Tangguh - adapting to the West Papuan context?

Down to Earth No. 73, May 2007

It has been two years since Down to Earth's last detailed report on BP's huge Tangguh gas project in Bintuni Bay, West Papua. Surprisingly little has changed.

From BP's point of view much has changed at Tangguh - the project is now well into its construction phase (70% complete as of March 2007) and is due to go 'onstream' in 2008. However, the same issues, the same concerns, the same doubts keep surfacing. How can this mega-project possibly fit into the realities of West Papuan life? How can it not result eventually in major environmental degradation? What real chance is there for Papuan communities to feel they are part of the project? What real chance is there for Papuans to benefit - and feel that they are benefiting - from the profits of this enterprise?

These issues can be summed up with the following words: incongruity, degradation, disempowerment and degeneration. 'Incongruity' because there is little to no chance that this 21st century production site will sit easily alongside the lives of those whose fishing and agriculture-based livelihoods have remained relatively unchanged for hundreds of years. 'Degradation' because, apart from local Papuans' perception that the land, their inheritance, is being sucked out from under them, it is unlikely that the comings and goings of LNG tankers and other vessels at the newly constructed dock, or the projected pumping of significant quantities of CO2 into the atmosphere, to name just two issues, will result in good news for the environment. 'Disempowerment' because, no matter how many consultations and studies are done, Papuans know that they are not in control of this enterprise. 'Degeneration' because the quality of life of those people living in the immediate vicinity of the Tangguh 'facilities', when considered holistically, cannot be said to have improved with the arrival of BP.

While Tangguh's promoters point to community support, development schemes, economic growth and tax revenues, there are continuing signs from the ground that the project is creating discontent among at least part of the local population. Revenues from the Tangguh project will no doubt bring development to Indonesia and West Papua, but at what cost? And is it really the development that local people want and need? The fact remains that BP's Tangguh project is now well on the way to becoming a reality, and a significant one, in the life of West Papua, Indonesia and the region. It is important to recognise this reality, to monitor developments at Tangguh as closely as possible and to ensure that critical views are not drowned in the flood of pro-project information put out by BP and its backers both in and outside Indonesia.

Papuan and Indonesian civil society - attitudes to Tangguh At the Tangguh Independent Advisory Panel (TIAP) meeting in London in April 2007, panel member Senator George Mitchell maintained that local support for the project was strong, that there was greater support now than five years ago and that the "further away from the project, the greater the protest". This view, by the chair of a body set up by BP, shows that perceptions of attitudes towards Tangguh vary according to what information is received and - in Senator Mitchell's case perhaps, what people want to hear. Down to Earth continues to receive a different message from the communities that are affected by and/or have an interest in this project: one of increasing discomfort and growing disillusionment. Indeed, not all members of TIAP, were so fulsome in their assertions about BP's reception in Bintuni Bay. Reverend Herman Saud, the panel's only Papuan member, talked about jealousies amongst the local people, the risk of those feelings being exploited by outside parties, creating divisions and resentment.

Two Manokwari-based NGOs have spoken out recently on this issue: Perdu on claims by communities living on the northern shore of Bintuni Bay relating to ownership of gas resources, recognition of customary rights, profit sharing and supervision; and LP3BH on the increased militarisation of the region.

BP's efforts to implement a significant social programme - based around health and education - in the Bintuni Bay area appear to be reaping some rewards. There is also a significant number of local Papuans currently employed during the construction phase of the project. Both these factors have no doubt increased some local community incomes in the short term, but persistent underlying problems are revealed when the project is looked at in the wider and longer-term perspective.

One outspoken critic of the Tangguh project is the Rev. Socratez Sofyan Yoman, President of the Union of Baptist churches in Papua. He has repeatedly criticised BP and Tangguh, placing the project firmly in the context of the wider political aspirations of ethnic Papuans. Such public criticism is remarkable, given the difficulties and risks associated with speaking out against a system of government that is perceived by many in Papua to be unfair, discriminatory and imposed from afar.

In Indonesia itself, there is relatively little knowledge of the Tangguh project beyond government circles and the intellectual and NGO community. Certainly, until revenues start flowing, interest in Tangguh will remain small and there is little pressure on the Indonesian authorities to monitor opinion and ensure transparency. Ambassador Sabam Siagian, TIAP's Indonesian member, has argued that it is important for BP to work with the national press in Indonesia as a way of educating Indonesian public opinion.

Public perceptions are key to the outcome of the project. 'Rumour' is much talked about in West Papua, for good reason. Communication within Papuan society happens in a very different way from western culture (and presumably BP's own institutional culture). For BP to overlook or discount this factor in the evaluation of its progress, would be a serious mistake, and, in the long run, would be detrimental to their business objectives.

