June 3, 2011
The Challenge
As the operator of the Papua New Guinea Liquefied Natural Gas Project (PNG LNG)—a large-scale, integrated development project that includes gas production and processing facilities in the highlands, as well as onshore and offshore pipelines and liquefaction facilities in the Port Moresby region—ExxonMobil has the potential to greatly impact the economy of the PNG. Independent assessments anticipate that the project may double the PNG’s gross national product, greatly increasing government and landowner revenues, creating jobs, and stimulating related industry developments.
Early in the project, to ensure delivery of these long-term local benefits, ExxonMobil created a robust “national content” program that seeks to develop a qualified and globally competitive local workforce and supplier base. The program also aims to identify opportunities for strategic investments in health, education, and infrastructure. The company engaged BSR to assist with an early assessment of the in-country capabilities.
Our Strategy
In the first phase of our work, BSR conducted a review of the local context to provide ExxonMobil with an early indication of existing workforce, supplier, and civil society capacities and needs. We then began research and interviewed approximately 100 representatives of:
- Vocational and academic institutions, to assess existing local workforce qualifications and potential focus areas for ExxonMobil training initiatives
- Local suppliers and businesses that could be eligible to support project construction and operations, as well as capacity-building alternatives
- NGOs focused on education, health, and community development, for possible partnerships with ExxonMobil in deploying strategic investment projects
BSR then created a preliminary database of PNG-based organizations in the three categories above, and we gave ExxonMobil an assessment of the wide-ranging perspectives on existing local capacity for the company to integrate into its national content planning.
In the second phase of our work, we used a tool designed with ExxonMobil to assess locally owned supplier companies against eight specific business criteria to provide a third-party view of the companies’ performance, training requirements, and initial eligibility for supporting the PNG LNG project. Our phase-two activities helped ExxonMobil assess prospective local supplier companies in order to:
- Lay the groundwork for ExxonMobil to constructively engage with local suppliers early in the project-planning phase.
- Identify local training needs and capacity-building opportunities.
- Match supplier capabilities with project needs.
- Set local supplier expectations regarding ExxonMobil’s standards for business conduct.
- Promote accountability by focusing on suppliers’ corporate governance improvements.
Our Impact
Many of BSR’s recommendations were incorporated into ExxonMobil’s comprehensive national content plan. Our phase-one work helped provide the groundwork for the company to determine workforce training objectives and supplier-development strategies, to formulate strategic community-investment priorities, and to enter into partnerships early in the project life cycle. In phase two, BSR’s assessments allowed ExxonMobil to engage early with local suppliers to discuss their areas of strength and opportunities for development. It also allowed for local companies to improve their business performance and potentially become eligible for engagement in the PNG LNG project.
Both phases of our work helped establish tangible baselines, early activities, and long-term focus areas for sustainable economic development programs focused on workforce development, supplier development, and strategic community investments in the PNG.
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