Acquiring and Maintaining Social License to Operate for a Major LNG Project in Papua New Guinea

Legal license to design, construct, and operate a major project in any country is granted by the government and regulatory bodies of the respective country. Such is the case with the PNG LNG Project currently being built by ExxonMobil and its co-venturers in Papua New Guinea (PNG). The Project, which includes gas wells, a 960 MSCFD gas conditioning facility, a 300 kilometer onshore pipeline, a 400 kilometer offshore pipeline, and a 6.9 Mta LNG plant, would be a major challenge in any country in the world. Government and regulatory approvals were granted in 2009 in order for design and construction to begin, and the project is on track to start up in 2014. However, a significant hurdle to building the project and operating it for 30+ years is acquiring and maintaining the social license that is “granted” by the indigenous people of PNG who live in the project impacted areas. In a country of almost 7 million people speaking over 800 different languages and living a largely subsistence lifestyle, the Project represents an opportunity to improve their lifestyle and and allow government to fulfill promises and commitments that have been made by governments over many years. The indigenous people use a variety of techniques to negotiate and frequently stop work and hinder progress in order to have their voices heard and their demands addressed. In order for the PNG LNG Project to be a long term success in Papua New Guinea, a comprehensive strategy for acquiring and maintaining social license to operate had to be developed and implemented. This paper will define what is meant by social license to operate (SLO), discuss the business drivers of SLO and why it is important to manage it with the appropriate people, skills, and strategies, describe ExxonMobil’s approach to acquiring and maintaining SLO in PNG, and offer some lessons learned.