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Court orders arbitration over compensation demands

PORT MORESBY, Papua New Guinea (The National, October 8, 2009) – Any delay in the signing of Benefit Sharing Agreement (BSA) by the Kutubu landowners in the Southern Highlands province could affect the timetable of the LNG project, industry sources have warned.

The National Court has issued an injunction stopping the development forum for Kutubu, or PDL 2, from going ahead.

The court has directed parties involved in this action – Kutubu landowners and the Department of Petroleum and Energy – to resolve their disputes using the Alternative Dispute Resolution (ADR).

The parties are to use ADR and inform the court of their progress next Friday.

But industry sources say it appears the court has not been made fully aware of facts relating to the Kutubu project.

The source said landowner identification and social mapping were done when the Kutubu project started in its early days.

But landowner leader Hami Yawari produced letters which showed that the Prime Minister had taken their concern seriously, and had asked Minister for Petroleum to resolve this quickly.

Sir Michael Somare’s letter to William Duma was dated Sept 4.

Sir Michael asked Mr Duma to "please liaise directly with them and update me on the progress".

Mr. Yawari maintained that there had not been a full scale social mapping and landowner demarcation studies conducted in the Kutubu petroleum project.

"The benefits for Kutubu are not delivered to rightful landowners. Non PDL 2 landowners are receiving benefits which they are illegally collecting."

He said although PDL 2 was a project covered under the existing Kutubu Petroleum Development Agreement (KPDA), that had to be reviewed first before a new development agreement.

He said KPDA talks about special support grants (SSG) and memorandum of agreement (MoA) funds which his Digimu and Foe landowners had been pursuing, now ended up in court.

He said the State owed landowners a total of K774 million [US$297 million] in SSG and K1.4 billion [US$538 million] in outstanding MoA funds.

"These are the issues that we have put to court and that the National Court says these issues must be sorted out first before a development forum."

The National:

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