Protests upset Kalimantan oil firms

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)