Sarah Rennie
                                                           Australian Sidoarjo Assistance Project
           ...
We feel that it is not too late for Santos, if necessary, to redress its approach to the mud-flow
disaster. In fact this r...
Statement of facts:

We invite Santos to affirm or clarify the facts in the following brief account of the Banjar Panji-1
...
East Java police initially carried out investigations. They claimed that they would press
charges against 13 individuals. ...
area.8 The impact of dumping unprocessed sludge into the sea threatens to devastate fish
stocks in Sidoarjo and surroundin...
Santos’ Response and suggestions for improvement

Response to date

Santos has given assurances that it would pay its shar...
Assessment report, they are not a long term solution.12 This is because the walls are unstable
and pose significant danger...
with safe drinking water and do not have access to adequate medical services. They do not
receive an allowance for food or...
corruption perception index.18 Not only government institutions but also the judiciary have
been found to be plagued with ...
From: Eames, Martyn <Martyn.Eames@santos.com>
To: Australian Sidoarjo Assistance Project ASAP <helpsidoarjo@gmail.com>

Da...
A S A P  Santos  Correspondence
A S A P  Santos  Correspondence
A S A P  Santos  Correspondence
A S A P  Santos  Correspondence
A S A P  Santos  Correspondence
A S A P  Santos  Correspondence
A S A P  Santos  Correspondence
A S A P  Santos  Correspondence
A S A P  Santos  Correspondence
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A S A P Santos Correspondence

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Correspondance between ASAP and Santos continued for over 12 months. Over this time Santos initially showed some willingness in negotiating with ASAP to find a more significant way for Santos to contribute to recovery in Sidoarjo (December 2008 meeting with Christian Bennett). ASAP encouraged Santos to engage with local community groups and NGOs. However as the media hype surrounding the Sidoarjo mud-flow wore off so too did Santos' interest in providing much assistance to the Sidoarjo community. In 2009 ASAP was unable to get any written response from Santos on the Sidoarjo issue or on the Mobile Health Clinic Proposal that ASAP presented to Santos along with the assistance of Indonesian based Gaia Foundation.

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A S A P Santos Correspondence

