Earning a social licence to operate


PNG veteran Peter Botten, Managing Director of Oil Search Limited, talks about the importance of engagement at a community level in Papua New Guinea.

© Oil Search Ltd

Oil Search’s Peter Botten

There are few regions of the world where the operating environment is as complex and dynamic as it is in PNG. While most operators appreciate the importance of maintaining a social licence to operate, few engage with their host communities and offer an extensive breadth of social services and development opportunities.

A hands-on approach

In addition to extensive formal and informal engagement with its local communities to monitor issues, Oil Search also espouses a hands-on approach to addressing these issues. It is here where operators really earn their social licence to operate.

It is one thing to carry out household surveys and assess the socioeconomic and political factors at play in a community, but it is another to understand these factors and to address significant issues as they arise.

Facing up to local issues

Many operators make the mistake of assuming that dealing with local issues is not an integral part of business, but addressing these issues can have a significant impact not only on project longevity but also the bottom line.

With this in mind, Oil Search’s commitment to sustainability encompasses three aspects: an uncompromising focus on safety; maintaining strong financial performance to ensure sustainable returns for shareholders; and a strong focus on stakeholder engagement, including employment of local landowners, a focus on community relations from the village to the heart of the operations, and delivery of effective health and development programs to ensure sustainable livelihoods for communities.

Oil Search has dedicated Community Affairs and Community Health teams delivering essential services in its project area communities. In addition, the company maintains strong partnerships with two locally active NGOs—the World Wildlife Fund (WWF) and the Community Development Initiative (CDI)—that run programs in environmental conservation and education respectively.

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Public–private partnerships

Being a Papua New Guinean company, Oil Search’s interests extend well beyond the boundaries of its project licence areas. These include engagement in public–private partnerships (PPPs) to increase the scope of development activities.

The Millennium Development Goals enunciate the importance of PPPs in achieving targets for poverty eradication, environmental conservation, and socio-economic development. For many years, PNG’s Tax Credit Scheme has enabled a portion of tax payments to be diverted from general revenue to approved infrastructure developments. This PPP model has been successful in delivering vital infrastructure in rural communities, although much remains to be done.

Recognising the effectiveness of PPPs in accelerating socioeconomic development, the company recently entered into a longterm partnership with the Global Fund (whose goal is to fight AIDS, tuberculosis and malaria), serving as Principal Recipient in their current round of grants for HIV/AIDS programs.

Oil Search’s community health programs have been recognised by the World Health Organisation and other international authorities for their practicality and success in addressing core health issues in challenging, remote and disadvantaged communities. In partnership with faith-based organisations and local and provincial government health providers, the company’s Public Health unit delivers services to communities that have long lacked access to fundamental medical support. Oil Search is looking forward to extending this model across PNG as part of its National Health Expansion Initiative, and is establishing a Health Foundation in 2011.

Ensuring a long-term legacy

The scope for operators to leave a long-term legacy is extensive, never more so than now with inexorable progress towards PNG’s first LNG project and the opportunity to double GDP. The relevant legislation provides a good platform for distributing benefits to local communities in the form of royalties, development levies, equity and dividends, and infrastructure.

In this era, where corporate social responsibility and philanthropy are facilitated by greater public awareness and ethical investment practices, operators have the opportunity to contribute to sustainable development in their zones of operation. Oil Search intends to maintain its social licence by promoting transparency in the distribution of benefits, by continuing to engage with local communities, and by supporting development initiatives to improve the country’s prosperity.

This article first published in Business Advantage PNG 2011/2012

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