MAC: Mines and Communities

London Calling! March 2 2003

Published by MAC on 2003-03-02

London Calling! March 2 2003

Beyond BP?

Not many people know this: the world’s second biggest oil company is also a major miner. Along with Rio Tinto, it hacks that other black stuff out of Indonesia’s biggest coal mine. The Kaltim Prima project came in for a lot of stick, even before construction started in 1991. A year previously, a representative of the “Big Brit” (BP) admitted the corporate partners had “built the waste heaps from the top down” by which obscure allusion he meant they’d thrown HDP sheets on top of potentially acid-generating slag, without lining them according to best practice.

Since then Kaltim Prima has been dogged by criticisms from local people forcibly evicted from their farmland; aggrieved workers; environmentalists confronted with the project’s incursions into a national park; and Indonesian central and regional administrations which accuse the company of stalling on their commitment to sell majority control in the enterprise. (Details of these controversies can be found on this MAC web site: click on the “company” page and go to “Kaltim Prima”).

Just why BP should hang on to a coal mine when it off-loaded all its other mineral assets (to Rio Tinto) in 1989, is still something of a mystery. One theory is that Britain’s biggest company wanted to ensure a modicum of green sensibility being applied to potentially one of the most damaging of Indonesia’s new extractive projects. Another conjecture is that BP was keeping its hand in play, to be the first to benefit from Indonesia’s vast oil and gas reserves at a later date.

The first theory certainly hasn’t stood up under scrutiny; the second has. Now BP has Tangguh, the huge liquified natural gas resource in West Papua’s Bintuni bay, which has attracted enormous flak both within and outside the Indonesian-occupied territory. The company wants to show its best social and environmental face towards the thousands of villagers who will be affected - many by removal. (A BP spokesperson is on record as comparing the Tangguh project favourably with the backsliding practices employed by Rio Tinto at its Kelian gold mine, also in Indonesia).

Gathering storms

Over the past three years, BP has won the coveted “company of the year” award bestowed by fellow corporate leaders (along with some environmental groups and selected media) through the Financial Times. (See London Calling January 25th).

And this, despite the company’s complicity, while protected by armed force, in ejecting peasants from their lands in Colombia, and its risible claim to be going “beyond petroleum” by develop[ing] “alternative” energy resources”: a gambit which fell flat on its face soon after it was popped out of the PR bag.

However, last month some British environmentalists (to quote the Independent on Sunday Business for February 16) began “downgrading” their former ”most environmentally conscious oil company” in favour of Royal Dutch/Shell.

First to consider is BP’s huge Russian gamble a US$6.75 billion deal with TNK which carries with it some of the filthiest and most damaging oil wells on the planet: Stockbrokers, Dresdner Kleinwort Wasserstein, have already warned investors against a partnership “fraught with risk especially to BP’s green credentials”.

Last November, Henderson Global investors removed its BP shares from its “socially-responsible funds”, after an Alaskan well exploded in August, seriously injuring a worker and causing a spill. Within weeks a welder suffered a fatal accident at the same plant. And in January this year, the company admitted it had covered up the full extent of its derelictions of employee safety. A public summary of and internal report states, according to the Financial Times (21 January 2003), that there had been “insufficient engineering and needs analysis and inadequate assessment of potential failure of the well casting.”

Sounds just like the euphemism used by BP more than a decade ago about slag heaps at Kaltim Prima.

WWF-UK in February also promised to dump its 51,000 (sic) BP shares, on health and safety grounds . (Two other shareholders the Universities Superannuation Fund and the Methodist Church’s General Fund have been “revising” their positions).

Lighting up Candlewood

But the biggest blow may yet be dealt by a relatively obscure New York based outfit, the Candlewood Timber Group. It bought forest rights, from Pan American Energy (PAE) gas consortium, on the San Pedrito foothills of the Argentinian Andes, to market timber under the Forest Stewardship Council’s ecological accreditation label. Candlewood accuses BP as 60% owner of PAE of despoiling 70,000 aces of largely virgin forest and dumping tons of waste rock, soil and vegetation, close to company wells. Candlewood is now taking PAE to court in Delaware.

Few British-based environmental groups (the notable exception being “Down to Earth”, the campaign for ecological justice in Indonesia) have challenged their country’s most highly-visible extractive conglomerate on its exploits in Indonesia.

Or registered the fact that, when pushing its Tangguh gas play, the company is almost bound to make similar mistakes to those of the recent past.

[Sources: Nostromo Research, Minewatch Asia-Pacific,, Down To Earth, “Boys from the Blackstuff”, London, 1999; Tapol Bulletin “BP in West Papua: the Tangguh project”, Norwood, Jan/Feb 2002; “Beyond Petroleum to what, ask greens”, The Observer, London, 15/4/2001; “The Human Cost of BP in Colombia”, Colombia Solidarity Bulletin, London, No 6 April-June 2002; Financial Times, 11/2/03; Observer 16/2/2003; “BP suffer a fall from grace with WWF-UK” Financial Times, 16/2/2003; “BP gas field ‘ravaged the rainforest’” The Independent on Sunday (Business section) 16/2/2003]

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