Energi Mega Reports Gas Flow Incident

Oil and gas company PT Energi Mega Persada Tbk (ENRG) said in a filing to the Indonesian Stock Exchange that there was a gas flow incident occurred at the company’s oil and gas field Bentu PSC, Segat-2, in Riau, Sumatra.

The incident occurred during well work-over activities, which has led to an evacuation of the non-essential site workers.

Nevertheless, there were no casualties or property damage during the incident. It added the incident as no impact on the Bentu and Korinci Baru PSCs. The original Segat-2 discovery well was drilled back in 1995.

Hopefully there will be no more mudflow like the one in Sidoarjo (Lapindo). Energi Mega was the controlling owner of Lapindo, which drilled the oil and gas field in Sidoarjo. Partners in Lapindo were Medco and Santos. (Roffie Kurniawan)

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Lapindo mudflow, what's up?

National media reported that three SBY-Boediono cabinet members visited the area flooded with Lapindo mudflow in Sidoarjo, East Java on Saturday. They "inaugurated" the piling of a fly over for Porong-Sidarjo toll road. The fly over shall be built because the mudflow cut the route seriously, especially in KM 35. This is one of the costs incurred by the mudflow the State generously pays.

The visiting ministers are Djoko Kirmanto (public works), Gusti Muhammad Hatta (environment), and Fadel Muhammad (fishery). People in East Java have suffered for almost five years due to this mudflow. The cost of the mudflow has been ballooned. Why?

President SBY issued Regulation No. 40/2009 in September 23, 2009 which basically lifted the financial burden off Bakrie's shoulders. The new regulation changed some articles of President Regulation No. 14/2007 about the Sidoarjo mudflow. One of the key articles abolished is Article 15 point 5 where PT Lapindo Brantas, controlled by Bakrie Family, initially bear the cost of handling the mudflow.

Under the new regulation, all the related costs of the mudflow will be sourced from the State budget. Lapindo's obligation is limited to the purchase of land and buildings of the victims pursuant to the new map. Lapindo shall pay 20% upfront, while the balance shall be paid one month before the 2-year house rent expired.

But according to the new regulation, the 20% shall be paid in 2008, 30% in 2009, and the balance will be paid gradually. The State Budget had allocated Rp600 billion in 2007, Rp1.57 trillion in 2008, and Rp1.15 trillion in 2009 for rehabilitation of public infrastructures affected by the mudflow.

The President Regulation No. 14/2007 was actually designed as "burden-sharing scheme" between the State and the Bakrie Group.

SBY initially issued Decree No. 13/2006 about the establishment of national team for the mudflow, supervised by energy minister (Purnomo Yusgiantoro), public works minister, fishery, and environmental affairs plus East Java governor, Brawijaya regional military commander, and East Java regional police chief.

The cost was initially a full responsibility of Lapindo. But President Regulation NO. 14/ 2007 lifted substantially some of the financial burdens from Bakrie's shoulders, especially rehabilitation of public infrastructures and operational costs for the national team (article 14).

So, the mudflow-related costs lifted from Bakrie's shoulders are: Rp2.11 trillion to move the railway line, turnpike, build new highway, and gas pipeline, plus Rp612 billion for construction of a canal to channel the mud to the Porong River, Rp300 billion for dam construction, and operational costs of mudflow handling at about Rp100 billion per annum. How much is that? Rp3.12 trillion or about US$320 million.

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SBY-Boediono, landslide victory in Lapindo area

For over three years, newspapers have been filled with reports about complaints from Lapindo mudflow victims in Sidoarjo, East Java. Lots of criticism towards SBY-Kalla administration and Bakrie. Yet, SBY-Boediono scored landslide victory in the area where victims have been relocated.

This report from Surya, a newspaper published in Surabaya, East Java, on Wednesday needs explanation from sociologists and political scientists. According to the report, there were two polling stations in Kedung Solo, Porong sub-regency with 1,280 registered voters.

Results?

About 44% didn't vote, turnout votes 56% o3 717 voters. It is relatively low compared to the national average, understandable. What's interesting, out of 717 voters, 613 voted for SBY-Boediono or 85%, far above the national average of 60%. 

