We aspire to set the standard for private sector contribution to sustainable development.

Strategic sustainable development

Shared value creation is a powerful way to achieve local social and economic development outcomes and achieve our strategic objective to maintain a stable operating environment.  Oil Search’s strategic local partnerships play an important role in our success while strengthening relationships, sharing knowledge and expertise, providing practical solutions to development challenges and broadening our reach.

The Company applies a partnership model to collaboratively address several business and social development challenges in PNG.Our priority areas are underpinned by Oil Search’s commitment to women’s empowerment, community health, literacy and education, local enterprise and business development and climate change adaptation. We are working with the PNG Government to support PNG’s capability in these areas.

Building capability

During the year, we progressed work towards enhancing the stakeholder engagement and community development capability of our Community Affairs staff by developing training modules for roll-out in 2019. The aim is to promote a proactive approach to community development by better equipping staff to effectively consult with community members and implement community development programmes with clearly-defined measurable outcomes. This initiative will make a meaningful contribution towards improving the lives of people in our host communities while strengthening community relationships.

Strengthening government health services

Most of Oil Search’s operating locations in PNG are in rural and remote areas that can lack adequate public health care services and infrastructure, so since 1992, we have provided project area communities with support to access health services. More detail about our approach is on our website.

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Working with PNG Provincial Health Authorities

During the year, OSF supported government health service delivery by strengthening partnerships with provincial health services in three project impact areas. By focusing on maternal and child health and addressing tuberculosis (TB), the Foundation increased its support for Provincial Health Authorities (PHAs) in Hela and Southern Highlands Provinces.

Through the continued support of OSF, Hela Provincial Hospital is in the top three of the highest-performing health facilities in PNG. In 2018, we supported the Foundation with a US$6.1 million contribution to assist them in supporting the PHA's financial management functions, providing funding for doctors’ salaries, managing the Hospital’s infrastructure upgrades, providing medical equipment and suppling mentors for public health and clinical governance. OSF is using this model to provide support to Southern Highlands Province which currently experiences some of the poorest health indicators in PNG.

In September 2018, OSF supported the opening by the Southern Highlands PHA of a “waiting village” for pregnant women, located next to one of the best-performing rural hospitals. The village enables women from very remote parts of the Highlands to temporarily reside closer to the hospital in the lead up to birth, increasing the number of women having supervised and safe deliveries.

In Gulf Province, OSF worked with the Southern Highlands and Gulf Provincial Health teams to improve diagnostics for TB, with the aim of increasing treatment completion rates. This will reduce the risk of drug-resistant TB as well as the number of resulting deaths.

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Wok Bung Wantaim

In May, OSF partnered with the Australian Department of Foreign Affairs and Trade (DFAT), the PNG Government and other donors on Wok Bung Wantaim (“Working in Partnership”) — a new strategy for working collaboratively on public and community health in Hela and Southern Highlands Provinces.

This strategy has four components:

  • Improved coordination and planning between the PNG Government and donors regarding health funding.
  • More effective financing at a provincial level.
  • Fostering partnerships and alternative service delivery models.
  • Engaging with communities on stronger accountability for service delivery and use of public funds.

Wok Bung Wantaim is a working example of the shared value that comes from PPPs. Its success relies on a combination of Oil Search needing a stable and secure operating environment, communities wishing to realise benefits from resource projects, and the PNG Government wanting to provide better services to communities.

Providing on-site health care

The Oil Search Medical and Occupational Health Service (MOHS) consists of multiple on-site clinics and medical resources across our operations. Through the MOHS, we provide health care services for our workforce and local communities. During 2018, Oil Search’s MOHS:

  • Treated more than 21,800 patients at its clinics in PNG and Australia.
  • Assisted with 58 medical evacuations of community members and 25 members of the workforce.

The MOHS team continues to support the work of OSF by providing clinical specialists at Hela Provincial Hospital to support day-to-day decision-making and help staff improve their clinical competence.

strengthening government health services

View the SDG table

Health services outreach

By working closely with local and District partners and PHAs, OSF continued to facilitate extended outreach patrols to some of the most remote parts of PNG. During 2018, it conducted 13 patrols in 30 villages and provided access to services for approximately 65,000 people.

