Papua New Guinea: Implications Of Declaration Of Boundaries Of Konebada Petroleum Park

Last Updated: 27 April 2017
Article by Stephen Massa and Erik Andersen

The Minister for Lands and Physical Planning has recently declared a significant portion of land (including sea areas) on the Western side of Port Moresby to be the Konebada Petroleum Park (KP Park) under section 3(4) of the Konebada Petroleum Park Authority Act 2008 (Act).

The boundaries of the KP Park that have been declared are very wide – totalling approximately 23,325 hectares in the Hiri West District, Central Province. The KP Park area appears to include land such as the Napa Napa refinery, the new international port currently under construction at Motukea, other areas currently managed by PNG Ports, and possibly some customary and privately owned land. The declaration is self-evidently missing one of the necessary way-points establishing the boundaries of the Park, and as a consequence it also seems to wrongfully include part of the PNG LNG plant.

By way of background, the purpose of the Act was to provide for an appropriately managed and serviced industrial precinct for operation of large scale greenfields petroleum processing and energy products to add value to the resources of PNG, promote and develop downstream processing and export industries, and enable land to be used for commercial activities. The Act was to do this by establishing the KP Park and Konebada Petroleum Park Authority (Authority).

Whilst the Act commenced in 2008, it was not until 7 February 2017, by National Gazette Notice No. G76 (Gazette Notice), that the Minister declared that by virtue of his powers under section 3(4) of the Act, a certain portion of land as set out in that Gazette Notice was the KP Park for the purpose of the Act (Decision). It does not appear that the Minister consulted with relevant interested parties before making the Decision and publishing the Gazette Notice.

The boundaries of the KP Park could cause potential issues for a wide variety of parties that own, or have an interest in, land that falls within the boundaries of the KP Park. This is for the following reasons:

  1. Under section 50(1) of the Act, a number of different pieces of legislation will not apply to either the KP Park area or the Authority, including the Building Act, Harbours Act, Physical Planning Act and various others. This creates uncertainty as to the responsibility for management of areas such as Ports that are currently managed under the Harbours Act, but appear to fall within the boundaries of the KP Park. 
  2. Under section 38(1) of the Act, the Authority can acquire, hold, dispose of, or otherwise deal with land and any interest in land located in the KP Park.
  3. Under section 38(2) of the Act, land within the KP Park cannot be dealt with except where the Authority is a party to the dealing, or the dealing has been approved. Any dealing that does not comply with those requirements is void and of no effect.
  4. Under section 38(3) of the Act, the Minister of Lands, Land Board and Registrar of Titles may only exercise powers under the Land Act and Land Registration Act in respect of land located in the KP Park if it is either in accordance with a written recommendation from the Authority, or in respect of a dealing of which the Authority is a party.

    A 'dealing' includes a lease, surrender, mortgage, charge, discharge, easement and similar interests.

It appears that the legislation could create significant issues for anyone that owned land within the KP Park, or that held an interest in land (for example, a Bank that has an interest in land by way of a mortgage over a security property).

There may also be consequential implications of the Decision for other parties. For example, if the Decision creates issues for operation and management of Port areas, or issues for Banks as mortgagees of property within the KP Park, then this could cause difficulties or create inefficiencies that would have flow on effects for stakeholders such as importers and exporters to PNG, those that rely on imports and exports, local businesses, landowners, operators of any facility within the KP Park, and the economy generally.

We have been approached for advice about the KP Park Decision from stakeholders that believe land that they have an interest in is affected, and it is possible that the Decision could be challenged in the Courts soon.

We will keep you updated.

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