Surya also reported from two other polling stations nearby: TPS-2 at Siring Village and TPS-3 at Besuki Village. SBY-Boediono got 79% in Siring and 96% at Besuki.

Why? Probably they're better off now? Or is it because of "money politics" like in this report from Beritajatim.com where Sidoarjo regent Win Hendarso gave out US$5 per victim on election day? The report also mentioned about the direct cash assistance (bantuan langsung tunai, BLT) awarded to the victims.

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Intelligence Agency's new role: Handling the mudflow

News of the day: President SBY has just expanded The State Intelligence Body's scope of work with the new task to handle the negotiation of mudflow victims in Sidoarjo, East Java with Lapindo Brantas Inc. Why? Guess yourself!

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Lapindo disaster updates

Arifin Panigoro's PT Medco Energi Internasional Tbk sells 32% interest in Brantas PSC for USD200 to Prakarsa Group (Bakrie-linked Minarak Labuan back up the group's financial liabilities). Lapindo Brantas Inc (controlled by Bakrie's Energi Mega Persada) owns 50% interest in the troubled oil & gas concession area. Energi once planned to exit from the disaster (remember the USD2 transaction with Freehold?) but stock market authorities blocked that. Why stock market authorities let Panigoro get out from the disaster?

I guess Bapepam sees like this...Medco sells 32% stake for USD100, while Energi tried to sell 50% stake to Freehold for USD2. Just kidding!
Why Medco decided to exit? Cut loss. Why Prakarsa (or Bakrie) decided to buyout Medco? Potential upside?
Why Medco & Santos (owns 18% in Brantas PSC) booked huge loss provisions from Brantas PSC while Energi didn't? Because Energi believes the cost of handling the mudflow disaster could be recovered by the State under cost recovery scheme?

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Energi op profit declined 29%

PT Energi Mega Persada Tbk booked operating income of Rp237 billion in 2006, declined 29% from Rp336 billion in 2005 due to increasing costs. But the company managed to book net profit of Rp203 billion, inched up from Rp201 billion in 2005. How much is the provision for mudflow in Sidoarjo?

According to its audited financial report 2006 published today, Energi's net sales slightly reduced to Rp1.64 trillion from Rp1.68 trillion in 2005 while its asset grew significantly by 55% to Rp9.88 trillion. Energi, parent company of Lapindo Brantas Inc---owner of 50% participating interest in the Brantas PSC, recorded significant increase in non-current liabilities to Rp6.7 trillion, mainly due to higher long-term loans.
It's not clear yet on how much the company's net provision for mudflow losses due to drilling activities in Banjar Panji-1 (Brantas PSC). But in the non-current liabilities, Energi posted estimated obligation on probable losses of Rp286 billion. (I need to read the full report filed to JSX later this afternoon)
As reported earlier, Santos---Energi's partner with 15% interest in Brantas PSC, had posted net provision of A$67 million or around Rp450 billion in its 2006 report.

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No decision on Lapindo

Cabinet meeting on Lapindo hot mudflow failed to make important decision about the status of the disaster last night. Cabinet made only technical decisions on extension of the team to handle the disaster by one month.

According to Detik.com report, the meeting chaired by President SBY decided to give three new tasks to the team led by energy minister Purnomo Yusgiantoro. First, identify all measures taken by government since May 2006. The team should work with Attorney General in anticipating class actions. Second, preparing the establishment a new team. Third, identify all the losses caused including costs to rebuild public infrastructures.
Before the cabinet meeting, SBY met with East Java Governor Imam Utomo, Sidoarjo Regent Wien Hendarso, and Bakrie Group leader Nirwan Bakrie. Attendees of the cabinet meeting were VP Jusuf Kalla, Coordinating Minister for the Economy Boediono, MoF Sri Mulyani, Minister for Fishery Freddy Numberi, Minister for National Development Planning Paskah Suzetta, Minister for Environmental Affairs Rachmat Witoelar, and Public Works Minister Djoko Kirmanto.
No statement made about the status of mudflow disaster as geologists are disputing it. Senior geologists and former chairmen of Indonesian Geologists Association (IAGI) Professor Kusuma and Andang Bachtiar both criticized a workshop conducted by the current IAGI board with some experts and its conclusion (mudflow as a natural disaster, triggered by earthquake in Yogyakarta).
Other geologists also criticized the quality of the workshop especially because the competene of participants are in doubts.

