A visit to BP's Tangguh project, West Papua

Down to Earth No 55  November 2002

This report is by Katie Wilson, president of the Oxford West Papua Friendship Society, who visited Bintuni Bay earlier this year with an expedition from Oxford University.

BP's Tangguh liquid natural gas project in West Papua will make BP Indonesia's largest single foreign investor. It will also profoundly affect the environment and social structure of Bintuni Bay, one of West Papua's most remote and undeveloped regions. When I travelled to the project site this summer with a group of students from Oxford University it was still little more than a cluster of Western-style buildings tucked against rainforest and mangroves, a sharp contrast to the surrounding indigenous coastal villages built on stilts. Construction is set to begin next year and BP's processing plant is expected to be functioning by 2006, eventually exporting 7 million tons of LNG each year and up to four times this amount if expansion plans go ahead. Some of the gas will go to a receiving terminal owned by China National Offshore Oil Corp (CNOOC).

BP has spent the last two years engaged in consultations with local communities and is portraying the project as a model of corporate responsibility. But we found evidence of profound difficulties. First, the practical problem of legitimate representation: discussion with a trans-national corporation that appears uninvited to extract wealth from the land beneath your feet is not something with which the tribes around the bay have much experience. Negotiations with the affected communities have been fraught with corruption, as unrepresentative village heads and other intermediaries have siphoned off money intended for development. BP is aware of this problem. The company now avoids cash handouts, instead using a development scheme whereby a village decides on a project and draws up a proposal, which BP must then approve and monitor. While the motivation for alternative strategies like this is clear, the resulting situation is disturbingly paternalistic and accentuates the power imbalance inherent in every aspect of the project.

The villagers we spoke with were hesitantly optimistic about the Tangguh project, but had deep worries. Despite BP's stated commitment to transparency, villagers in Saengga, close to the LNG site, expressed frustration that BP will not provide evidence or legally binding agreements to back their claims that nothing will go wrong. They worried about losing their traditional coastal rights, and feared the environmental impacts of the project on the fish and shrimp populations in the bay. BP insists that the environmental footprint will be insignificant but then offers only vague assurances that, in the event of extensive damage, the company will set up 'programs' for those who can no longer make a living.

BP expects blind trust on the part of the people. Negotiation takes place in the language of Western contracts, but without the backing of Western law. According to an August 6th agreement between BP and Saengga village: "BP agrees to consider input from the community on issues that might have direct negative impact but ultimately retains the right to operate its business within the laws and regulations of the Government of the Republic of Indonesia."

But Tangguh's impacts extend beyond Bintuni Bay. In West Papua, where a popular independence movement challenges Indonesia's right to control over West Papua's rich natural resources, and a corrupt and brutal military considers private security contracts with companies like BP its right, no project is isolated. BP has so far tried to resist the Indonesian military's advances, instead 'promoting the concept of community-based security'. But this isolation may already be a fiction. Papuan human rights investigators maintain that the killing of five members of the police mobile brigade in Wasior last spring, which coincided with the British Ambassador's visit to the BP base camp, was incited by elements in the military hoping to use this manufactured instability to secure the desired contract with BP. This incident precipitated a violent and ongoing operation in Wasior district in which Papuans have been tortured and extra judicially executed, villages have been burned, and hundreds of refugees have fled to nearby cities. Regardless of intentions, responsible development in West Papua is a difficult prospect.


Tangguh update

Environmental impact assessment: The EIA for the Tangguh LNG project, due to start construction next year, has now been approved by Jakarta. As a condition of the approval, BP has agreed to further investigate how to minimise the level of carbon dioxide emissions from the plant.

Resettlement of Tanah Merah village: The move to a new site for villagers affected by the project is now scheduled for the first half of next year (2003) and will take around a month. An agreement signed by Tanah Merah community representatives and BP in August states that BP will process certificated land title for eligible villagers who move to Tanah Merah Baru.

Compensation issues: In August, BP signed an MoU with Saengga villagers (who protested in May 2002 - see DTE 53/54). This includes US$ 750,000 in a trust fund for the Wayuri, Sowai and Simuna clans in recognition of "the need to resolve any issues relating to compensation". Local NGOs have been critical of the way in which BP secured this agreement.

LNG contract: In August 2002, BP/Pertamina failed to win the CNOOC gas sales contract for a terminal in Guangdong, worth around US$13 billion, but was offered instead an US$ 8 billion contract to supply 2.6 million tonnes of LNG over 25 years to a terminal in Fujian province, starting 2006/7. CNOOC is planning to pay BP $275 million for a 12.5% stake in Tangguh.

Human rights / security: Despite increased military determination to secure 'vital projects', BP says it remains committed to community-based security at the project. The report of a human rights impact assessment, carried out earlier this year, has not yet been made public.

(Source: Bloomberg 27/Sep/02; AFX-Asia 25/Oct/02; Update: Tangguh Project and Integrated Social Strategy, Sep/2002)