Environmental monitoring Given the increasing awareness of the likely impacts of climate change, it is surprising that building a Liquid Natural Gas (LNG) production facility in the middle of one of the most pristine environments in the world has not provoked more critical reaction from NGOs and the public in Europe, North America and Australia. Experience in Papua has shown that such mega-projects not only have a history of damaging the environment and local ecology, but attract further development, which in turn inflicts more damage.

BP has tried to prevent this 'magnetism' effect, by limiting employment to Papuans, but it seems unlikely that the counter-measures will have the desired effect. Lord Hannay from TIAP pointed out that the system set up to discriminate in favour of employing Papuans was 'beyond the control of BP' and 'open to corruption'. (Papuan residency cards are issued through local government offices.) Consequently, the Indonesian perception of West Papua as the land of opportunity is further strengthened, drawing more migrants to West Papua and compounding the problems created under Suharto's massive transmigration programme.

Two other issues stand out. The first, highlighted by BP's 2006 environmental disaster in Alaska, points to the risks of a massive increase in shipping and other activity in and out of Bintuni Bay. In a recent admission, BP America president Robert Malone admitted that cost-cutting within BP was a contributing factor to the oil spill in Prudhoe Bay, Alaska. There are continuing reports that lessons from this disaster are not being taken on board by BP management. Similarly, in its report on BP's Texas oil refinery explosion in 2005 (which killed 15 people), the US Chemical and Safety Board said that cost-cutting was a contributory factor. As reported in DTE 72, supertankers will regularly ferry LNG from West Papua and other marine traffic has already increased exponentially. Could BP or the Indonesian authorities respond to a major accident in Bintuni Bay?

The second issue is the question of carbon dioxide (CO2) emissions and other waste products from the LNG production process. As BP itself has admitted, The Tangguh gas fields and the processing of LNG will release large quantities of CO2 into the atmosphere. Estimates indicate that 12.5% of the Tangguh reservoir gas stream consists of CO2, which will be released into the atmosphere unless a system of disposal is found. Over the life of the project, this could represent at least 1.8 trillion cubic feet (Tcf) of CO2. Currently, BP has no definite plans to counter these emissions. A system for 're-injecting' some of the CO2 into the ground has yet to be acted upon. Similarly, the disposal of mud waste from drilling and of ships' ballast water and sediments is likely to prove environmentally damaging. The project has yet to sign up to best practice in all these fields.

BP has a programme to manage the local Sousa dolphin population and other marine mammals and is working with environmental organisations such as WWF and Conservation International, but it is unclear if these programmes will be effective or how they will integrate with the LNG facility. Indeed BP's Biodiversity Action Plan contains much that focuses on conservation, surveys and education, but not so much on the practicalities of reducing Tangguh's environmental impact. There is a legitimate concern that, if the monitoring is left in-house, Bintuni Bay may suffer a similar fate as Prudhoe Bay in Alaska, but without the infrastructure available to respond effectively.


Employment, social programmes and their effect on Papuan society

Apart from the social programmes, employment is likely to be the most significant factor in BP's immediate effect on Papuan society. Currently, there are up to 9,000 people working on the construction site, of which about 2,900 are Papuans, employed mainly in manual and unskilled jobs. This appears to be a positive contribution to the prosperity and development of life in the Bintuni Bay area. However, from 2008 onwards, the numbers being employed at the site will diminish and by 2010, there may be less than 100 Papuans employed at Tangguh. BP's projected figures on the percentage of Papuans in the future workforce are not impressive. BP is taking measures to try to train more Papuans for skilled positions in the production stage of this project, but the numbers are still low. When production starts in full, local residents of the Bintuni Bay area will see a massive high-tech operation shipping out their natural resource wealth with only a handful of Papuans apparently benefiting and engaged in the process. However much BP points to the large revenues that will flow to the Indonesian government, or even to West Papua itself, the local perception will be one of injustice. One exiled West Papuan activist, Benny Wenda of the UK Free West Papua Campaign, has described the process as 'the robber selling off the contents of my home'

In its 2007 report, TIAP encourages BP to do more on the employment of Papuans and to educate the local population about the 'demobilisation' process. Having worked for a few years helping to build this facility, many local Papuans, especially men, will find themselves unemployed and back in their previous situation, warns the report. However, society in the Bintuni Bay area will have changed. A report by the Indonesian Mining Advocacy Network (JATAM) has already described the effects on the community of the arrival of BP in Bintuni Bay. For example, alcohol is being brought in on the ships arriving to build Tangguh, prompting increasing drunkenness and highlighting frustrations that exist (see DTE 65 and JATAM report). Concerns about 'demobilisation' prompted TIAP to recommend that BP contribute to re-training those people who will no longer be employed, in particular by putting resources into training on fishing and agriculture. It remains to be seen whether any such measures will be sufficient to cope with these changing realities and make inroads into perceptions of injustice.