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Lapindo updates

President SBY is expected to make an important decision today, to declare the status of hot mudflow in Sidoarjo, whether it's a natural disaster (so the reconstruction cost would be the state's responsibility) or a disaster caused/triggered by drilling activities of Lapindo Brantas Inc. Watchout!

State Minister for Environment Affairs Rachmat Witoelar told the press yesterday that the mudflow could be considered a natural disaster. While Energy Minister Purnomo Yusgiantoro said it's the president himself who has the authority to declare the status of the disaster.

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Lapindo disaster politic updates

House Speaker Agung Laksono (also Deputy Chairman of Golkar Party) declared 'according the meeting of infrastructure committee of the house of representative (DPR)', the cost to repair & relocate public infrastructures destroyed by mudflow in Lapindo Brantas inc's drilling area (predicted at Rp7.6 trillion) will be the state's responsibility.

Minister of Finance Sri Mulyani Indrawati quickly responded the statement saying no more money available to finance the restoration projects.
"Even if the money is there, it should go through legitimate political process and clear on the burden sharing between Lapindo Brantas Inc and government. There should be a president decree or agreement between government and The House about the status (of those who should be held responsible) then I could put into the mid-term budget revision mechanism," she said.
Meanwhile, coordinating minister for the economy Boediono said government has yet to decide the status of the mudflow in Sidoarjo, pending on inputs from experts from Japan and UK. "Even the experts have yet to make clear conclusion," Boediono said.
State minister for National Development Planning Paskah Suzetta (also executive of Golkar Party) said government is working on rehabilitation and reconstruction programs. "Even though, we need the burden sharing mechanism between government and Lapindo," he said.
Will the experts come up with conclusion that might not correct politically? Will government make decision that politically correct even though Lapindo might argue that there is no firm scientific conclusion to justify that the mudflow is a result of drilling misconduct?
Former chairman of Indonesian Geologist Association (IAGI) Koesoemadinata as quoted by Koran Tempo expressed his concern about the conclusion of a workshop (IAGI scientists participated) two weeks ago that the mudflow was caused by earthquake in Yogyakarta.
"It is a mud volcano. But it's not clear yet of whether it was triggered by earthquake or drilling misconduct," he said.
Senior geologist Koesoemadinata criticized IAGI saying "I'm worried IAGI is being used by certain interests."

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Cabinet Meeting with Mud Therapy

Two years ago, president SBY led a cabinet meeting from Washington through video conference. Catchy! Yesterday, VP Jusuf Kalla led a cabinet meeting on the Jakarta-Yogyakarta train. Catchy as well! Very soon, we're hoping to have the next cabinet meeting with full service of hot mud therapy provided by Lapindo Brantas Inc in Sidoarjo, East Java. That would be a big show!

The next cabinet meeting deserved huge attention as by March 8, 7 days from now, president should issue new decree on how to settle the mudflow disaster especially the cost aspect. The existing decree, expired Marh 8, obliged Lapindo to provide Rp3.8 trillion to finance the settlement. There is immediate need of another Rp4 trillion to fix public infrastructures destroyed by the Sidoarjo mudflow which now popular as Lusi (abbr of Lumpur Sidoarjo). Fancy name right? Oh, Detik.com has another fancy name related to Lusi called Bolton (Bola Beton) or Concrete Balls used to stop the mudflow! (I laughed when read the story...Bolton failed to stop the mudflow!, after the soothsayers failed to show their magic powers few months ago)
I wonder whether the recent workshop of scientists sponsored by (?) would end up with cabinet decision like, "OK, this is a natural disaster, the state should take care the burdens, Bakrie family could walk away free, we'll reimburse the already disbursed funds," or "No, this is 50:50, natural disaster + man-made disaster caused by poor drilling, so we should share 50% of the financial burdens."
Should the cabinet meeting on schedule, the next day, media would run stories like...Relaxed with Lusi's therapy, Cabinet decided to...

