BBC World News, Wednesday, 12 March, 2003, 00:11 GMT
Oil giant gets Indonesia warning
By Manuela Saragosa
BBC Business reporter
[Photo: Papuans distrust army guards at Freeport mine]
Energy firm BP has been warned against relying on Indonesia's military as it develops
a huge new gas field in a remote, poor area of West Papua province.
The recommendation comes from a panel of advisors whom BP asked - and paid - for
independent external guidance on its Tangguh liquefied natural gas (LNG) project.
Tangguh has the potential to become one of the world's premier LNG facilities and
could sustain Indonesia's position as the world's largest LNG exporter.
The Tangguh Independent Advisory Panel (TIAP) of four internationally respected
figures consulted local villagers, Indonesian government officials and non-governmental
organisations (NGOs) in London and Indonesia.
A model to avoid
BP is keen to avoid walking in the footsteps of New Orleans-based Freeport
McMoRan, which has been operating the world's richest gold and copper mine in
Papua since the 1970s.
Freeport relies on the Indonesian military for security services, although troops are
also fighting separatist rebels in the region.
The company has been regularly criticised by human rights activists and
environmentalists.
Tangguh promises to be the most significant investment in West Papua since the
opening of the Freeport mine there.
'Distrust and fear'
TIAP's report said security at Tangguh would be "the most difficult and sensitive issue
for BP".
"Distrust and fear of the military are present in Papua. It's caused by the experience
of Freeport, where many Papuans were treated inhumanely. NGOs are worried that a
big project like this will be accompanied by a big military presence," said Papuan
Reverend Herman Saud, one of the advisors on the BP Tangguh panel.
[Photo: BP wants to avoid attracting local anger]
But at a presentation of its findings to NGOs and journalists, the panel was also keen
to stress that almost everyone they spoke to was overwhelmingly in favour of the
project.
"The concern is more about how the project will be handled," said ex-US Senator
George Mitchell, who advised the UK government on the Northern Ireland peace
process.
Mr Mitchell, who chairs TIAP, added that many Papuans and NGOs had welcomed
BP's consultative process.
Mr Mitchell said the panel supported BP's idea of developing community-based
security.
This would involve enlisting Papuans for basic perimeter security of the project.
The police would only be called on for major internal disturbances and the army only
for the most serious threats.
Corruption
The report conceded that "many believe this concept (of community-based security) is
unrealistic and that the (Indonesian army) will insist on protecting this vital national
asset at close range".
[Photo: Locals want to be consulted about policing]
Many Indonesian military officials make money by protecting businesses, it said.
BP has pledged to "engage in high level consultations with senior political, military
and police officials" to try to sort out security issues "before a final decision is
made..to go forward with the project."
BP added that it would resist demands by the army or the police for direct funding.
The panel also advised BP "not to assume the roles of a local government, or to be
perceived as such, as Freeport has done (at its West Papua mine) in Timika."
The Tangguh project is located in the Bintuni Bay region of the Bird's Head area of
Papua.
[Photo: West Papua is remote and poor]
It's a large, pristine bay with perhaps the world's largest mangrove forest and what is
considered one of its most varied marine ecosystems.
The communities around the bay are small, isolated villages of up to100 families.
They "live in primitive wooden houses with thatched or corrugated metal roofs and
outdoor cooking and toilet facilities," the TIAP report notes.
Most depend on shrimp farming, using dugout canoes rather than outboard motors.
But expectations of the wealth the project is likely to bring to the area are already
running high.
Hopes of wealth
Construction of the project has not yet started; BP's presence in the area amounts to
no more than a base camp site. But the panel said the company already faced a
"series of escalating requests, bordering on demands."
"For example, the decision to provide new housing to the villagers from Tanah Merah,
which must be physically moved, has led to parallel demands by villagers from the
north shore (of the bay)," the report says.
Impatience with the project could be problematic. Exports from the field are slated to
start in 2006 but the Tangguh project is not due to start generating revenues for the
provincial government in West Papua for another decade or so.
Furthermore, the project could be delayed if the necessary sales contracts for
Tangguh's gas fail to materialise.
BP said it intends to deal with these issues by continuing to invest in local education
and health development projects, and to work with donor agencies such as the United
Nations Development Programme to build up more robust local governance capacity.
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