Global Policy Forum

By Prangtip Daorueng

Indonesia's bid to supply China with liquified natural gas from West Papua province promises to be among the biggest money earners for this cash-strapped country, but it excites few in the impoverished area.

In fact, distrust and fear is the reaction of many in resource-rich West Papua, which lies at the eastern end of the Indonesian archipelago.

In late April, Indonesia submitted its final tender to Chinese government to win the $2 billion contract for natural gas production in West Papua's Bintuni Bay, a project between the world's third largest oil group, Britain's BP PLC, and Indonesia's state-owned oil and gas company Pertamina.

A number of high-ranking Indonesian officials, including President Megawati Sukarnoputri, have been to China and assured Beijing that the Jakarta supports the so-called Tangguh LNG project. Exploration has shown that the supply of liquified gas in the bay could last 15 to 20 years, with an annual supply of up to 3 million tons. Plant construction by BP is to be completed by 2006.

This project would bring huge income to the central Indonesian government, adding to the $3 billion sent to Jakarta annually from the provinces.

But many West Papuans feel that real benefit from the project is likely to go, as in the past, to Jakarta instead of their province, which remains among the poorest although it is home to a lot of multinational investments.

"No investments in Papua are for us Papuans. All the dollars go to the pocket of people in the government, not us. The only thing we have in return is violence," says a Papuan student in Jakarta, referring to military efforts to quell a long-running separatist campaign.

Indeed, many activists have security and environmental fears about the natural gas project, given bitter experiences with past foreign investments drawn to the island of New Guinea, the western half of which is West Papua that has one of the largest tracts of tropical rainforest left in the world.

West Papua's forests cover some 24 percent of Indonesia's total forested area. The province has huge supplies of oil, gas and copper underground and under the sea.

"This BP project has a high risk of repeating what Freeport has been doing," says Nur Hidaryati, mining campaigner of Jakarta-based NGO Indonesian Forum for Environment (WALHI). "BP has made a lot of promises. Freeport did the same thing but they never come true," she adds.

She was referring to the large copper mining project of the U.S.-based Freeport McMoRan Copper & Gold Inc, which began in West Papua in the sixties.

Rights activists have long alleged that the firm has moral responsibility for several cases of kidnapping and murders of locals by the military guards hired to protect the operation areas. The firm, the biggest taxpayer in Indonesia, denies these charges.

BP has announced its intention to involve the community in its security measures to avoid the same problem as Freeport, but critics say this is realistic.

In its report, the British-based environmental group Down to Earth expresses doubt about this, saying that company protection has long generated lucrative income for the Indonesian military, so it is difficult to stop its involvement.

It also questions the record of BP's main partner Pertamina, which is in partnership with American gas and oil company Exxon Mobil in restive Aceh province.

There, conflicts between the Acehnese community and Exxon Mobil emerged partly because Indonesian troops paid to guard the installations committed rights abuses, many of them recorded and published by rights groups.

Last year, Exxon Mobil had to suspend operations at the Arun gas site for four days due to attacks allegedly by the separatist Free Aceh Movement (GAM).

Since the security arrangements will depend on external factors outside company control, it will be difficult for BP to keep its promise to involve the community in its work, the Down to Earth report says.

So far, BP has hired military and security advisors to work on a "community-based security" program that will prevent future confrontations between soldiers and armed rebels in West Papua.

"There is great concern that the Indonesian military will initiate conflict in nearby areas in order to justify the need for a strong security presence at the site," the report says. "Villagers have expressed fear about the military in various meetings with BP staff," it points out.

A human rights activist in Irian Jaya says BP is unlikely to be able completely prevent the military from taking part in the project: "When it comes to operations on the ground of both the corporations and the military, information is always sealed from the outside world."

Troop presence can be seen in every level of business in West Papua. For example, most logging companies, many with military links, have notorious reputations for using force against locals. Troops are now paid to guard several logging operations, including sawmills, throughout the province.

Tensions could also rise if more logging interests go to Papua, especially now that the forests in Kalimantan are in decline. According to the Jakarta-based Tempo magazine, no less than 50 companies operate and collectively control 11.8 million hectares of forest in West Papua, while the equivalent figure in Kalimantan is 10 million hectares.

Environmentalists are also wrried that like the Freeport project, the BP undertaking would displace tribal people from their traditional land. Around 500 villagers living around Bintuni Bay BP's project will be moved from their homes in Tanah Merah to a newly created village 3.5 km to the west.

"We fear local conflict from the moving as well," says Hidaryati. "As we know, Papuans live on tribal customary laws in which traditional territory is taken seriously. If a tribal group is moved to the territory of another, there is tendency to conflict between the two."

"But when the government creates a development project, they just look at the map but forgets that there are people living there too," she explains, adding that more consultation by BP with the locals could help.

Already, frustration among villagers is rising because they have not even been told about when are moving, the mining network Jatam stated. Compensation for their land, based on a 1997 survey of land prices by local government, would be as low as .001 to .003 cents per square meter.

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