BP's Tangguh project will increase tension

Down to Earth No 50 August 2001

Preparations for BP's giant Tangguh gas project are moving ahead at a time of heightened tension in West Papua as the Indonesian military toughens its stance against 'threats to security' in the disputed territory.

The killing of five mobile brigade (Brimob) police officers and a logging company employee on 13th June, has sparked a brutal response by the Indonesian security forces in Wasior subdistrict, to the east of BP's Tangguh project in Bintuni Bay. The area had already been closed to humanitarian workers since an earlier shooting incident in March which left three employees of another timber company (PT Dharma Mukti Persada) dead. Reports by the West Papua-based human rights organisation ELSHAM say that, after that attack, six civilians were shot by Brimob troops and others were wounded. Prompted by the June killings, 'Operation Comb and Destroy' has resulted in arrests, beatings and torture of local people, including women and children, as police use violence to try to extract information about the killings. In late June, one woman was shot dead. Around five thousand people have fled their villages in search of safer places. Between 300 - 600 Brimob, regular police and troops have been flown into the region bringing numbers to an estimated 2,000. Villagers remaining in Wondoboi, where the June shootings happened, are being prevented from tending their gardens, gathering sago, hunting or fishing.

It is not yet clear what motivated the June attack - although police are blaming an OPM armed independence unit. The large-scale "sweeping" operation following the killings is symptomatic of the harder line taken by the military and police against the pro-independence movement. As President Wahid's influence in Jakarta has declined, so has his ability to restrain military violence in both West Papua and Aceh, so that - for all the talk of dialogue and ceasefires - there is no practical difference on the ground between the behaviour of the security forces now and during the Suharto era. Vice-President Megawati Soekarnoputri, who is known to be close to the military, is widely expected to take over from Wahid if impeachment proceedings against him succeed. She may well allow the military even more of a free hand to quash the independence movement.

Where does the BP project gas project fit into this picture? The Tangguh gas fields were discovered during the years of Suharto's presidency, when foreign investors could expect priority treatment and decisions about resource use were enforced by the military. Like a host of other investors, Arco - the company developing Tangguh before BP took it over in 1999 - would have been promised access to the customary lands of indigenous communities without requiring their prior consent. But BP is uncomfortable with being seen to profit from the systematic abuse of human rights. The company wants to develop a positive image in West Papua - in contrast perhaps, to the first big resource project in the territory, Freeport/Rio Tinto's gold mine, whose history has been punctuated by killings, human rights violations and environmental disasters. However, criticism over BP's projects in other countries has undermined the company's attempts to promote itself as one of the more enlightened and forward-looking oil multinationals. Moreover, BP's main Indonesian operation - the Kaltim Prima coal mine, which is jointly operated with Rio Tinto - has been beset by strikes and land disputes in recent months.

BP is also keen to be seen as a contributor to local coffers, not as a prop for Jakarta's ailing economy. However, it is still unclear how revenues from this and other projects will be split between central government and local government. A special autonomy law drafted for West Papua has still not been finalised. The autonomy offer from central government has been rejected (see DTE 49) and no agreement has been reached on an alternative proposal drawn up by West Papuans. At the same time, independence movement leaders have stated they want Tangguh to be suspended until independence has been achieved.

Recent reports from local NGOs and journalists who have visited the area say that the situation in the immediate area around Bintuni Bay is tense, although BP is at least making some effort to contact local peoples. Villagers are said to be divided among those who are keen for the project to go ahead in anticipation of compensation for land, the promise of jobs and community benefits; and those whose livelihoods will be affected, but who can expect little compensation because the installations won't be sited on their lands. But how much choice have these communities really got and how informed are they of the potential impacts of the project? A detailed account in The Ecologist reports that all the information available to local villagers in the project area comes either from BP, from NGOs paid by BP or from Indonesian government officials. "Anyone else who tries to discuss the issue with local people is liable to be arrested." The remoteness of the site means - like at Freeport's mine - that it is easier for the authorities to control information. This is probably why the tragic death of 48 babies in Weriagar village in 1996 was never widely reported at the time. According to the Ecologist report, the babies died shortly after the company - then Arco - started drilling for gas in the river, the villagers' only source of water. The villagers wanted to report the deaths to the regional government, "but when troops arrived to protect the site, it was made clear to them that it would be in their interests not to make a fuss."

