Protests upset Kalimantan oil firms

JAKARTA (JP): Protests against oil and gas operations in East Kalimantan could escalate if gas company Vico Indonesia Ltd fails to settle its dispute with locals, a senior official at state oil and gas company Pertamina said on Saturday.

Spokesman of Pertamina's Foreign Contractors Management Body (BPPKA) A. Sidick Nitikusuma identified gas companies Unocal Indonesia and Total Indonesie as vulnerable to demonstrations.

Local residents have rallied against Vico for several weeks, demanding the company pay compensation for damage they accuse it of causing to their farms. The residents have blocked the access road to Vico's Serambah production plant in Kutai regency.

"The blockading activities may spread to other companies," Sidick said.

Vico, Unocal and Total are Pertamina production sharing contractors that deliver gas to the Bontang liquefied natural gas (LNG) plant in East Kalimantan.

Sidick said that if Vico failed to negotiate an end to the blockade, it might encourage other locals to occupy the gas fields of Unocal and Total to make similar demands.

The dispute between the locals and Vico centers around claims the company's production activities affected the fields of local farmers.

Locals filed the claim in 1998, demanding compensation of Rp 86 billion (US$10 million) for losses since Vico began operating in 1991, Sidick said.

Negotiations led to a reduction of the amount to Rp 7 billion.

He said Vico accepted the reduced demand, but talks were still under way concerning the terms of payment.

The locals, he said, demanded the money be paid in cash.

Vico wished to compensate the farmers through community development programs.

Sidick said that a compromise agreement could entail partial payment in cash and community development programs.

Vico's gas production activities continued as normal, he added.

He warned that environmental concerns and land compensation demands were possible triggers for demonstrations at other gas companies.

"The trend is that locals quickly resort to using the masses in pressuring companies," Sidick said.

Vico is not the only company in East Kalimantan to experience pressure from the public.

Gold mining company PT Kelian Equatorial Mining stopped operating since last Month after locals blocked the only supply road leading to its mine in the West Kutai regency.

Disputes between mining companies and locals have been on the rise since president Soeharto's resignation in 1998.

Sidick said disputes in the past usually did not involve mass groups of people and companies would hold talks with local representatives to find solutions.

He said the tendency for people to resort to mass actions was evidence they suppressed their demands for many years.

"They're impatient now," he said.

Meanwhile, Minister of Mines and Energy Susilo Bambang Yudhoyono said the central government would not intervene in the dispute.

He expected the provincial administration of East Kalimantan would facilitate talks between the two parties.

"But don't let there be any pressure while negotiations are still under way," he told reporters last week.

He believed the dispute would not affect the general investment climate as long as negotiations took place. (bkm)