust accounts that can be used for a variety of potentially nefarious purposes.
Meanwhile, the legal disputes between landowner clans, feed the profits of law firms and clog the courts.
There is also another side to the management of landowner revenues from resource extraction projects. As well as the royalties that are supposed to be paid directly to the clans, there are also the equity interests and annual revenues that are managed on the landowners’ behalf by state run companies. The operations of these companies has become a major scandal where money is mismanaged and squandered, with little transparency.
It is a subject PNGi will return to in the Second Part of its examination of the Gobe Petroleum project.