Nemu dari milis tetangga...
- - - - -
The Australian
Saturday, July 1, 2006
Well of discontent for Santos as mud sticks
Santos and its Indonesian partners fear
an angry backlash, says Nigel Wilson
SURABAYA is Indonesia's second-largest city with 3 million people
supporting
a hive of commercial activity.
It is also the capital of East Java and the focus of exploration
because its
gas distribution system provides a ready market for discoveries.
In the past month, that exploration activity has attracted intense
criticism
in Indonesia because of an incident involving the Banjar Pangi-1
well in which
Santos has an 18 per cent interest.
The well is being drilled 38km southwest of Surabaya in what is
known as the
Brantas Production Sharing Contract.
Sulphurous mud and water have been rising to the surface from cracks
in the
ground near the well, burying surrounding paddy fields as well as
three
villages, Siring, Renokenongo and Jatirejo, and the Surabaya-Malang
toll road.
Communities have been forced to move. The incident was so dramatic
that it was
bought to the personal attention of Indonesian President Susilo
Bambang
Yudhoyono.
Residents told reporters they were shocked to find the entrances and
ground
near their houses covered by what looked like a smooth, gray paste
of
concrete.
A number of businesses, including the ubiquitous rattan furniture
factories,
have closed and as far away as Jakarta there are allegations of
impropriety
involving Santos's Indonesian partners.
The knives are out, particularly after the operator offered the
equivalent of
$22
in compensation to help cover the costs of displaced families. What
happened?
At this stage no one really knows.
An international group of experts is investigating the cause of the
venting
and expects to report to the joint venture in the next week.
What is known is that at 5.54am on Saturday, May 27, a major
earthquake
rocked Central Java. Subsequently, on May 28, rig operators at the
Banjar
Panji-1 well noticed a kick in the rig string and moved to shut the
well
down.
It may be they weren't fast enough in pouring in cement to case the
well.
But whether the well, and the way it was handled, was the cause of
the gas
and mud venting to the surface on the following day, has not been
established.
The Indonesian media has alleged negligence on the part of the
operator,
Lapindo Brantas.
Australian companies have been active in the Surabaya area for more
than
a decade. In 2002, Novus Petroleum announced it had made a gas
discovery
in the Brantas PSC with its 50-50 joint venture partner, Lapindo
Brantas, a
unit of Indonesian publicly listed oil and gas company Energi Mega
Persada.
Lapindo Brantas has a 50 per cent stake in the Banjar Panji-1 well,
with
32 per cent owned by Indonesia's biggest listed E&P group, Medco
Energi,
and the remainder by Santos.
The interest for Australia is that the Brantas PSC was the focus of
Australian company Novus Petroleum, which in 2004 was taken over by
Medco Energi
after a long-running battle.
At one stage, Santos joined with Novus's management in an
unsuccessful
attempt to head off the takeover.
Santos has been in Indonesia since 1993 and has had success in
finding
gas for use in Surabaya.
As part of the Novus washup, Santos secured 36 per cent of Novus's
Indonesian interests, including those in the Brantas PSC.
Santos reported to the stock exchange this week it had been told by
Lapindo Brantas that "a well control incident" occurred on May 29 at
Banjar Panji-1.
Santos said a flow of mud and water had affected a number of nearby
villages, businesses and roadways near Surabaya, but that it was
insured.
The Indonesia media has reported Medco Energi as accusing Lapindo
Brantas of being "grossly negligent" in failing to implement prudent
operating measures.
"Based on our technical review with respect to the current Banjar
Panji-1
drilling incident, we consider Lapindo as the operator of PSC
Brantas Block
has committed a gross negligence," Medco was reported to have said
in a
letter to Lapindo.
While Santos is not involved in operating the well, the company is
clearly
concerned at the level of adverse comment in Indonesia and - with
the benefit
of experience from its own incident at the Moomba Gas plant on New
Year's
Day 2004 - it is keen to get to the bottom of the Banjar Panji-1
problem
---------------------------------
Want to be your own boss? Learn how on Yahoo! Small Business.
