The story led the business pages in Papua New Guinea’s Post-Courier in early February. “Analyst: PNG on verge of change” screamed the headline. British-based market analysts Bdaily Business Network praised the $US17.3 billion Exxon-Mobil led LNG project. “[It] is the most important single development in the history of PNG”, it stated, coming online for overseas markets in 2014.

But the reality away from corporate spin is a simmering conflict. A source close to the Southern Highlands land owners, the site of the major LNG project, predicts civil strife in the coming years. Locals are starting to collect weapons and grenades for the coming fight. Sabotage and attacks on pipelines are likely. Weapons are being smuggled in from Indonesia, including West Papua and Thursday Island near Australia.

“I fear what is coming unless something changes soon,” he says at a local Chinese restaurant covered in Coke-coloured wallpaper. “We are not being heard and feel we have no choice. We know we will be out-gunned, and Exxon, being an American company, may receive US government support, but this is about dignity and our rights.”

Stanley Mamu, editor of the LNG Watch blog, fears a Bougainville-style war over resources. It is almost inevitable, he argues, unless Exxon and the government listen to the grievances of the local people. Tensions are already high after a deadly landslide in January was blamed on nearby mining blasts.

LNG project managing director Peter Graham told Radio Australia last year he was satisfied with the “extraordinarily consultative process” with the landowners. That would be news to most of them.

A story in PNG’s Sunday Chronicle in mid-February highlights their anger. Two landowner chiefs demanded Exxon “fulfil relocation” plans previously agreed to. They complain about Exxon-hired private security firm G4S — the company has implanted itself in the highest echelons of the national government, I am told by countless NGOs — and local police using excessive force to re-open a key access road to the LNG project. They warn that other residents will heed a call to join them in resisting the development.

A former commander in the PNG army during the Bougainville “crisis” of the 1990s warned in 2010 that the presence of a foreign militia company such as G4S heightened the chances of another conflict: “They [G4S] have no appreciation of the local customs, culture and the people.”

I recently travelled to Papa Lea-Lea, about 30 minutes from downtown Port Moresby, to investigate a key LNG hub of the project. Driving through impoverished communities living alongside the shore, we pass small villages along the cracked road — small houses built of stilts to keep them from sinking. “They would have to move if a cyclone hit,” an Oxfam PNG staff member who accompanied me says matter-of-factly.

Passing a roadblock — our driver is forced to pay a small bribe to a policeman because he doesn’t hold a driver’s licence — we soon see kilometres of high fences behind which sit LNG facilities in various stages of completion. Security guards watch us drive past. On one side of the road is the beaten-up land of the project, the other is lush, rolling hills. Oxfam tells me some landowners have done deals with Exxon for the use of their property while others complain they aren’t properly consulted before work has begun.

Oxfam recently released a report on the LNG’s impacts in the area after engaging an LNG Impact Listening Project. The results were decidedly mixed and explained how alcohol abuse by men and women was leading to a spike in HIV infection, domestic assault and infidelity. One woman from Porebada said that road construction caused excessive dust that affected the growth of bananas, mangoes and paw paws. “Every time we go to find our gardens polluted.”

The current Peter O’Neill government supports the LNG project as strongly as Michael Somare’s. Australian billionaire Clive Palmer recently announced his likely entry into the LNG race, saying: “If we find gas, we develop it and make billions of dollars out of it.” During my visit the re-entry of Shell into PNG was also warmly embraced as a key driver of LNG opportunities.

Australia still pours millions into the country as a supposed insurance policy against imminent collapse. Former foreign minister Alexander Downer recently wrote in The National that his government “rebuilt PNG’s economy” and “helped end the Bougainville crisis” when in reality — as Crikey has reported — the Howard years entrenched the rot that has continued under the expanded Labor aid program (much of which goes on “boomerang aid”).

My time in Madang with the progressive NGO Bismarck Ramu Group (BRG) was a welcome change, one of the few organisations in the country that believes the only sustainable way forward for PNG is to reject all Australian support and find alternatives to mining and forestry projects, such as agriculture.

BRG’s Rosa Koian tells me there were countless examples just in her province — a polluting Chinese-owned Ramu Nickel mine and an equally polluting Filipino-run cannery — that show how corporate giants can mislead locals. Poor communication was a factor so BRG’s community workers take locals being romanced by corporations to areas where such firms have set up. “We have had 250 years of failed capitalism here,” Rosa says.

Terry is a key losing litigant in a recently completed case by landowners against the Chinese-owned MCC, which runs the Ramu Nickel mine in Madang. He claims violent intimidation by the company and has witnessed pollution in the water near his village. “Every day I hope the world comes to an end,” he says to me in despair. The top courts, ministers and federal government are all colluding to support the mine, he says.

MCC advertising in the local press claims the company is “ready to deliver”. But perhaps not for the people in Madang.

*Antony Loewenstein is an independent journalist currently working on a book about vulture capitalism. Read here his first PNG report from Bougainville.