With regard to the social programmes, BP has budgeted just over US$58 million for the period 2005-10 for their entire programme (which includes funds for resettlement and security amongst other issues). Each 'directly affected village' will receive US$30,000 per year for this period for 'community action programmes'. This seems like a substantial sum. However, with the subtraction of staff costs of over US$20 million, the figure does not look quite so impressive. As with employment and 'demobilisation', the question remains what will happen after 2010? Will BP continue to finance social development in West Papua or will it consider its debt to have been paid off?



For many Papuans, far more serious is the question of security and the consequences of the lure of resource wealth. Papuans know that trouble tends to come fast on the heels of the arrival of money-making enterprises. The experience of Freeport-Rio Tinto has shown this clearly (see separate report) and BP has tried to anticipate some of the problems. Tangguh's Integrated Community Based Security Programme (ICBS) is intended to offset the problems of its business being shown to be too closely associated with the Indonesian police and military. BP knows that the indigenous community are deeply suspicious of the Indonesian security forces because of their involvement in human rights violations and the perception that they are outsiders and part of a system alien to their way of life. The ICBS programme is based on a system of layers of private and public security, agreed procedures and human rights training that aims to avoid the use of the military for security purposes and promote better community relations. While the intentions may be good, the pressures on this system may, in the end, prove too great.

Already there are reports of an increased military and security presence in the Bintuni Bay area. LP3BH issued a statement in November 2006 highlighting this increased presence, pointing to the construction of a new military base (Kodim) and the fear of what this may mean for the local community. According to the statement, the construction of naval facilities is also underway in the bay, and personnel from various intelligence agencies are now present in Bintuni town, as part of the local administration. The group warns: "It is very likely that these agencies will be involved in all the activities taking place in the area of the LNG Tangguh Project, directly as well as indirectly".

The NGO calls on BP to pay attention to the impact and consequences for human rights in the Bintuni Bay area of these developments and of the use of military 'security advisors' within the Tangguh project area. At the London meeting, Reverend Saud from TIAP mentioned rumours of intelligence personnel and members of the army's special forces command, Kopassus, being active in the Bintuni area and the potential problems of any increased military presence. Many Papuans believe that, rather than ensuring security and stability, these forces are a provocative and highly intimidatory presence. This process of militarisation is widely seen as self-serving, in that it perpetuates conflict and therefore strengthens the hand of those who maintain that force and a hard-line solution is the only way for Indonesia to guard its interests in the region.

As is well-documented, the murkier goings on between the military and Freeport-Rio Tinto include financial interests (see DTE 57). The Indonesian military relies on business activities for around 50 per cent of its income and often the line between legitimate and illegitimate business interests is blurred. Even putting aside the military's track record on human rights, there is a clear conflict of interest in having the power to control both the supply and demand in the business of internal security within Indonesia. Seen in this light, BP's efforts at steering clear of these pressures are commendable, but perhaps are naive or involve a certain amount of wishful thinking.


The political and human rights context

BP's security dilemma makes it appropriate to consider more closely the wider context within which the company is operating.

One political issue that is definitely impinging on BP is the controversial creation of the new province of Irian Jaya Barat (provocatively now renamed 'West Papua'). Tangguh is located in the new province. Many Papuans are opposed to the division of Papua, and believe it to be unconstitutional as it was not approved by the institutions set up under Special Autonomy provisions. Some see it as an attempt by the central government to divide and rule a region that is threatening to break away from Indonesia. Given the wealth of natural resources in Papua and revenues available to the central government, it remains unlikely that Jakarta will want to loosen its control. In its 2007 report, TIAP recommended that BP strengthens its ties with the new provincial administration in Manokwari and that more resources are directed at strengthening regional administrative structures. By following these recommendations, BP will be on dangerous ground because it will be drawn into close association with a regional and provincial government apparatus that has been initiated in controversial circumstances. Some proponents of independence for West Papua use a similar logic to argue against all of BP's dealings with the Indonesian government in West Papua, given the controversial circumstances surrounding the 1969 'Act of Free Choice' that led to West Papua's incorporation into Indonesia. By working with the Indonesian authorities, BP will become more and more involved in the ongoing political debate surrounding the status of West Papua. This latent conflict, as with all types of conflict, will eventually force those involved to take sides. If BP wants to promote a 'caring' image, it will need to show itself willing to exert its influence to ensure the system of government in West Papua is as fair as possible, even if this means arguing the case in Jakarta.