  1. 1. Sarah Rennie Australian Sidoarjo Assistance Project Students Union Building Australian National University helpsidoarjo@gmail.com 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. 1
  2. 2. 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 2
  3. 3. 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). 3
  4. 4. 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/ (retrieved 31/3/2008). 6 Ibid. 7 http://www.sciencedaily.com/releases/2007/01/070123181953.htm 4
  5. 5. area.8 The impact of dumping unprocessed sludge into the sea threatens to devastate fish stocks in Sidoarjo and surrounding coastal districts.9 8 John McLachlan-Karr (2006-10-09), Sidoarjo Mud Emergency Response Consultant Report: An Ecological Engineering Approach. http://www.un.or.id/upload/lib/Consultant%20report%20-%20Ecological%20Engineering%20Approach%20-%20JM%20Karr.pdf. 9 Adnan Awad UNDP & Consultant – Marine Environment Affairs Ministry of Environment: Direct Discharge of Sidoarjo, Mud to the Ocean? Overview of Risk Factors Associated with Disposal of Sidoarjo Mud at Sea, September 8 2006. 5
  6. 6. Santos’ Response and suggestions for improvement Response to date Santos has given assurances that it would pay its share of the clean-up and compensation when a settlement to the Indonesian law suit was reached.10 Santos has met the Brantas PSC cash call of approximately US$28.5 million. It appears Brantas PSC has used such funds to support the National Mud-flow Mitigation Team which was established by the Indonesian Government, although precise contributions made by Brantas PSC remain undisclosed. Santos has made a further provision of US $79 million to deal with the Mud-flow incident. It appears these funds have been set aside for the possibility of future litigation rather than to provide the Sidoarjo community any immediate assistance. Aside from providing a financial contribution to the National Mud-flow Mitigation Team we have no information that Santos has carried out any independent assessment of the disaster's impact or established any independent relief efforts. From the community groups we have engaged with, Santos has not conducted any direct consultation or engagement with affected communities. Nor, to our knowledge, has it conducted an independent environmental impact report. Further, there is no evidence to suggest that Santos has played a participatory role in either devising or reviewing the measures taken by the National Mudflow Mitigation Team. We seek clarification on all these statements. Therefore, it appears that Santos' sole contribution has been the indirect provision of funding to the projects of the National Mudflow Mitigation Team. It is then appropriate that we assess Santos' response to the mud-flow disaster by evaluating the measures taken by the National Mudflow Mitigation Team. The solutions put forward by National Mudflow Mitigation Team have proved unsuccessful in stemming the mud flow. Moreover, according to media reports these measures have often proved ill-conceived, creating more damage than providing effective mitigation.11 These solutions include the initial measures of building relief wells and using concrete balls hoping to block the flow of mud. Both of these measures failed. The next major mitigation measure has been the construction of high earth containment walls to dam the mud. These walls have limited the area effected by the mud, however, as indicated in the United Nations Disaster 10 Energi calls on partners to share in mud costs, Andi Haswidi, The Jakarta Post, Jakarta, 1 February 2007. 11 Engineers abandon attempt to plug a gushing mud. The Jakarta Post. Retrieved on 2007-02-25. 6
  7. 7. Assessment report, they are not a long term solution.12 This is because the walls are unstable and pose significant dangers to surrounding villages. As the volume of mud continues to increase the walls are vulnerable to collapse and in fact this has already taken place in January 2008. A fourth measure taken by the National Mudflow Mitigation Team has been to dispose of the mud via the Pasar Porong river. However pumping of mud into the nearby river was largely ineffective and also resulted in siltation as well as flooding in nearby villages. Current proposals under consideration include channelling the mud into the Madura Strait. While there the mud is not thought to be toxic it does have high levels of salinity, of h2s as well as metals, hydrocarbons and ammonia.13 As such there are major concerns as to the viability and the environmental impacts of such measures.14 To our knowledge Santos has not entered any direct negotiations to assist with the relocation and housing of mud-flow victims. There has also been no comprehensive plan put forward by Lapindo Brantas. The latest position from Santos and Lapindo Brantas seems to be that the Indonesian government should be solely responsible for devising a solution. Previously, under an informal arrangement, provision was made by Lapindo Brantas for two years rent assistance payed to some affected families. According to mud-flow victims, prior to the recent court decision, there were also informal promises to compensate made by Lapindo Brantas representatives. Community members have little faith that these promises will be fulfilled and have reported levels of disillusion with negotiation processes.15 Residents at the Pasar Porong refugee camp reported that the only long term housing solution they had been offered was the government's suggestion that they join a transmigration program to become palm oil plantation workers in Kalimantan.16 From available information, Santos has not made any direct contributions to providing other forms of aid to mud-flow victims. At the same time, neither Lapindo Brantas nor the National Mudflow Mitigation Team has provided substantial aid to mud-flow victims with respect to basic living necessities. The refugees living at Pasar Porong, for example, are not provided 12 Final Technical Report: United Nations Disaster Assessment and Coordination mission in June & July 2006 and Follow-up mission in July 2006, Environmental Assessment Hot Mud Flow: East Java, Indonesia, 2006. 13 John McLachlan-Karr (2006-10-09), Sidoarjo Mud Emergency Response Consultant Report: An Ecological Engineering Approach. http://www.un.or.id/upload/lib/Consultant%20report%20-%20Ecological%20Engineering%20Approach%20-%20JM%20Karr.pdf. 14 Adnan Awad UNDP & Consultant – Marine Environment Affairs Ministry of Environment 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. 7
  8. 8. 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. http://www.tempointeraktif.com/hg/nasional/2008/03/04/brk,20080304-118544,uk.html (retrieved 2/4/2008). 8
  9. 9. corruption perception index.18 Not only government institutions but also the judiciary have been found to be plagued with corrupt practices.19 In such an environment, Santos should make an independent assessment of the impacts of its operations and the best way to address the consequences of these impacts. Santos is no doubt aware that a high degree of supervision and care is necessary when a company is undertaking risky operations in densely populated areas, such as exploring for gas or oil in East Java. When co-operating with other companies and government authorities in such operations Santos has an interest in obtaining all the relevant facts to make responsible company decisions. We would hope that Santos does not turn a blind eye to social injustice taking place in the environment in which it operates. Instead we would hope that it might use its influence to uphold standards of moral conduct which Australia would expect of its corporate citizens conducting business in the third world. This month the United Nations is conducting a periodic review of human rights issues in Indonesia. It would be unfortunate if Santos became embroiled in claims of an international human rights or environmental law violations. To avoid such a situation we propose that Santos put together a committee to adopt a viable relief and mitigation plan for Sidoarjo. Santos states that one of its fundamental values is that of discovery: “by opening our minds to new possibilities, thinking creatively and having the courage to learn from successes and failures, take on new challenges, capture opportunities and resolve problems.” Accordingly we ask that Santos put its own values into practice and take on a new approach to dealing with the mud-flow incident. This approach should aim to engage and consult with the mud-flow victims and relevant community organizations in devising an adequate response plan. Urgent steps must be taken to guarantee the livelihood of the victims- particularly those living in refugee areas. Long term steps are required for the rehabilitation of environmental damage. 18 Indonesia rates 143 in the Transparency International, 2007 Corruption Perceptions Index, Regional Highlights: Asia Pacific Region, http://www.transparency.org/content/download/23975/358245. 19 Civil and Political Rights, Including Questions of Independence of the Judiciary, Administration of Justice, Report of the Special Rapporteur on the Independence of Judges and Lawyers Dato' Param Cumaraswamy, Submitted in accordance with the commission on Human Rights Resolution 2002/43 REPORT ON THE MISSION TO INDONESIA*, 15-24 July 2002 . 9
  10. 10. From: Eames, Martyn <Martyn.Eames@santos.com> To: Australian Sidoarjo Assistance Project ASAP <helpsidoarjo@gmail.com> Date: Mon, Oct 20, 2008 at 1:31 PM Subject: RE: Correspondence from Australian Sidoarjo Assistance Project Mailed-by santos.com Dear Sarah Thank you for your email and I can confirm that Santos has received your recent letter. I have asked Christian Bennett, our Group Executive for Government, Media and Indigenous Affairs, and who has been involved in Santos’ response to the incident since 2006, to contact you in order to identify a time when he could meet with you in Canberra during his next visit. I think such a discussion would provide a useful further opportunity for ASAP and Santos to engage and discuss the mudflow incident. Regards Martyn Eames Martyn Eames VP Corporate & People Santos Limited 60 Flinders Street Adelaide SA 5000

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