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Misleading mudflow conclusion would cost the state sky high

Some of you might have read The Jakarta Post this morning. The paper quoted British volcanologist Richard Davies, a mud volcano specialist and professor at Durham University saying "the chance that the mud erupted because of the drilling activities is 90 percent. The chance of the mud volcano being triggered by earthquake in Yogyakarta was 1 to 2 percent, while the chance of both drilling & earthquake was 8 percent."

Davies is disputing government-sponsored conference's conclusion that the Sidoarjo mud disaster was caused by tectonic forces which would set Lapindo Brantas Inc & Bakrie Family free from responsibility on costs to handle the impacts.
The sky is the limit when it comes to costs for handling the disaster. President SBY deducted Lapindo's responsibility to Rp3.8 trillion through a decree issued in September. Now, these government scientists could even transfer the Rp3.8 trillion altogether with the additional Rp4 trillion cost that yet to be decided its source of fund and further costs/claims to our shoulder.
I think, the dispute on scientific explanation over the mudflow disaster should be settled first before the state scientists give any recommendation especially if it would cost the state & the people.

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State scientists set Bakrie free from disaster costs

The Jakarta Post run as its headline today a conclusion of a workshop of scientists from state agencies (LIPI & BPPT), geologist association (IAGI), and some scientists from overseas universities that the mudflow in Sidoarjo is a mud volcano, a natural disaster. They recommend government to immediately consider the mudflow as a natural disaster so the state should take the responsibility.

The workshop was organized just weeks before government should make new decision on the future of the mudflow handling as the existing team established by president SBY last September would end its tenure early next month. While minister of public works and other scientists rejected the conclusion, cause it will make the state should finance all the reconstruction of public infrastructures, the timing of the workshop and its conclusion raised the question: why now? why not next month? what's happened with the money Lapindo had disbursed? what will happen with the president decree that all costs (set at Rp3.8 trillion) are Lapindo's responsibility?
Should the cabinet accept the recommendation, for sure the additional cost predicted at Rp4 trillion to rebuild the public infrastructures would be transfered to state's shoulders (al of us).
"Who said so?" Djoko Kirmanto, minister of public works reacted when journalists told him that 'experts' recommended the mudflow disaster as a natural disaster caused, partly, by the earthquake that jolted Yogyakarta.
What about the reports that the mud started to flow weeks before the earthquake? What about the warning of Medco that Lapindo ignored to install casing in the drilling well that caused the mudflow? What about VP Jusuf Kalla's statement that "Bakrie Family would bear all the costs"?

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Who'll bear Lapindo's additional cost of Rp4 trillion?

The National Team set up to solve the hot mudflow disaster caused by Lapindo Brantas Inc's drilling in Banjar Panji-1 well, Sidoarjo, East Java predicted additional cost up to Rp4 trillion to rehabilitate some public infrastructures, but it's not clear yet on who will bear this cost.

Media quoted Basuki Hadimoeljo, chairman of the team, saying the additional cost is needed to finance the construction of new turnpike (Rp700 billion), general alternate roads (Rp300 billion), new railway (Rp450 billion), gas pipeline (Rp300 billion), land acquisition (Rp600 billion), and others.
The Rp4 trillion additional cost is on top of the Rp3.8 trillion compensation cost pursuant to President Decree issued last September. Lapindo has disbursed Rp1 trillion, the team claimed, and another Rp1.3 trillion should be disbursed till next month, to be followed by the remaining Rp1.5 trillion after March.
So far, the team has yet to come up with financing plan. But if government keeps its promise that Bakrie family would be responsible for all the costs, then we know what might be the next.
The family is in the process to sell significant shares in Kangean Block, one of the crown jewels of PT Energi Mega Persada. But the proceeds would not be used to finance the Lapindo disaster, I guess. The proceeds would go to creditor's coffers.

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Another refinancing for Energi Mega

The management of PT Energi Mega Persada (ENRG) Tbk will ask shareholders approval on assets pledge for refinancing scheme in the meeting scheduled February 15. No immediate figures on the amount of new loans to be raised.