Without getting into the wider human rights picture in West Papua and widespread incidents of human rights violations (other NGOs have reported on this - for example, see Human Rights Watch's latest reports), it is enough to say that ethnic Papuans are living under a discriminatory regime. At the TIAP meeting in London, Reverend Saud said that "discrimination in Indonesia is very big". Although he stopped short of directly saying that discrimination was institutionalised, it was clear that he was articulating this concern. For West Papua and Papuans to feel some measure of control of their own futures, the issue of discrimination needs to be tackled and social mobility promoted.

The question of transparency is a good illustration of one such block to social change in Papua and therefore one of the serious challenges facing BP in its efforts to promote a clean and socially responsible image. Currently, BP and the government of Indonesia do not reveal the projected levels of revenue from the Tangguh project - this will start flowing once production starts and loans have been paid off. The figures are still only talked about in general terms: for example, BP talks about a figure of US$12 billion revenue for Indonesia over the next 25 years. Transparency International, an international NGO campaigning on this issue, has argued that there is no reason why levels of confidential and non-confidential revenue generation cannot be revealed. Papuans will have no way of knowing whether they are receiving their full entitlement to a percentage of the Tangguh income unless there is complete transparency over the revenue figures. Indonesia is not yet a signatory of the Extractive Industries Transparency Initiative (EITI) which requires greater clarity on this. (BP itself is listed as an EITI 'supporter'.) Only through the publication of revenues generated and projected revenues can all those concerned be able to judge for themselves whether the distribution of resources is fair and just.


A world-class project?

In the introduction to BP's Sustainability Report 2006, Lord Browne, then BP's Chief Executive, talked about the company "caring for genuine sustainability", holding up the example of Tangguh, where BP was "working in a remote, environmentally sensitive area and requiring the greatest of care in integrating a large-scale construction process with the life of the local community." These are fine words and demand of everyone involved the strictest monitoring and appraisal procedures. The TIAP report 2007 and its recent stakeholder meetings should also reflect these high standards, given its supposed nature as an independent advisory body. There is a sense, however, of holding back the tide. The questions from the floor at the London meeting revealed the large variety of concerns - and this is before production has begun. The meeting was boycotted by the Free West Papua Campaign, reflecting a growing sense of frustration with the project among many activists. BP has landed upon themselves some very high expectations, especially from the West Papuan indigenous community. They are looking for a solution to the ongoing sense of injustice at the hands of outsiders who for years have come to their land and subjugated it. If BP is truly looking for genuine sustainability, it must begin to recognise and deal with the political context it is working in. At present, there is little evidence of that being done.

This, perhaps, points to the key problem with Tangguh: leaving aside the arguments over environmental sustainability, it may just not be possible to develop a socially sustainable mega-project in Papua today, precisely because of the unfavourable political context, with its explosive mix of human rights violations by the security forces, discrimination against Papuans, deep frustration from a lack of significant political power, and, underlying it all, the denial of Papuans' right to self-determination.

The Jakarta government has failed to act on promises to work on a solution in Papua and real prospects for restarting the dialogue on Papua's future appear remote. Instead, Jakarta is continuing to assert its control by pressing ahead with Papua's division - with all the increased militarisation that involves.

In this context, what can BP hope to achieve - apart from the usual hefty profits for its shareholders? Yes, BP is undertaking community development and social programmes and these should have some positive effects, and yes, the potential revenues from the project will undoubtedly benefit Indonesia and make more money available for development in West Papua. But militarisation, the potential for human rights violations, continuing local resentment over the land rights, resource rights and consent, plus a wider objection to BP as collaborator with an exploitative Jakarta government remain deep concerns.

The 'Tangguh test' continues: at the TIAP meeting David Clarkson, Tangguh's project manager declared BP's intention of becoming a "world class recognized model for an enterprise of this sort" and stated that the next two years will be critical in this process. Many questions follow: who will decide, after two, five, ten years and more, how successful or otherwise BP's efforts have been? Who will decide when the real Tangguh test ends and how it is assessed? And who will bear the consequences if Tangguh fails the test?

(Sources: Up-date Tangguh, March 2007, forwarded by Perdu; 
STATEMENT BY LP3BH criticising the Situation and Human Rights Conditions in the Bintuni Bay District, translated by TAPOL, received 5/Feb/07;  
Houston Chronicle 16/6/2007;  
Times Online 10/5/2007; www.eitransparency.org/section/supporters;
notes from the London TIAP meeting, April 17th 2007;
TIAP 5th Report on Tangguh LNG project (CO2 emissions and waste products), March 2007, letter to TIAP from UK Free West Papua Campaign)