A Thai Oil Firm, Indonesian Seaweed Farmers And Australian Regulators: What Happened after the Montara Oil Spill?

Photo Credit: Reuters/達志影像
Why you need to know

Eight years after the blowout, legal action against the Thai company responsible is ramping up, even as the true extent of the damage caused remains a mystery.

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During 74 days in late 2009, a leak in the Montara offshore drilling platform gushed tens of thousands of barrels of oil into the Timor Sea, a body of water shared by Australia and Indonesia. The spill is considered Australia’s worst offshore petroleum accident, and the third-worst spill by volume in the country’s history.

Now, some 5,000 Indonesian seaweed farmers have launched a class-action lawsuit against the company responsible for the spill, asking for potentially more than 200 million Australian dollars (US$153 million). The farmers are seeking compensation for loss of livelihoods due to faltering seaweed production and allegations of severe health problems. Last month, a federal court rejected an October 2016 request by the defendant to dismiss the case.

The lawsuit follows a breakdown in negotiations between the Indonesian government and PTTEP Australasia (PTTEP AA), the owner and operator of the Montara platform, whose ultimate parent is one of Thailand’s largest corporations, state-owned oil and gas giant PTT Public Company Limited. Indonesian officials accuse the company of falsely claiming that oil never reached the Indonesian coast, of negotiating in bad faith and, ultimately, of reneging on a tentative agreement for hundreds of millions of dollars in compensation.

After years of considering its own suit, the Indonesian government announced in January that it also plans to sue PTTEP AA, which would be independent of the current class action.

“They never delivered on their commitment,” said Masnellyarti Hilman, the head of the Indonesian negotiating team with PTTEP AA and a retired Ministry of Environment official. (The institution is now part of the Ministry of Environment and Forestry.) “How can they not keep their word?”

While PTTEP AA admits that oil from the spill reached Indonesian waters, and acknowledges that “mistakes were made that should never be repeated,” the company said it hasn’t seen evidence that the spill caused any harm to the environment in Indonesia.

The exact extent of damage caused by the spill, or blowout, is at the heart of the dispute. PTTEP AA and several Australian government agencies point to a series of studies done in Australian waters after the spill which they say show little to no environmental impacts from oil or from the potentially toxic chemical dispersants used in the clean-up effort.

But several oil spill experts — as well as an investigation by the Australian government — question those studies, claiming they were done far too long after the spill began, and likely failed to accurately portray the degree of the blowout’s impact.

The Montara platform is seen from the air on Sept. 12, 2009, two weeks after the spill began. Oil slicks around platform are clearly visible; the white haze is a spray of water vapor, natural gas, and natural gas condensate from the uncontrolled well. Photo courtesy of Environs Kimberley/Flickr

What has proven most contentious is what level of study, if any, took place in Indonesia. Hilman told Mongabay that the Indonesian government found significant damage from the spill in West Timor’s waters. But PTTEP AA does not accept the government’s findings, and maintains that it hasn’t seen adequate evidence of damage. The company told Mongabay that it was denied permission by the Indonesian government to fund independent environmental research, or to meet with West Timorese communities “for reasons that remain unclear.”

Advocates for West Timor — the Indonesian half of Timor island, which is about the size of Maryland or Belgium — are still calling for a rigorous scientific assessment of the damage, even eight years after the spill.

The dispute highlights the complexity of regulating transnational corporations operating in maritime borderlands like the Timor Sea, a relatively narrow body of water rich in oil and gas reserves and surrounded by multiple countries.

The Australian government, under whose jurisdiction PTTEP AA was operating, published an exhaustive report in 2010 known as the Montara Commission of Inquiry. “The Blowout was not a reflection of one unfortunate incident, or of bad luck,” the commission said. “[PTTEP AA’s] systems and processes were so deficient and its key personnel so lacking in basic competence, that the Blowout can properly be said to have been an event waiting to occur.”

