1 Sarah Rennie Australian Sidoarjo Assistance Project Students Union Building Australian National University [email protected]Mr Stephen Gerlach Chairman Santos Ltd 60 Flinders Street Adelaide, South Australia 5001 15/4/2008 Dear Mr Gerlach, Re: Sidoarjo Mud-flow Disaster I write on behalf of the Australian Sidoarjo Assistance Project (ASAP), an organization formed in response to the Sidoarjo mudflow disaster. The reason for this correspondence arises from our deep concern over the continuing impact of the East Java mud flow on the communities of Sidoarjo. According to Santos's company literature, one of its goals in East Indonesia has been to “improve the quality of life of local people through initiatives that boost health, education and incomes.” We are concerned that Santos's response to the East Java mud-flow disaster appears to fall far short of this commitment. ASAP will be holding a public forum on the 29 th of April 2008, at the Australian National University to discuss the Sidoarjo Mud Flow disaster and what appropriate steps the Australian community should take in addressing this issue. The forum will be attended by International environmental, human rights and corporate law practitioners, academics and delegates from national and international environmental advocacy bodies. The purpose of this forum is not to engage in an attack on Santos's corporate image or demand that Santos ceases exploration activities in countries like Indonesia. Instead, we hope to achieve equitable solutions for the victims of the mud-flow disaster, which involve Santos and take its interests into account.
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Sarah Rennie Australian Sidoarjo Assistance Project
Students Union Building Australian National University
[email protected] Mr Stephen Gerlach Chairman Santos Ltd 60 Flinders Street Adelaide, South Australia 5001
15/4/2008
Dear Mr Gerlach,
Re: Sidoarjo Mud-flow Disaster
I write on behalf of the Australian Sidoarjo Assistance Project (ASAP), an organization formed
in response to the Sidoarjo mudflow disaster. The reason for this correspondence arises from
our deep concern over the continuing impact of the East Java mud flow on the communities of
Sidoarjo.
According to Santos's company literature, one of its goals in East Indonesia has been to
“improve the quality of life of local people through initiatives that boost health, education and
incomes.” We are concerned that Santos's response to the East Java mud-flow disaster
appears to fall far short of this commitment.
ASAP will be holding a public forum on the 29th of April 2008, at the Australian National
University to discuss the Sidoarjo Mud Flow disaster and what appropriate steps the Australian
community should take in addressing this issue. The forum will be attended by International
environmental, human rights and corporate law practitioners, academics and delegates from
national and international environmental advocacy bodies.
The purpose of this forum is not to engage in an attack on Santos's corporate image or
demand that Santos ceases exploration activities in countries like Indonesia. Instead, we
hope to achieve equitable solutions for the victims of the mud-flow disaster, which involve
Santos and take its interests into account.
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We feel that it is not too late for Santos, if necessary, to redress its approach to the mud-flow
disaster. In fact this represents an opportunity for Santos to demonstrate that Australian
corporations can act as business leaders in South East Asia, setting an example of ethical and
responsible corporate behaviour.
We have produced a statement of the facts surrounding the Sidoarjo incident including the
response taken by Santos. In addition to this statement we have outlined the impacts of this
disaster for those people living in the areas surrounding the site and what responsibilities fall
on Santos in this respect. This information has been compiled based on publicly available
resources from Australia and Indonesia.
We request that Santos:
1. Reviews our statement of facts to ensure that we have not made any
misrepresentations about the company or its activities
2. Demonstrates how it seeks to redress the difficulties faced by the residents of Sidoarjo
adversely affected by the mud-flow, and
3. Responds to the suggestions that we have put forward.
We request that you respond to the concerns and the proposals set out in this letter before the
29th of April, 2008, the date of the public forum.
We hope that Santos recognises that our common concern is not in the attribution of blame
but rather in alleviating the suffering of the Sidoarjo people. We keenly await your response
on the above issues and proposal and look forward to working in collaboration with you on this
matter in the future. Your time is greatly appreciated.
Yours sincerely,
Sarah Rennie
Australian Sidoarjo Assistance Project
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Statement of facts:
We invite Santos to affirm or clarify the facts in the following brief account of the Banjar Panji-1
incident and subsequent developments.
The mud-flow begun on the 28th of May, 2006 when a gas explosion occurred at the Banjar
Panji-1 exploration well in conjunction with drilling activities in the Brantas Production Sharing
Contract area of Sidoarjo. The explosion has caused huge quantities of mud to flow from the
earth at rates of approximately 150,000m3 a day.1
The company operating the drilling activities was Lapindo Brantas, a subsidiary of Energi
Mega Persada. Santos has an 18% non operative share in the venture, the other owners
being Energi Mega Persada (Indonesia): 50%, Medco Energi (Indonesia): 32%. While Santos
was not directly involved in the day to day operations, Lapindo Brantas has stated that Santos
was consulted by them about all drilling procedures and received frequent reports on progress
in the field. Lapindo Brantas has also reported that Santos had at least one of their officers on
the ground.2
There has been dispute as to whether the drilling activities of Lapindo Brantas caused the
explosion and subsequent mud-flow. On one hand, Lapindo Brantas has claimed that the
mud-flow was a natural disaster. On the other hand, there has been a high degree of
consensus between scientific observers that the explosion occurred as a consequence of PT
Lapindo Brantas’s failure to install a casing around the well to the levels required under
Indonesian mining regulations.3 The mud started seeping into the well at a depth of
approximately 1,800 metres and cement plugs were inserted to stop it. This led to the
pressurized mud forcing its way to the surface approximately 180m from the well. The first and
largest of the breakthrough mud-flows erupted 200m southwest of the well. Today, almost two
years later, this mud continues to flow. A second and then a third mud-flow appeared in the
following days to the northeast, but these were reported to have stopped flowing by June
2006.