The Foundation supported 1,930 mobile health clinics to deliver over 366,700 vaccinations. A total of 250 people completed TB treatment courses, a 27% increase from 2017. OSF also partnered with Marie Stopes PNG, providing 1,489 couple years of protection (a family planning measurement) through 543 family planning interventions.

OSF partnered with Rotarians Against Malaria in 2018 to address malaria outbreaks in PNG, which are estimated by the World Health Organisation to have increased by as much as 400% in some areas during the past four years. OSF delivers bed-nets, anti-malarial drugs and other services to communities in Southern Highlands and Gulf Provinces. These services have helped maintain low malaria rates in our project impact communities.

Water, sanitation and hygiene

A large portion of PNG’s rural population lacks access to safe, clean drinking water or basic sanitation. This creates health problems and places women and girls at a disadvantage as they are responsible for water collection and face specific hygiene challenges. The water, sanitation and hygiene (WaSH) programme is essential for reducing waterborne diseases, increasing school attendance by girls and addressing women’s safety. In 2018, OSF worked with the PNG Emergency Controller’s Office to restore water supplies damaged by the earthquake and will continue to build on these efforts with Oil Search and key non-government partners as part of a broader WaSH strategy in 2019.

Providing education opportunities

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Improving literacy and access to quality education in PNG is a sustainable development priority for the PNG Government and Oil Search. Working with OSF, we deliver programmes in areas around our operations that improve education and literacy outcomes. More information about our approach is here.

OSF’s first two Tari literacy libraries — launched in partnership with Buk bilong Pikinini— were damaged significantly by the February earthquake and subsequent tribal fighting. The first library was dismantled while a replacement site is being negotiated, and the second is continuing at a local church until rebuilding is complete. In response to local demand, OSF is building another library in Kikori that is due for completion in early 2019. This project has strong community ownership, with 43 children enrolled and learning in makeshift community infrastructure until building is complete.

In 2018, OSF also funded a three-week induction for seven new literacy librarians to increase the capacity for teaching basic early childhood literacy skills. Three of the librarians are teaching at the makeshift Kikori library and will continue at the new library once it is open.

OSF’s new scholarship programme was launched during the year. It will contribute to the development of effective and ethical Papua New Guinean leaders. The programme offers opportunities to develop leadership skills through structured training, mentoring and work placements and in 2018, 14 students completed their academic year in medicine, nursing and business studies. In partnership with Oil Search, the Foundation will further expand the scholarship programme in 2019 to support the Company’s Citizen Development Programme.

During the year, Oil Search also:

  • Increased access to tertiary education by sponsoring 105 students to attend tertiary institutions; and
  • Supported 13 teachers upgrade their primary education qualifications from certificate to diploma level. The teachers represent 12 schools across Kutubu, Moran, Kagua, Erave and Kikori in Gulf and Southern Highland Provinces.
Case Study

Delivering vital education infrastructure in Chimbu Province

Built in 1992, Bimai High School in Chimbu Province needed substantial infrastructure improvements to accommodate a growing number of students and teachers. In 2018, Oil Search delivered US$1.1 million worth of upgrades to the school’s infrastructure as part of the PNG Government’s Infrastructure Tax Credit Scheme.

Chimbu Province is remote, and many students travel long distances to school. Students now have access to improved learning opportunities with the addition of a double classroom, two dormitories and two teachers’ houses. The teachers' housing encourages staff retention and the dormitories will be used by female students to help improve their attendance and completion rates by reducing the risks to their safety and wellbeing posed by their trips to and from school.

Strengthening community resilience

Oil Search has the resources to make a significant difference in PNG by improving community resilience and contributing to natural disaster management. We primarily do this through PPPs that use a multi-faceted, multi-disciplinary approach to providing access to resources, expertise, emergency response, redevelopment and in-kind donations.

Climate adaptation

More than 90% of households in our host communities depend on income from traditional subsistence living. These communities can be vulnerable to natural disasters, or incremental changes caused by climate change.

In November 2018, Oil Search and PNG’s CCDA’s first PPP on climate resilience. Its objective is to develop and demonstrate climate adaptation initiatives that contribute to the resilience of PNG communities.

