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The Post-Courier newspaper quoted landowner spokesman Michael Tumbiago as saying the DPE had yet to pay them the money, which was the remaining amount of a K15.5 million payment under the memorandum of agreement.
He said four local contractors were paid K8 million in April this year, leaving the remaining K7.5 million which the landowners are now claiming.
Tumbiago added the landowners could carry out their threat "anytime this week".
"We are now demanding that the Department of Petroleum and Energy pay us that K7.5 million or we will shut down the project and take the matter to court," he said.
