MAC/20: Mines and Communities

Rights Groups Slam BP's Tangguh Project

Published by MAC on 2005-01-10


Rights Groups Slam BP's Tangguh Project

Laksamana.Net

January 10, 2005

A coalition of human rights groups says Anglo-American energy giant BP should scrap its multi-billion dollar liquefied natural gas (LNG) project in Tangguh, Papua province, if it fails to embrace greater transparency and improve the rights of indigenous people.

Construction of the $3 billion Tangguh facility began last year and the project is due to commence production in 2008 with initial annual output of 7 million tons of LNG from two processing trains.

BP is providing its own security for the project because it doesn't want to have to pay big protection fees to guards from the Indonesian Defense Forces (TNI).

Also mindful of its international image, BP doesn't want any soldiers based at Tangguh lest it suffer the fate of other multinationals, such as Freeport and ExxonMobil, which have been accused of complicity in human rights abuses perpetrated by their military guards.

BP has therefore recruited at least 82 guards from local villages for its Community Based Security Program and plans to hire a total of 250 over the coming years when construction work peaks.

The company says the project has also begun recruiting and training Papuan employees to operate and maintain the expected offshore production platforms.

The local government and villagers are expected to receive about $225 million in annual royalties from Tangguh.

BP holds a 37.16% stake in Tangguh, which has proven reserves of 14.4 trillion cubic feet of gas. BP's partners in the project are MI Berau BV (held by Mitsubishi Corporation and INPEX Corporation) with 16.3%; China National Offshore Oil Corporation (CNOOC) with 16.69%; Nippon Oil Exploration Berau with 12.23%; KG Companies (held by Japan National Oil Corporation, Kanematsu Corporation and Overseas Petroleum Corporation) with 10%; and LNG Japan Corporation (held by Nissho Iwai Corporation and Sumitomo Corporation) with 7.4%.

Despite BP's efforts to present a good corporate image at the Tangguh project, the non-government organizations claim the company has failed to establish rigorous and credible human rights monitoring. They also accuse the company of inadequate transparency in dealing with Indonesian authorities.

Following is the NGOs' press statement on human rights at Tangguh, and their letter of concern sent to BP chief executive Lord Browne, and US Senator George Mitchell, who chairs BP's Tangguh Independent Advisory Panel (TIAP).


BP's Human Rights Commitment and Practices in West Papua Slammed in World-wide Protest

Tapol, the Indonesia Human Rights Campaign

December 8th, 2004

"Unless BP implements a human rights policy in West Papua, embraces transparency and uses its influence in Jakarta positively, then the Tangguh natural gas project should not go ahead."

Today, Wednesday December 8th 2004, a coalition of NGOs and individuals from West Papua, Indonesia, Australia, New Zealand, the US and the UK has written to Lord Browne of Madingley, Chief Executive of BP plc, and also to US Senator George Mitchell, who chairs BP's Tangguh Independent Advisory Panel (TIAP).

The signatories to the letter, including over 300 individuals and organisations from within West Papua, especially from the area of the Tangguh Project itself, express their deep concerns over: the failure by the company to establish rigorous and credible human rights monitoring and reporting processes more than two years after such commitments were made; inadequate transparency in dealing with Indonesian authorities, and a complete failure to acknowledge the wider West Papuan political context of continuing repression in which the Tangguh Project will operate.

This letter follows long-term field monitoring, extensive contact, discussions and correspondence with both BP and the TIAP. It reflects frustration and disappointment that such engagement has not yet produced substantive results in these critical areas.

John O'Reilly, formerly Senior Vice President, BP Indonesia, 1999-2003, said: "If the Tangguh Project is to achieve its ambitions in setting world-class standards, then active and robust human rights policies in West Papua are essential if BP is not to repeat its bad experiences in Colombia. The delay in implementing such key policies is disquieting".

According to Bustar Matiar, director of the Perdu Foundation in Manokwari, West Papua, which has monitored BP's dealings with the local community since the 1990s, "BP claims to have human rights policies but they are constantly violating the rights of the local indigenous people."

In a statement released in August by the people of Soway, Wayuri & Simuna, the landowners of the site where the Tangguh natural gas project is being developed, which was sent to the Indonesian President and BP, it was made clear that ".the land on which the Tangguh project is situated remains the property of the Soway clan. We request a review of the status of this land."

"So far, the presence of the Tangguh project has only caused conflict between communities, and the social disadvantages have outweighed any advantages. We ask that all project activities on our customary lands be stopped as from the date of this statement until the problems have been fully addressed."

John Rumbiak, a leading West Papua human rights advocate and Coordinator of International Advocacy for West Papua human rights group, ELSHAM, commented:

"The presence of BP must be seen in the wider political context of West Papua. BP knows recent political developments have made West Papua a time bomb. But George Mitchell of TIAP and BP itself are ignoring the reality of the wider political context and not using their influence positively with the Jakarta government to improve the situation."

The letter says that the signatories are neither supporters nor opponents of the Tangguh project: this is a matter for decision by the local communities and the wider West Papuan society. However, the signatories assert that BP should not approve the Project until substantive progress is made on mandatory human rights commitments, on transparency and also on the requirement for the company to carefully re-examine its legitimate sphere of influence in West Papua.

Background

The Tangguh Liquified Natural Gas (LNG) Project is located in the Berau-Bintuni Bay region of Teluk Bintuni Regency in West Papua, Indonesia's easternmost territory. The project is operated by BP Indonesia, which holds a 37.16% stake in the project. The Tangguh gas fields contain 14.4 tcf of certified proved natural gas reserves. The Tangguh Project has recently won sales orders to China, Korea and the US, and markets are also being sought in Japan. The Project is awaiting formal approval from BP and its partners. Production is currently scheduled to begin in 2008.

