Govt encourages Bakrie’s Lapindo to continue exploration in Sidoarjo

The government expects PT Lapindo Brantas, a subsidiary of Bakrie Group, to continue its gas and oil exploration at the Banjar Panji I well in Sidoarjo, East Java, a minister said on Tuesday.

The company was drilling the well in March 2006 when it spewed hot mud that eventually inundated thousands of homes in the area, forcing PT Lapindo to stop its operation.

“If necessary, as an alumnus of the Bandung Institute of Technology (ITB), I will talk to Bakrie,” said Deputy Minister of Energy and Mineral Resources Widjajono Parto widagdo after opening a seminar on electricity business and technology in Bandung, West Java, on Tuesday.

Widjajono said he was ready, if asked, to open communication with the Bakrie Group to discuss the continuation of exploration in Sidoarjo.

He added that the government had expressed its expectations because of the oil potential in the area. “Someone said [the oil reserve] is about half a million barrels. We will only know for sure if the exploration is carried out,” he said.

He also said there were conditions that PT Lapindo Brantas had to meet before resuming exploration in Sidoarjo, such as completing compensation payments to affected people.

“Only after the payment is done will the license be issued,” he said.

He also suggested that the exploration be completed in cooperation with state-owned oil and gas company PT Pertamina. This is needed to prevent PT Lapindo Brantas bearing the exploration risks alone.

According to Widjajono, such a risk-sharing concept has also been implemented by Pertamina in the Natuna Block with Exon, Total and Petronas. “Bakrie can just do the same,” he said.

With regard to the contract, Widjajono said there was no change. “But the exploration can only be done if the local community approve it,” he said.

According to Widjajono, East Java Governor Soekarwo said that there was a Russian expert expressing interest in learning more about the mud volcano in Sidoarjo.

“He (the expert) even expressed hope to have 100 more mud volcanoes in his own country because they indicate oil reserves,” Widjajono said.

He added that the mud spewed in Sidoarjo was no longer 150,000 cubic meters but was only 10,000 cubic meters. “This means that the spew has decreased. If we turn it into production I believe it will decrease more.”

He gave assurances that continued exploration in Sidoarjo was safe as long as it was conducted the
right way.