Cooperation through this PPP will explore areas of mutual interest regarding climate change adaptation, share and leverage knowledge, and contribute to PNG’s National Determined Contributions adaptation targets. The initial focus areas will include data-sharing, agriculture, livelihoods, food security, and water and sanitation. See the Climate section of this Report for more information.

Drought relief

Oil Search’s Drought Relief Support (DRS) was established in 2015 in response to the 2015-16 drought in PNG. DRS works to improve access to clean water and sanitation, food security and nutrition for communities impacted by the drought and the 2018 earthquake.

In 2018, we initiated a frost-mapping project to aid communities in PNG affected by years of drought and frost conditions. The project identified areas that are vulnerable to extreme weather conditions by analysing satellite imagery over time. We shared the analysis and historical weather and climate data with the PNG National Agricultural Research Institute (NARI) to help identify the type of interventions local farmers need to make to manage such climatic changes.

Building local enterprises and opportunity

Oil Search aims to maximise the involvement of local businesses in opportunities that arise from our operations. Our PNG business development specialists support local enterprise development in host communities by helping them to form organisational structures to maximise their effectiveness and to establish and maintain effective management and governance systems as well as providing other specialist advice and support as required.

In Alaska the local economy is vastly different to PNG, but our priorities around supporting Alaskan businesses are the same. During the year, the Company progressed the development of a local business strategy which will aim to maximise the value and opportunities for local suppliers in Alaska. It will include investing in supplier development, including developing and procuring supplies and services locally.

Case Study

Supporting Lanco development

We restructured our PNG catering service requirements in 2015 by consolidating multiple small catering services into a single contractor with the capability to service all Company project sites in PNG. As part of this process, Oil Search helped five existing PNG landowner companies (Lancos) to establish an umbrella Lanco and JV company, PNG Mining & Petroleum Hospitality Services (PNGMPHS), and awarded them the contract.

PNGMPHS employs 400 staff, 97% of whom are PNG nationals who were retained from the smaller catering contractors. It has grown its core business areas of catering and hospitality and is accredited to international quality standards.

The Lanco also works with Oil Search to support our Women in Sustainable Agriculture Programme by buying eggs, produce and materials for its catering services. This supports our commitment to enterprise development and provides the women with market access.

During the PNGMPHS’s growth, Oil Search provided advice and expertise to build its governance capabilities. We also provided opportunities for ongoing business — 90% of its current contracts are with the Company. It is one of our flagship Lancos, with 100% statutory and business compliance.

Now fully established, PNGMPHS is seeking to grow and diversify its business locally and internationally by investing in a food-crop fertiliser business.

Empowering and protecting women

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Oil Search works with OSF to implement women’s protection and empowerment initiatives. This ensures families have access to information and support that help them address gender-based violence and leads to positive change within their communities. Our approach to women’s protection is detailed here.

Bel isi PNG

Bel isi PNG ("Peaceful PNG") is a new PPP initiative conceived and facilitated by OSF. Launched at a leadership forum for private sector CEOs in September 2018, it provides case management services and emergency accommodation for people who experience family and/or sexual violence (FSV) using an innovative multi-sector model.

The initiative brings together businesses, the Australian and PNG governments, service providers, local and international NGOs and technical advisors. The partners will work collaboratively over the next five years to create awareness and deliver programmes that address challenges and empower women to lead productive lives in a safe environment.

Bel isi PNG partners include Oil Search, Bank South Pacific, Steamships Trading Company, the Business Coalition for Women, the National Capital District Commission and Femili PNG. Involving all sectors has increased the resources available, improved services and strengthened efforts in PNG to address violence.

There are two service components to Bel isi PNG:

  • A safe house funded by business subscriptions.
  • A case management centre operated by Femili PNG.

Participating companies can provide support to staff needing assistance as a result of violence such as medical care, counselling, legal resources and shelter. Participating companies also gain access to a private leadership group that offers events with internationally-recognised guest speakers, regular newsletters, and professional advice on how to address FSV in a way that supports staff while mitigating its business impact.