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Lapindo raises The White Flag

Lapindo Brantas Inc says Rp1.3 trillion is the maximum amount of compensation it can provide to all parties hurt by hot mudflow in Sidoarjo, East Java, Tempointeraktif.com reported. Pardonez Mois. Indonesian people (220 million) are invited to enjoy the hot mud treatment in Porong for Rp25,000/pac (minus Adam Air one way ticket!).
"If the amount of costs increased with higher number of people affected by the mudflow, we can't provide above the approved amount at Rp1.3 trillion. That's our maximum capability. Beyond that, we'll fully hand over to government," said Yuniwati Teryana, VP for human resources & relations at Lapindo Brantas Inc.
So far, Lapindo had disbursed Rp39 billion of compensation to 3,320 families. The maximum amount mentioned by Lapindo is well below the losses of Rp7 trillion estimated by some NGOs.
It's increasingly clear, all of us would have to underwrite the cost of a catastrophe which, according to the latest study, was merely caused by improper drilling operation and nothing to do with earthquake that hit Yogyakarta as claimed by certain groups.
Regarding the costs, initially government declared all costs should be Lapindo's full responsibility. "If they ask government's money, we'll reject," VP Jusuf Kalla said in September.
But in late November, things started to shift when president SBY declared the hot mudflow as disaster. "The state should start to take care," Energy Minister Purnomo Yusgiantoro quoted the president.
But we have different figures here. From my archieve, Lapindo should start to pay compensation of Rp1.3 trillion on January 5, 2007 till March 2007. Another Rp2.5 trillion of compensation should also be paid by Lapindo, starting March 2007. So, what Lapindo really wanted to say with 'Rp1.3 trillion is our maximum capability'? Who will bear the remaining Rp2.5 trillion? State budget?
How about Minister of Public Works' statement that Lapindo should bear the cost of relocating the toll road (Rp1.3 trillion) or compensation claim from 29 factories (Rp327 billion), exporters who have to pay additional cost of Rp1 billion/day due to the closure of the turnpike, or PT Telkom's claim of Rp18 billion?
Let's refresh our memory with Bakrie Family's statement early on that they won't walk away from the liabilities of Lapindo. Lapindo is owned by Bakrie Family and we shall not let Lapindo say, "that's it, take care this shit, we have no more money!" when we know exactly the family is sitting over billion USD worth of assets, right? What's the difference with Soeharto/IMF style of massive banking bailout in 1998-2002?
Considering what Bakrie Family will do, I think they've started to sell shares in some of its listed affiliates, and on the other end buyers are waiting to grab hot money as well. My fellow taxpayers will only get 'hot mud' treatment! Hope you enjoy, Merci Bocoup!

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Energi Mega flip-flop, watchout!

Scientific study confirmed that mud vulcano erupted in Lapindo Brantas Inc's Banjarpanji working area was mainly caused by gas drilling, AFP & The Jakarta Post reported today. So, it's not due to earthquake in Yogyakarta as claimed by some 'experts' that pushed government to consider the mudflow as national disaster covered with state budget. On the other end, Energi Mega Persada, Lapindo's parent announced another flip-flop on the Rp3.8 trillion fund raised through rights issue in late 2005. Initially it was loan from Energi to its subsidiaries, including Lapindo, then changed into equity (conversion of loan), and now is asking to change that to loan again. Wanna more? Better watchout!

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Lapindo disaster's overdue payments

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State to finance infrastructure repairs of Lapindo disaster

Slowly but sure Lapindo's burden over Sidoarjo disaster would be financed with state budget. Yesterday, parliament and government agreed to use the state budget to finance the repairs of infrastructure facilities hit by the mudflow, Tempointeraktif.com reported. Last week, parliament also endorsed government's proposal to use the disaster fund in 2006 budget to help people affected by the mudflow. Repair of two facilities (road & railway) could cost the state Rp443 billion. How generous!

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Bakrie's next move to pay the bills

What will Bakrie family do to pay the sky high bills of Lapindo disaster?

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Lapindo-Freehold deal is off

PT Energi Mega Persada Tbk announced the cancellation of the divestment of subsidiary Lapindo Brantas Inc to Freehold Group. Energi wrote to JSX this morning that Freehold Group cancelled the deal due to controversy over the issue.

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