Saturday, September 20, 2008

"Indonesian govt "gives up" on stopping mud volcano"

JAKARTA (Reuters) - Indonesia's vice president said on Friday the government had given up all hope of halting a mud volcano in East Java which has displaced thousands of people, hurt businesses, and destroyed the local environment.

The disastrous mud volcano, which started erupting in May 2006 near Indonesia's second-biggest city of Surabaya, has proved a huge problem for the government.

The hot, noxious mud has displaced more than 50,000 people, submerged homes, factories and schools and is now flowing at a rate of more than 100,000 cubic meters a day. Various attempts to halt the flow have all failed.

"The government has given up in terms of efforts to stop the mudflow, but will never give up when it comes to taking care of the people," Vice President Jusuf Kalla told reporters.

"There have always been people that said stopping the mudflow is not an easy task," he said, adding the government had spent "trillions of rupiah every year" trying to solve the problem.

Some scientists have said that energy firm PT Lapindo Brantas' drilling for a gas exploration well set off the mud volcano, but Lapindo has denied it is to blame, saying the mud disaster was triggered by tectonic activity.

Lapindo is linked to the Bakrie Group, controlled by the family of Chief Social Welfare Minister Aburizal Bakrie, who was recently ranked by a local business magazine as Indonesia's richest man.

The government has ordered Lapindo to pay 3.8 trillion rupiah, or about $400 million, in compensation to the victims and to cover the damage.

($1 = 9,435 rupiah)

Santos denies playing down Indonesia mud volcano disaster

Australian oil and gas giant Santos on Monday denied downplaying the seriousness of the disaster caused by the world's largest "mud volcano" in Indonesia.

The company was responding to a report that said it faced a ten-fold blowout of the clean-up bill from the unstoppable mudflow that was caused by a gas drilling incident in East Java in 2006...

Fairfax newspapers quoted a leaked report by the UN Environment Program (UNEP) and Australia's government aid body AusAid as saying the disaster has so far caused economic damage of 3.4 billion dollars and could be contained.

The study reportedly said the only way to mitigate the disaster would be to transport the mud 14 kilometers (8.75 miles) to the ocean to create a wetland, which would send the cost skyrocketing to 4.6 billion dollars.

The mudflow could cost Santos 830 million dollars (681,762 US), the report said, while the firm has declared provisions of just 88.5 million dollars to the Australian Stock Exchange to cover the clean-up cost...

A study by foreign scientists in Indonesia has found the mud volcano was caused by drilling by oil and gas firm Lapindo Brantas, which holds a 50 percent stake in the scheme.

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