To raise awareness in the community about FSV, the project engaged women’s rugby teams the PNG Orchids, the Brisbane Broncos and the Matildas.

empowering and protecting women

View the SDG table

Champions of change

Oil Search aims to create positive change through the Champions of Change initiative, which was launched in PNG and Australia in 2018. This programme is aimed at enabling Oil Search and OSF employees and contractors to identify an idea or need in their community and apply their skills and knowledge to achieve a better outcome. Developed and driven by  OSF, the programme targets women’s empowerment and protection, health and safety, water supply and sanitation, and leadership. Employees have access to information, training and toolkits.

They can also apply for small grant funding. In 2018, 18 small grants were awarded to Oil Search employees in nine provinces to support Champions of Change activities, including:

  • Helping young men’s sporting clubs to become champions for peace and non-violence.
  • Improving community access to safe sanitation.
  • Training employees to address local family and sexual violence.
  • Enabling leaders to address longstanding drug and alcohol issues in their communities.

Read a case study on this initiative here.

Contributing to infrastructure development

Contributing to infrastructure development

Oil Search contributes to the socio-economic development of PNG by supporting regional infrastructure development such as roads, hospital and school redevelopments and other projects in line with the PNG Government’s national development priorities. These developments are provided by the PNG Government’s Infrastructure Tax Credit Scheme (ITCS) and National Infrastructure Tax Credit Scheme (NITCS). These schemes facilitate more timely delivery of infrastructure than what might otherwise occur.

In November 2018, PNG hosted 21 Pacific Rim member economies for the Asia-Pacific Economic Cooperation (APEC) Summit. Under the NITCS, Oil Search delivered APEC Haus, a world-class, iconic venue for the APEC Leaders meetings. The building showcased PNG on the world stage and will continue to provide a legacy for the economy as a museum and conference centre that highlights PNG culture.

During the year, the PNG Government reviewed its ITCS legislation to align with other government infrastructure priorities, expand its scope to all provinces, and increase the amount that is eligible to be claimed as a tax credit from 0.75% to 2%. Oil Search participated in the consultation process and made submissions on project governance, use of funds and effective administration.

Although the changes have been approved by Parliament, we are waiting for implementation guidelines and the review’s findings, which have not yet been released. Several projects are therefore on hold until the changes are formalised.

Project delivery timelines during the year were also impacted by the earthquake, community unrest and local clan disputes. In 2018, we completed:

  • The construction of APEC Haus
  • Upgrades to Bimai High School facility,  including new classrooms, dormitories and staff houses.
  • Stage one works at Kupiano Hospital, including an administration building and an outpatients’ ward. Work on stage two is scheduled for completion in late 2019.
  • Completed phase one of the Erave to Samberigi Road, a total of 32 kilometres
  • One of the two planned bridges on the Komo Adjakaiba road project and completed several significant culverts on this National Road.
Case Study

Preserving the culture of PNG through APEC Haus

The building and its public art represent PNG’s economic and civic ambitions and symbolise the country’s trading history. The form of the dominant sculptural roof makes contemporary references to the unique crab-claw shape sails found on traditional Motuan lagatoi boats used during trade journeys. A mix of traditional and modern artworks adorn the walls and the Leaders' meeting room tables are made from sustainably and locally-sourced teak, red rosewood and queen ebony. The frigate bird tattoo motif at the entry is also symbolic of the Hiri trade.

Enabling access to power

In PNG, access to power remains a significant developmental issue. During the year, Oil Search Power Holdings continued to focus on gas-powered generation, domestic gas and energy distribution, and renewable energy generation. The scope of this portfolio aligns with the PNG Government’s strategic priorities, including its goal of 70% electricity connectivity by 2030 and the country’s transition to 100% renewable energy by 2050.

In October 2018, four power producers — NiuPower, PNG Biomass, PNG Forest Products and Posco Daewoo Power — started the IP3 Industry Group to promote their collective interests in PNG. The group will contribute to public policy development, disseminate information about the energy sector and promote competition in the generation sector. This initiative creates a level playing field for all industry players to participate in, and help achieve, affordable and sustainable power generation in PNG.

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Port Moresby power station

In 2018, NiuPower progressed the construction of the gas-fired Port Moresby power station. The power station is expected to produce the cheapest power in Port Moresby, resulting in substantial savings for the electricity supplier - PNG Power. The station will be commissioned in early 2019 and will have the capacity to supply 57.8MW of electricity to the Port Moresby grid. This represents approximately 75% of the 80MW average daily load of the grid and 45% of the daily peak.

