The long-standing dispute over the Kutubu Petroleum Development License 2 (PDL 2) benefit-sharing structure has reached a critical point, with landowners issuing a 14-day ultimatum to the national government to reinstate the original benefit-sharing arrangement.
In response, the Minister for Petroleum, Hon. Jimmy Maladina, assured all parties that the government is actively working toward a lawful and peaceful resolution.
Government’s Position on Kutubu PDL 2 Dispute:
In a media conference held on February 11 in Port Moresby, Minister Maladina acknowledged the growing tensions surrounding the project, and reaffirmed the government’s commitment to addressing the concerns of all stakeholders.
“As you are aware, the issue of Kutubu PDL 2 has become quite significant, and we as a government are very concerned. We believe that we should try to resolve this issue. The government is not sitting back; we are on the forefront of this matter,” he said.
The dispute traces back to a Ministerial Determination issued in 2022 under former Petroleum Minister Hon. Kerenga Kua, which altered the distribution of royalties and benefits from the project.
The determination shifted the previous equal-sharing arrangement among all landowners to a more impact-based model—allocating 80% of benefits to the most impacted landowning groups and 20% to others. It led to multiple court proceedings between 2022 and 2024.
Minister Maladina clarified that while the Supreme Court upheld the 2022 determination, one faction of landowners remains opposed and has now given the government 14 days to reverse the decision.
“We as a government have to respect the Supreme Court’s decision and the ministerial determination, as it is a legal instrument,” Maladina explained.
“However, we also recognize that some landowners feel aggrieved. We will engage with them and explore lawful ways forward to resolve this matter peacefully.”
The Secretary for Petroleum, Mr. David Manau, provided background context to the Kutubu project, which began oil production in 1992, predating the Oil and Gas Act.
He outlined the previous benefit-sharing agreements, including the 1990 and 1996 Kutubu Memoranda of Agreement (MOAs), which governed benefit distribution before the 2022 determination. He explained that the new arrangement was based on landowner impact assessments and aimed to ensure a fairer distribution of benefits to the most affected landowners.
However, the changes sparked resistance from groups who argue that the original formula, which ensured equal distribution across all licensed blocks, should remain intact.
Landowners hold separate presser
At a separate media conference held at the Hilton Hotel in Port Moresby, Kutubu landowner leaders expressed frustration over the 2022 Ministerial Determination and demanded its immediate reversal.
The landowners delivered a petition to the current Marape-Rosso government, calling for the reinstatement of the original benefit-sharing structure.
Mr. Johnny Yawari, Chairman of the Foe Association Inc. and Director of Petroleum Resource Kutubu (PRK), strongly criticized the landowner benefit identification (LOB-ID) exercise introduced by the Department of Petroleum in 2013 and the subsequent 2022 determination.
“Our country faced an economic crisis in the late 1980s due to the Bougainville conflict, and the Kutubu project helped sustain the PNG economy,” Yawari stated.
“From 1992 to now, we have worked with successive governments, and all have respected the original Kutubu benefit-sharing structure. This government must do the same,” added that the determination was made without proper consultation with Kutubu landowners.
He called on Prime Minister James Marape and his government to immediately revoke the decision and uphold the original agreements.
“The Kutubu people were generous enough to give 70% of the benefits to the Southern Highlands Provincial Government while receiving only 30%,” Yawari said. “Instead of further dividing our entitlements, the government should be talking about increasing our benefits, not reducing them.”
Yawari warned that if the government fails to meet the landowners’ demands within 14 days, they will take action, including shutting down the Kutubu PDL 2 project.
‘Complex Situation’
Minister Maladina acknowledged the complexity of the situation, noting that the government faces a dilemma between upholding the Supreme Court’s decision and addressing landowner grievances.
“One faction wants the previous equal-sharing arrangement to continue, while another supports the new 80-20 and 70-30 distribution model,” Maladina explained. “Both sides have valid arguments, but the law as it stands upholds the new determination. We will carefully consider our next steps and announce a way forward by next week.”
He appealed to all parties to remain calm and refrain from disrupting operations at the Kutubu project.
“I ask all landowners to re-engage with the government and my office. We are committed to finding a peaceful resolution within the framework of the law,” the minister emphasized.