1 Mud Volcano In Java May Continue To Erupt For Months And Possibly Years. Science Daily (Jan 24 2007).
2 Energi calls on partners to share in mud costs, Andi Haswidi, The Jakarta Post, Jakarta, 1 February 2007.
3 Richard J. Davies, Richard E. Swarbrick, Robert J. Evans and Mads Huuse (February 2007). “Birth of a mud volcano: East Java, 29 May
2006". GSA Today 17 (2).
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East Java police initially carried out investigations. They claimed that they would press
charges against 13 individuals. However in March 2007, East Java Police chief Ins. Gen.
Herman S. Sumawiredja said the police would not carry out investigation against PT Lapindo
Brantas and all investigations have since been dropped. Official findings from the
investigations have not been released.
A civil action was filed by Indonesian environmental NGO Walhi against PT Lapindo Brantas,
Medco, Santos, the Indonesian president and several ministers. However in December 2007
the South Jakarta District court held that there was inadequate evidence to demonstrate that
the mud-flow was a man made disaster. Walhi has filed an appeal against this decision. In
the meantime no civil or criminal liability has been established against Lapindo Brantas.
Impacts for residents surrounding the site:
Eleven villages, extensive farmlands, several businesses, thirty factories and thirty three
schools have been destroyed by the mud-flow. The disaster has resulted in displacement of
entire villages and a serious unemployment problem. According to average estimations,
15,000 residents have been displaced; however other independent observers have cited
figures up to 50,000.4 Some of these residents have relocated with relatives; others have
found temporary rental accommodation and over two thousand live as refugees at the local
market place Pasar Porong. Those who shelter at Pasar Porong live under cramped
conditions in makeshift tents and vacant stalls.5 As well as physical hardships from the loss of
homes, jobs and community, many also suffer psychological health issues from the trauma of
the mud-flow.6
Some broader Impacts
It has been predicted that if the mud-flow is allowed to continue it will cover at least 10 km2 and
result in the permanent displacement of thousands more Sidoarjo residents.7 Local
infrastructure has been significantly damaged, including toll roads, power transmission
systems, gas pipelines and arterial roads. Further surrounding villages are vulnerable to
severe flooding as happened in January of this year when one of the containment walls
collapsed. The high salinity, high levels of H2S as well as metals, hydrocarbons and ammonia
place environmental and economic risk on the entire region, which is a major food producing
4 Bonner R (2006-10-06). New Indonesia Calamity: A Man-Made Mud Bath. New York Times.
5 Rennie S (2008-20-03), ‘Voices from the muddy void: Living with the Lapindo Disaster, Inside Indonesia,http://www.insideindonesia.org/
Direct Discharge of Sidoarjo, Mud to the Ocean? Overview of Risk Factors Associated with Disposal of Sidoarjo Mud at Sea,
September 8 2006.
15 Rennie S (2008-20-03), ‘Voices from the muddy void: Living with the Lapindo Disaster, Inside Indonesia, http://www.insideindonesia.org/ (retrieved 31/3/2008).
16 Ibid.
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with safe drinking water and do not have access to adequate medical services. They do not
receive an allowance for food or clothing but did receive meal packages from the Lapindo
funded Centre for Food Aid. However these food packages were intended for consumption
under emergency situations and as of March 2008 the provision came to an end leaving many
disaster victims hungry.17 Most of the benefits that Pasar Porong residents have received have
come via private donors and non-government organizations. Yet few in the wider community
believe that the mud-flow was a natural disaster. Rather they believe that Lapindo Brantas was
responsible and should provide assistance accordingly. Because of this, donations to mud-
flow victims have not been forthcoming. This is in contrast to the victims of other disasters who
often receive international assistance, which puts the mud-flow victims in a very difficult
situation.
Suggestions for improvement:
We appreciate that Santos has been forthcoming in providing some support to the government
bodies responsible for managing the disaster. However, given the degree of mismanagement
by these relevant bodies, Santos can not reasonably claim that it has fulfilled its
responsibilities with respect to the communities of Sidoarjo. We assert that these
responsibilities exist regardless of legal determinations.
In the next decade, Santos aspires to become one of the leading energy corporations
operating in South East Asia. Through its size and reputation as a high-performing energy
corporation Santos has won the right to exploration of natural resources throughout East
Indonesia. These rights, however, should entail certain responsibilities. An Australian
company operating in the third world should be adopting at least as high an ethical standard
as it would at home. Santos acknowledges these moral responsibilities in its publications
claiming that Santos works to embrace a citizenship role in the communities to which it
belongs. Santos also prides itself as a company which seeks to engage and consult with the
community and states environmental and community sustainability as one of its underlying
values.
Upholding moral ethics requires a certain level of alertness and vigilance. As such Santos
must not be ignorant of the countries in which it carries out its operations. Indonesia is a
nation riddled with corruption, one of the lowest performers on the Transparency International
17 Rohman Taufiq , ‘Lapindo Victims are Starving’ TEMPO Interactive, Jakarta, Tuesday, 04 March, 2008.