Over 90% of the workforce involved in the plant’s development are PNG citizens. The project also extensively used PNG Lancos, service providers and suppliers.

PNG Biomass

Oil Search’s PNG Biomass project will be the first utility-scale renewable biomass power generation project in PNG. It comprises a 30MW biomass power plant using integrated and dedicated sustainable forestry plantations to provide domestically sourced and generated biomass electricity for the Ramu Grid.

Since its commencement in 2011 in the Markham Valley, the project has enhanced the livelihoods of local communities by establishing plantations that provide employment and business development opportunities. Today, landowners receive commercial rent for their lands and are involved in forestry activities. Communities are also creating additional income streams by practising intercropping in fertile soils between trees encouraging food security and enterprise development.

PNG Biomass operates in line with the Equator Principles for environmental and social risk through the application of the International Finance Corporation’s Performance Standards as well as the Roundtable on Sustainable Biomaterials. It is also working toward certification under the Forest Stewardship Council (FSC) National Forest Management Standards for PNG and the Gold Standard for the Global Goals. In 2018, the project:

  • Used the local Lanco Zif Faring Business Group to contract 69 additional employees.
  • Was granted an environmental permit and a generation licence.
  • Progressed certification under the FSC and Gold Standard standards into the audit phase. Independent auditors assessed the project in December 2018 against the respective requirements.
  • Formalised a community grievance mechanism and created fundamental principles for the project to respect land rights.
  • Developed a Gender Impact Management Plan (GIMP) defining the project’s approach to women’s empowerment. GIMP is a strategic approach to ensuring the rights of socially-vulnerable groups are respected and positive outcomes are enhanced.

During the year, progress towards a final investment decision faced two key challenges - changes to the power tariff agreed in the Power Purchasing Agreement (PPA) signed in 2015 and prolonged decision-making by the regulators who are progressing the PPA.

enabling access to power

View the SDG table

Case Study

Switpela Bi Hani

Native sugarbag bees, which are stingless and only make and store small quantities of honey, are endemic to the Markham Valley. Their honey is highly prized for its medicinal qualities and its antioxidant, anti-microbial and anti-inflammatory qualities make to it similar to manuka honey, creating strong demand.

There are potential opportunities of honey production as an income stream for communities and to improve crop yield in its plantation seed orchards. The Switpela Bi Hani programme developed by PNG Biomass works with communities to build beehives, provide training from experts, support honey production and sales, and monitor the hives and community benefit streams. By December 2018, the programme had five beehives populated with native bees in the Markham Valley, with the roll-out of 30 more hives planned for 2019.

PNG Biomass benefits from the programme as the flowers of the plantation’s eucalyptus trees are a good source of pollen and nectar, leading to improved pollination and genetic diversity in its plantations.

Assisting with effective distribution of benefits


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Distribution of revenues from the oil and gas industry in PNG is governed by the Oil and Gas Act. If this distribution does not meet community and national expectations, it can threaten the stability of our operating environment. For this reason, we actively assist the PNG Government to meet its obligations. Read more here.

The landowner identification process is a highly complex clan-vetting exercise conducted by the PNG Government that is integral to understanding and determining the allocation and value of benefits to be distributed. With approximately 35,000 landowners undergoing this exercise, in 2018, this process experienced delays due to inter-clan and inter-generational disputes over land ownership and/or legitimacy and slower than anticipated government processes.

During the year, despite these delays and the significant work required for the earthquake and APEC, the PNG Department of Petroleum focused on resuming the landowner identification process and made significant progress in completing phase one, which involved mapping, identifying and vetting various clans. Phase two will involve a process of ‘no-objection’ to ensure landowners agree with the clan-vetting process carried out in phase one. Once complete, the Government will work towards opening bank accounts so payments to vetted, impacted beneficiaries can be facilitated.

Oil Search continues to support the PNG Government to facilitate the release of landowner benefits pending the completion of landowner identification and verification. As a participant in the EITI, Oil Search’s commitment to transparency plays an important role in establishing and maintaining our credibility and supporting strong and effective relationships.

As in previous years, we have voluntarily disclosed our 2018 payments to governments in this Report, our contributions to the PNG EITI report, and our Transparency Report.