Ever since West Papua's annexation by Indonesia in the 1960s through a fraudulent 'consultation' process, the West Papuan people have been subjected to systematic political and military repression. The removal of Suharto in 1998 led to hopes that dialogue and democratic processes would be established in West Papua and a Special Autonomy Law was enacted in 2001. However, the Law has not been implemented and has done nothing to halt continued repression in the territory by the Indonesian military.


The following letter was sent to Lord Browne of BP, and copied to Senator George Mitchell of TIAP, on December 8th 2004:

Lord Browne of Madingley
Group Chief Executive,
BP p.l.c.

Dear Lord Browne,

As individuals and organisations in West Papua and internationally who are closely following the Tangguh LNG Project in West Papua, we are writing to express our mounting concerns and to call for your immediate intervention.

We refer to the letter from BP dated November 12th in response to earlier correspondence. Our concerns are centred on:

- inadequate progress on key human rights commitments
- a worrying lack of transparency
- a failure to acknowledge the disturbing realities of the wider

West Papuan context

We believe that the company should not proceed to full project sanction until significant movement is forthcoming to address these issues. The credibility of the Tangguh Independent Advisory Panel (TIAP) as an effective instrument for 'assurance' is also at stake.

Tangguh Human Rights Issues

While we welcome BP's renewed commitment to its mandatory human rights obligations and note positively some of the proposed initiatives contained in the letter, the fact remains that these legal commitments were published two years ago as part of the Project's statutory social and environmental requirements. We emphasise, and BP well knows, that these obligations are entirely within the company's control, and are not dependent on the outcome of the current discussions with the Indonesian security forces. That so little has been achieved in this period is profoundly disturbing. We urge you to make this a critical priority: in particular, we call on the TIAP to become actively involved in ensuring BP's rigorous and rapid compliance with its commitments.

Lack of Transparency

The Tangguh project has frequently declared its intention to set new standards for operations in highly sensitive environments. Transparency and openness with stakeholders are fundamental to this objective. Yet, sadly, the reality is falling far short of expectations.

In the letter of November 12th, BP promises to provide a 'summary' of the provisions of the MoU with the Papuan police. But this MoU was signed in April, over seven months ago, and the company would have done nothing on communicating its contents until challenged by stakeholders.

And why will only a summary be issued and not the full text? What is being hidden? We note that the BTC project has just published the entire texts of its security agreements with the government of Georgia. The imperative of openness is even greater in locations as West Papua where the abuses of human rights for over 40 years by the Indonesian military have been systematic and endemic.

We are also disappointed that only a "short summary" will be produced of the forthcoming report by Gare Smith on Tangguh's human rights performance. The company seems determined to maintain a secrecy that so eroded its credibility in 2003 with its refusal to publish the original Tangguh Human Rights Impact Assessment by Messrs. Smith and Freeman.

This is hardly the way to build trust.

BP and West Papuan Political Context

The letter of November 12th contends that major destabilising events as the arbitrary division of West Papua are matters for "governments and civil society". The notion that West Papuan civil society played any part in the diktat is preposterous; and the company does itself no justice by such an extraordinary formulation.

No stakeholder is suggesting that BP should not obey the law, but we do contend that it has a responsibility to make its views known. Key components of the Tangguh Integrated Social Programmes, including the Diversified Growth Strategy, Revenue Management and indeed the security framework, have been predicated on a unified West Papua. The establishment of the so-called West Irian Jaya Province, whose status is further confused by the recent Constitutional Court ruling, has a direct impact in the Project. BP feels no compunction about raising questions of tax, environmental and regulatory policies with the Indonesian Government. Why therefore does it choose to be supine on issues whose negative consequences for West Papuans also significantly heighten the many operating risks for the company and its shareholders?

Specifically, the division of West Papua will mean that Tangguh Revenues will now flow largely to West Irian Jaya and not to Papua Province as a whole, thus exacerbating the potential for horizontal conflict and economic inequity. However, there is currently a state of complete confusion as to the relative distribution of revenue between the two provinces, as the 2001 Special Autonomy Law, which was supposed to cover such matters, was passed assuming there would only be one province, Papua, and Special Autonomy has in any case yet to be implemented.

There is also the alarming possibility that new TNI and other security structures could be established that will reinforce political intimidation and longstanding military corruption and violence, (such as occurred in April this year [2004] a mere 20km along the Bay from the project base when the TNI attacked Meryadi Village, Vorwata District, killing four Papuan civilians -- as reported in the Stakeholders' Update in May, and is also taking place at this very moment in the Puncak Jaya region of the central highlands).

These are matters that affect BP directly and in so doing they also have fundamental human rights implications for those communities whom the Tangguh Project most affects. In these circumstances, we assert that BP must carefully re-examine its legitimate sphere of influence in West Papua. It has a moral and commercial obligation to do so.

Conclusion

We are neither supporters nor opponents of the Tangguh Project. The local communities in Bintuni Bay and broader civil society in West Papua should be the ultimate arbiters though we doubt that this is possible in a continuing climate of oppression, notwithstanding the dedication and commitment of Tangguh's field team of young West Papuans and others.

But they and other stakeholders are entitled that corporate human rights commitments made will be commitments honoured in full and in a timely manner. At present, this is not happening to anything like an acceptable extent in the areas we have identified. We ask that BP and the TIAP give the highest priority to rectification.

Yours sincerely,

Carmel Budiardjo,
[on behalf of over 300 signatories]

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