Chevron Ships Its First Oil From Troubled Island Field

Chevron Corp. on Tuesday announced the first shipment of crude oil from Papua New Guinea, a troubled project that has been plagued by combative island villagers, bureaucratic snarls and threats of sabotage.

“It’s been a long, tortured story, exemplifying all the problems you run into when you’re dealing in exploration in a Third World country,” said Philip K. Verleger Jr., a visiting fellow at the Institute for International Economics in Washington.

Chevron said it had exported the first oil from the Kutubu petroleum development project, about 350 miles northwest of the capital of Port Moresby. The project’s oil fields, discovered in 1986 in the island’s southern highlands, hold an estimated 200 million barrels of oil, said Jan Golon, a Chevron spokeswoman.

Chevron said production from the Kutubu venture is expected to reach 120,000 barrels a day by year end.

Developing the field has been arduous. Golon said local villagers at times blocked roads, attacked workers with spears and axes and threatened to shut off the flow of oil from the pipeline unless the company agreed to certain terms.

The San Francisco-based oil company has also reportedly run afoul of corrupt government bureaucrats, internecine village squabbles and arguments over royalty payments.

Besides those problems, there has also been concern about the environmental effects of building a 160-mile pipeline through mountainous rain forest. That pipeline was completed about a month ago, Golon said.