Identifier
Created
Classification
Origin
06JAKARTA13448
2006-12-08 09:20:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Jakarta
Cable title:
East Java Mudflow: Lapindo Defaults,
how-toVZCZCXRO0044 PP RUEHCHI RUEHDT RUEHHM DE RUEHJA #3448 3420920 ZNR UUUUU ZZH P 080920Z DEC 06 FM AMEMBASSY JAKARTA TO RUEHC/SECSTATE WASHDC PRIORITY 2410 INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS RUEHBY/AMEMBASSY CANBERRA 0197 RUEHWL/AMEMBASSY WELLINGTON 1198 RHHMUNA/HQ USPACOM HONOLULU HI RUEHGP/AMEMBASSY SINGAPORE 5624 RHMFIUU/DEPT OF ENERGY WASHINGTON DC RUCPDOC/DEPT OF COMMERCE WASHDC ZEN/AMCONSUL SURABAYA
UNCLAS JAKARTA 013448
SIPDIS
DEPT FOR EAP/MTS AND EB/ESC/IEC
DEPT PASS OPIC, EXIM, TDA
DOE FOR CUTLER/PI-32 AND NAKANO/PI-42
COMMERCE FOR USDOC 4430
FROM AMCONSUL SURABAYA #2689
SENSITIVE
SIPDIS
E.O. 12958: N/A
TAGS: ECON EINV EPET PGOV ID
SUBJECT: East Java Mudflow: Lapindo Defaults,
Contractors Walking Out
Ref. A: Jakarta 13358
Ref. B: Jakarta 12733 notal
UNCLAS JAKARTA 013448
SIPDIS
DEPT FOR EAP/MTS AND EB/ESC/IEC
DEPT PASS OPIC, EXIM, TDA
DOE FOR CUTLER/PI-32 AND NAKANO/PI-42
COMMERCE FOR USDOC 4430
FROM AMCONSUL SURABAYA #2689
SENSITIVE
SIPDIS
E.O. 12958: N/A
TAGS: ECON EINV EPET PGOV ID
SUBJECT: East Java Mudflow: Lapindo Defaults,
Contractors Walking Out
Ref. A: Jakarta 13358
Ref. B: Jakarta 12733 notal
1. (SBU) ConGen Pol/econoff and Jakarta USAID officers
visited the PT. Lapindo Brantas (Lapindo) mud volcano
site and the relief well operation in Porong, East Java
(Ref. A) on December 8, meeting with several
representatives of contractors working on the relief
well. According to the contractors, Lapindo has
stopped paying everyone supplying and running its
relief well operation. The relief well is the last and
only hope of quickly killing the fractured gas well
(Ref. B) that is spewing over 200,000 cubic meters per
day of hot mud. (Note: The mud volcano is
approximately 12 miles south of ConGen Surabaya. End
Note.) Lapindo is now USD 10 million in arrears to the
drilling rig owner and operators of the well. As a
result, the operators shut down the drilling rig at a
safe point and presented demand letters for payment in
full by December 8 or they would all simultaneously and
permanently walk off the job. There are several
American contracting firms working at the relief well,
including Haliburton and Boots and Coots. At close of
business on December 8, none of the contractors had
been paid and Haliburton left East Java once again.
2. (SBU) Contractors had previously stopped work in
October over non-payment issues but returned after
Purnomo Yusgiantoro, Minister for Energy and Mineral
Resources, guaranteed payment and established a USD 4
million deposit as advance payment. The deposit is now
spent and Lapindo is not offering any signs that it
will meet the contractor's demands, claiming they have
run out of funds. Initially, the new Lapindo Chief
Financial Officer promised payment of all arrears by
the deadline, but later returned to the contractors
asking for extensions and payment plans. The
contractors stated that Minister Purnomo and the head
of the National Mud Disaster Team (Timnas),Basuki
Hadimulyono, were both aware of the lack of payment and
status of the relief well.
3. (SBU) Despite the recent press reports claiming
imminent failure of the relief well, the well operators
remain confident that the relief well project will be
successful with the caveat that they will need a second
well to create sufficient hydrostatic pressure to stop
the flow of water. They claim that with USD 100
million and control of the drilling operation, they can
kill the well by March or April 2007. They remain
highly frustrated with the lack of payment for both the
primary contractors and their suppliers as well as
Lapindo and Timnas's insistence on having final
decision making authority. One contractor summed it up,
"I understand their wanting to be the heroes here.
But, they have no clue what they are doing and they are
making it impossible for us to do our jobs and kill
this off before more people are hurt and homes are
destroyed."
PASCOE
SIPDIS
DEPT FOR EAP/MTS AND EB/ESC/IEC
DEPT PASS OPIC, EXIM, TDA
DOE FOR CUTLER/PI-32 AND NAKANO/PI-42
COMMERCE FOR USDOC 4430
FROM AMCONSUL SURABAYA #2689
SENSITIVE
SIPDIS
E.O. 12958: N/A
TAGS: ECON EINV EPET PGOV ID
SUBJECT: East Java Mudflow: Lapindo Defaults,
Contractors Walking Out
Ref. A: Jakarta 13358
Ref. B: Jakarta 12733 notal
1. (SBU) ConGen Pol/econoff and Jakarta USAID officers
visited the PT. Lapindo Brantas (Lapindo) mud volcano
site and the relief well operation in Porong, East Java
(Ref. A) on December 8, meeting with several
representatives of contractors working on the relief
well. According to the contractors, Lapindo has
stopped paying everyone supplying and running its
relief well operation. The relief well is the last and
only hope of quickly killing the fractured gas well
(Ref. B) that is spewing over 200,000 cubic meters per
day of hot mud. (Note: The mud volcano is
approximately 12 miles south of ConGen Surabaya. End
Note.) Lapindo is now USD 10 million in arrears to the
drilling rig owner and operators of the well. As a
result, the operators shut down the drilling rig at a
safe point and presented demand letters for payment in
full by December 8 or they would all simultaneously and
permanently walk off the job. There are several
American contracting firms working at the relief well,
including Haliburton and Boots and Coots. At close of
business on December 8, none of the contractors had
been paid and Haliburton left East Java once again.
2. (SBU) Contractors had previously stopped work in
October over non-payment issues but returned after
Purnomo Yusgiantoro, Minister for Energy and Mineral
Resources, guaranteed payment and established a USD 4
million deposit as advance payment. The deposit is now
spent and Lapindo is not offering any signs that it
will meet the contractor's demands, claiming they have
run out of funds. Initially, the new Lapindo Chief
Financial Officer promised payment of all arrears by
the deadline, but later returned to the contractors
asking for extensions and payment plans. The
contractors stated that Minister Purnomo and the head
of the National Mud Disaster Team (Timnas),Basuki
Hadimulyono, were both aware of the lack of payment and
status of the relief well.
3. (SBU) Despite the recent press reports claiming
imminent failure of the relief well, the well operators
remain confident that the relief well project will be
successful with the caveat that they will need a second
well to create sufficient hydrostatic pressure to stop
the flow of water. They claim that with USD 100
million and control of the drilling operation, they can
kill the well by March or April 2007. They remain
highly frustrated with the lack of payment for both the
primary contractors and their suppliers as well as
Lapindo and Timnas's insistence on having final
decision making authority. One contractor summed it up,
"I understand their wanting to be the heroes here.
But, they have no clue what they are doing and they are
making it impossible for us to do our jobs and kill
this off before more people are hurt and homes are
destroyed."
PASCOE