At a 'conflict resolution' meeting earlier this year between NGOs, local community representatives, government officials and BP, it was agreed to conduct an independent investigation into the deaths. According to one recent report, this process appears to have reached an impasse since the NGO charged with the investigation has no funds and the villagers are unwilling to allow the victims' bodies to be exhumed for forensic analysis.

Wider impact
There seems little doubt that this major project will also have a wider impact on the military situation in the region whether BP likes it or not. Indonesian security forces will want to make a show of being in control of the surrounding area and will be more likely to clamp down hard on political dissent. This may already be happening - security at Tangguh has already been linked to the Wasior operation. Shortly after the June 13th killings, Papua Governor JP Salossa said the project must still go on despite the attack. He said he would ask the head of police and local military commander to assist the local government in maintaining the project's security and that the "security factor was a priority in development of LNG in Bintuni."

The general security situation in West Papua and Indonesia is a key factor in Tangguh's ability to win supply contracts - vital if the project is to go ahead at all. The main potential buyer of the processed gas - China's Guangdong LNG project - is looking closely at Indonesia's ability to guarantee supplies. Rumours have been circulating that the China National Offshore Oil Corps (CNOOC) which is in charge of the Guangdong project, is seeking two sources, instead of a single gas supplier. A lower export volume, according to Pertamina President Baihaki Hakim, would make Tangguh no longer economically viable. BP is now offering CNOOC a 5% stake in Tangguh to help its bid. The Chinese selection criteria are reported to include political stability as well as production stability and experience in long-term supply. Exxon Mobil's closure of its operations in Aceh due to the security situation there will not help. For hardliners in the Indonesian government, security could be a further excuse for cracking down on political dissent in West Papua. Just as the closure of Exxon Mobil prompted a new wave of military operations in Aceh, the same policy could be used in West Papua to pre-empt disruption at Tangguh and assure potential buyers that supplies will be guaranteed.

British position 
The British government's role in supporting Tangguh deserves close attention. The UK Ambassador, Richard Gozney, was visiting Tangguh at the time of the Wasior killings and was reported to have made comments signalling British approval of military operations in the area. Tapol, the UK-based Indonesian human rights campaign, has called on the British government to exert pressure on Indonesia to halt the military operations in Wasior and withdraw all additional troops stationed there since the beginning of April. "The fact that there is a major British investment in a location near a region where such widespread human rights abuses are currently occurring should be cause for alarm...and... the subject of strong condemnation by the Government, so as to ensure that the clampdown does not reflect unfavourably on British interests in the region." In June, DTE wrote to Gozney asking for an explanation of the British position on the use of Indonesian troops for the protection of large projects such as Tangguh. In his reply, the ambassador said: "The suggestion that I spoke in favour of operations by the Indonesian military or police to secure foreign investment projects is wrong..." (Letter to DTE 26/Jun/01)


The Tangguh project
  1. The Tangguh project is operating by BP and jointly owned by several companies including state oil company Pertamina. BP currently has a 40% stake and Mitsubishi 16%. British Gas plc is also involved.
  2. BP plans to open 2 offshore gas platforms in Bintuni Bay in 2004/5 plus a LNG plant covering 600 hectares of what is now rainforest.
  3. Up to 5,000 workers will be employed to build the two gas production trains worth US$1.5 billion.
  4. There will only be around 350 permanent operating jobs.
  5. The project's life is expected to be over 30 years.
  6. Exploration is continuing in other areas of the "Bird's Head" region of West Papua. More platforms and up to five more LNG trains may be opened depending on the results.
  7. The Weriagar, Berau and Muturi fields contain more than 14 trillion cubic feet of proven gas reserves.
  8. The Guangdong contract is offering potential sales of 3 million tons of LNG per year, beginning 2005; BP has already won part of the contract to build the Guangdong gas terminal.
  9. According to the Far Eastern Economic Review, BP had been planning to use Freeport's airport and port facilities at Timika during the development phase of Tangguh, but is now reconsidering the plan. (FEER5/Jul/01;)


(Source: ELSHAM Urgent Action 46 19/Jun/01 and report circulated by Tapol 25/Jun/01; ELSHAM UA 16/Jul/01; 'Petrol in Papua' in The Ecologist June 2001; BBC 13/June/01; Cenderawasih Pos 19/Jun/01; Jakarta Post 15, 30/Jun/01; Tapol Press Statement 26/Jun/01; Petromindo 20/Jun/01; 16/Jul/01; FT13/Jul/01)