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Indonesia to punish state firm over litany of failures behind Borneo oil spill

  • An official investigation into an oil spill last month in Indonesian Borneo found a lack of warning systems that would have alerted state oil company Pertamina to the leak hours earlier.
  • The government has also found omissions in the company’s environmental impact assessment, and is preparing to impose a series of administrative sanctions as well as fines.
  • Police are carrying out a criminal investigation in parallel to determine who was responsible for the spill, amid reports that a foreign-flagged coal ship may have cause the pipeline damage leading to the leak.

JAKARTA — The Indonesian government is preparing to punish state-owned oil and gas firm PT Pertamina over a major oil spill stemming from one of its undersea pipelines in eastern Borneo last month.

An official investigation of the spill in Balikpapan Bay, in the province of East Kalimantan, which was first reported on March 31, found faults in the company’s operational procedures. Among the findings by the Ministry of Environment and Forestry: the Pertamina refinery in Balikpapan, which was served by the pipeline, lacked both an early-warning system and an automated monitoring system.

“If the system was good, there wouldn’t have been [a delay] of five to seven hours [before the oil spill was detected] and no need [to wait] until a fire broke out,” Environment and Forestry Minister Siti Nurbaya Bakar said on the sidelines of a hearing at the House of Representatives in Jakarta.

An automated monitoring system would have alerted Pertamina immediately to changes in the pressure level in the pipeline, and thus allowed the firm to respond swiftly, Siti said.

Instead, it took Pertamina four days to admit that the oil spill came from its 20-year-old pipe. By then, the slick had spread across an area greater than the city of Paris.

“Their emergency system’s response to the leak from the pipe was very slow,” said Rasio Ridho Sani, the environment ministry’s director general for law enforcement. “That’s why there needs to be an improvement.”

Part of that initial response involved setting fire to the slick to clear it up. That resulted in an out-of-control blaze that killed five fishermen.

The ministry’s investigators also found that Pertamina failed to carry out routine inspections of its pipeline. Instead, the company only did so when needed or when required for certification purposes once every three years. The investigation also uncovered omissions from Pertamina’s environmental impact assessment document, including a lack of studies on the pipeline’s maintenance.

Oil spill in Balikpapan Bay on the morning of March 31. Photo courtesy of the Indonesian Forum for the Environment (Walhi) Balikpapan.

The ministry intends to impose administrative sanctions on Pertamina, including forcing the company to conduct an environmental impact assessment and environmental audit focusing on the security of its pipeline, refinery and supporting facilities. It will also require Pertamina to carry out environmental recovery activities in Balikpapan Bay and surrounding areas affected by the oil spill.

While the full extent of the environmental damage is still under evaluation, early estimates show the most severe damage occurred across a 2.7-square-kilometer (1-square-mile) span of mangrove forest.

The ministry is also calculating a monetary value for the environmental damage caused, so that it can levy a fine against Pertamina. Siti said the final figure would be in the hundreds of billions of rupiah (tens of millions of dollars).

In the meantime, the most immediate punishment the ministry can impose is the set of administrative sanctions, which ministry officials said would be issued soon.

Rasio said he hoped the sanctions would compel Pertamina to improve its pipeline inspection and disaster prevention systems, as well as serve as a reminder to other oil and gas companies to be more cautious in their operations in the country.

“The aim is to prevent an incident like this from happening again, not only for Pertamina but also for others too,” Rasio said. “Because we know that the oil and gas industry poses environmental risks, especially in risky areas. Therefore, we will make some efforts so that these companies’ activities pay attention to environmental risks.”

Besides the ministry’s administrative sanctions and pending fines, law enforcement authorities have also launched a criminal investigation in the case, centering on the question of who should be held ultimately responsible for the oil spill.

There are indications that a Panama-flagged coal ship passing through the heavily trafficked Balikpapan Bay dropped anchor in a restricted area and damaging the pipeline. Police have collected material found on the vessel to compare it with that from the damaged pipeline, and are now awaiting the results and testimony from expert witnesses.

Siti said the environment ministry’s law enforcement unit was helping the police in the criminal investigation.

In response to the investigation findings, Pertamina president director Elia Massa Manik said the company would follow up by improving its monitoring systems. He said Pertamina had also started cleaning up the bay with the help of more than 5,200 community members, allocating 785 billion rupiah ($57 million) to the effort.

Elia said Pertamina had also reached out to those affected by the disaster, including the families of the fishermen killed in the fire, and offered compensation. This includes 200 million rupiah ($14,500) for each of the bereaved families, and smaller sums for hundreds of other fishermen for loss of income as a result of the spill.

Banner image: The fire from the oil spill in Balikpapan Bay, East Kalimantan province. Photo courtesy of the Indonesian Forum for the Environment (Walhi) Balikpapan.

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