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An Analysis of How Political Governance of Liquid Fuels Contributes to Energy Security in Papua New Guinea

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An Analysis of How Political Governance of Liquid Fuels Contributes to Energy Security in Papua New Guinea AN ANALYSIS OF HOW POLITICAL GOVERNANCE OF LIQUID FUELS CONTRIBUTES TO ENERGY SECURITY IN PAPUA NEW GUINEA BY FRANCIS HUALUPMOMI A thesis submitted to the Victoria University of Wellington in the fulfilment of the requirements for the degree of Doctor of Philosophy in Public Policy Victoria University of Wellington (July 2019) Abstract This study examines how political governance of liquid fuels at the institutional level contributes to energy security in Papua New Guinea (PNG) from a political economic perspective. An interpretive methodology and critical case analysis design were used to analyse LNG energy governance regime (policies, legislation, and institutions) and its relationship with energy security. The research design involved analysis of participants’ observations and documents in relation to the critical cases (instances) in the practice of the energy regime under the Somare and O’Neill governments between 2002 and 2017. By using the characteristics of the Quality Energy Governance Framework (QEGF) which emerged from the analysis of the literature on energy governance and energy security, this study shared a new policy insight that energy security is actually created through the interactions that occur between political actors and the institutions and processes of energy governance. The study found that energy governance is a system of interacting institutions, policies and legislation created by the political institutions for the purpose of achieving economic efficiency in order to produce public value. The effective functioning of this system depends on the quality of the political institutions. A strong political institution constructs a quality policy regime which, in turn, translates into operational and adaptive qualities of an energy regime that enhances energy security. Alternatively, where a political institution is weak, the operational and adaptive qualities of the energy governance system are also incrementally diminished, thus generating energy insecurity, which, in turn, affects development outcomes. Accordingly, the study concludes that in PNG the qualities of the energy governance system did not seem to effectively function efficiently as a whole due to the political- economic interests and non-compliance to the institutional qualities. This, in turn, has had the effect of generating energy insecurity rather than enhancing energy security. In effect, the practices associated with the formal governance arrangements have failed to deliver a consistent and predictable governance system for PNG LNG and development outcomes have suffered as a result. The social interaction of political and economic actors and their interests in the energy governance system is complex and quite difficult to predict, resulting in an unstable energy regime. Given the unpredictability of this energy regime, political reform should assume primacy as a first order priority to withstand emerging energy governance issues and challenges that might contribute to energy insecurity. i Acknowledgments This thesis would not have been possible without the contribution of several individuals and organisations. Firstly, I am extremely grateful to the 20 participants whose perspectives contributed to this thesis. I also would like to appreciate the invaluable contribution of my two supervisors, Associate Professor Graham Hassall and Dr Elizabeth Eppel. I’m greatly thankful for your constructive feedback along the way. I would like to extend my sincere appreciation to Professor Cecilia Nembou, President of the Divine Word University and Mr Solomon Wanis Tapura, Master of Law Student at the Victoria University of Wellington for reviewing my thesis from a Papua New Guinean perspective. I acknowledge the Victoria University of Wellington, the Office of the Assistant Vice Chancellor (Pasifika), in particular Dame Winnie Laban Luamanuvau and the School of Government; the Papua New Guinea High Commission in New Zealand and the PNG Department of Higher Education Research Science & Technology for the administrative support during my three years of study. My appreciation is also extended to my friends and colleagues for moral support. Finally, I thank my immediate family members for all the support accorded to me. This thesis is dedicated to my parents, late Pitawa Hualupmomi and Martina Yavingy Hualupmomi. I give Glory and Honour to God Almighty for His infinite Wisdom, Understanding and Knowledge! Without Him, I would not have come this far. ii Table of Contents Abstract .......................................................................................................................... i Table of Contents ......................................................................................................... iii Abbreviations or Acronyms ......................................................................................... vi List of Figures, Tables, Appendices, Map and Pictures .............................................. ix CHAPTER 1: CONTEXT OF THE RESEARCH ..................................................... 11 A. Research Purpose and Questions ........................................................................... 12 B. Scope and Approach .............................................................................................. 12 C. Contribution of this Study ..................................................................................... 13 D. Ethical Considerations........................................................................................... 15 E. My Place in this Research ...................................................................................... 15 F. Organisation of the Thesis ..................................................................................... 16 CHAPTER 2: LITERATURE REVIEW ................................................................... 18 Part 1. Review Strategy .............................................................................................. 18 Part 2. Definitions of Energy Security and Energy Governance .................................. 19 Part 3: A Survey of Energy Security Literature .......................................................... 23 Part 4. Energy Security in OECD Countries and Resource-Rich Developing Countries ................................................................................................................... 28 Part 5. Political and Economic Contributions to Governance of Energy Security ........ 32 Part 6. Governance and Accountability Reports ......................................................... 37 Part 7. Theory and Concept ........................................................................................ 40 Part 8. Summary – Research gap in this study ............................................................ 43 Part 9. A Quality Energy Governance Framework (QEGF) ........................................ 44 CHAPTER 3: BACKGROUND.................................................................................. 48 Part 1. Political and Economic System of Papua New Guinea .................................... 48 Part 2. Papua New Guinea Petroleum and Energy Context ......................................... 57 iii Part 3. Institutions and Policy and Legislation............................................................. 61 Conclusion ................................................................................................................. 67 Chapter 4: Research Design and Methodology ........................................................... 68 Part 1. Research Strategy ............................................................................................ 68 Part 2. Research Design .............................................................................................. 69 Part 3. Research Methods ........................................................................................... 70 Part 4. Levels of Analysis ........................................................................................... 76 Part 5. Data Analysis .................................................................................................. 77 Part 6. Managing Research Challenges ....................................................................... 79 Conclusion ................................................................................................................. 80 CHAPTER 5: LNG ENERGY GOVERNANCE FRAMEWORK ............................ 81 Part 1: Legislation....................................................................................................... 81 Part 2. Policies .......................................................................................................... 117 Conclusion ............................................................................................................... 126 CHAPTER 6: IMPLEMENTATION OF LNG ENERGY GOVERNANCE FRAMEWORK .......................................................................................................... 127 Part 1: Participants’ Perspectives .............................................................................. 128 Section 1: Political Governance of Energy Security .................................................. 128 Section 2: Policies, Legislation and Institutions ........................................................ 131 Section 3: Management of Energy Security .............................................................. 141 Section 4: Government’s Responses to Energy Security...........................................
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