The commission also faulted Australia’s Northern Territory Department of Resources — a regional regulatory body at the time — saying it adopted a minimalist approach to its responsibilities, which prevented meaningful oversight of PTTEP AA’s “poor practices.” PTTEP AA said in a 2012 press release that it had transformed its operations and culture, and deeply regretted the incident.

The Australian government fined the company the equivalent of around $530,000, but no compensation or penalty was ever paid to Indonesia. After years of fruitless negotiations between the Southeast Asian country and PTTEP AA, Indonesian citizens have turned to Australia’s class-action system.

“It’s a difficult spill to come to grips with,” said Robert Spies, a marine ecologist and oil spill expert who served as chief science advisor to the government in the Exxon Valdez restoration program, put in place after the eponymous 1989 disaster in U.S. waters. Spies has studied the Montara spill at length, collaborating with scientists from Australia and Indonesia.

“We have the coincidence of a fishery collapse, and seaweed farms took a dive as the oil arrived,” Spies told Mongabay. “And we have oil — it seems likely that those things are related, but we don’t have the data. The situation requires further study to learn more about the cause-and-effect relationships.”

Ferdi Tanoni, a small businessman and member of the West Timor Care Foundation, emphasized the human toll caused by the oil spill. “Strange diseases still arise, and no one has ever investigated it,” he told Mongabay. “It’s very sad really.”

The spill

The remote location, depth and unique nature of the Montara blowout tested the Australian government. In the aftermath of the spill, according to official records, there was confusion over who was in charge of the response. The Montara Commission of Inquiry said that agencies responsible for both the cleanup and environmental testing were in “new territory” where they had “no first hand experience.” The commission cited several areas where federal agencies and PTTEP AA itself acted judiciously, but with the benefit of hindsight, could have responded more efficiently.

Operating in the Timor Sea, the Montara wellhead platform is almost exactly halfway between Indonesia and Australia at approximately 250 kilometers (155 miles) from Rote Island, the closest Indonesian territory to the rig, and 250 kilometers from Australia’s northwest coast. The blowout was the result of a failed cement barrier in an oil-well some 70-plus meters underwater.

The Montara platform’s location is shown in the Timor Sea, near the Australia-Indonesia maritime border. Map by Tim Henry

It is not known how much oil was spilled. The commission of inquiry cited a statement from Andy Jacob, PTTEP AA’s chief operating officer in 2009, who testified to the effect that the “initial flow may have been as high as 1,000 to 1,500 barrels per day before dropping to around 400 barrels and possibly less.”

Using the 400-barrel-a-day benchmark, just under 30,000 barrels oozed into the Timor Sea — equivalent to slightly less than two Olympic-sized swimming pools — during the 10-plus week duration of the spill. By contrast, the Deepwater Horizon blowout, considered the worst such disaster in U.S. history, spilled approximately 5 million barrels of oil into the Gulf of Mexico in 2010. While smaller in degree, experts are still quick to call the Montara blowout a major spill and the amount of oil severe in terms of its potential impact on the environment.

The Australian Maritime Safety Authority, the lead government agency responding to the blowout, estimated that the slick covered some 90,000 square kilometers, but that most of the hydrocarbons remained within about 35 kilometers of the Montara platform.

PTTEP AA said satellite images showed that small amounts of weathered oil had flowed into Indonesian waters on Sept. 1, 2009, 10 days after the spill began. PTTEP AA said the oil came within approximately 94 kilometers of Rote Island — according to the company, this is as close to Indonesia as oil from the spill would ever reach.

But Hilman and her colleagues said the oil went far beyond Rote. She and Muslim Muin, an ocean engineer who helped the Ministry of Environment assess the damage, said government surveyors found oil along the Indonesian coast. “Ocean currents pushed some oil away, but there was still a lot along the coast of Timor,” Muin told Mongabay.

Muin is the head of the Coastal Engineering Research Group at the Bandung Institute of Technology. Computer models he built for the ministry used their data to predict possible routes a spill might take based on the weather, winds, tides and currents at the time. His models were informed by surveillance flights and satellite images as well as boots-on-the-ground observations by the ministry’s investigators.

A sea snake swims through oil sludge in waters affected by the Montara spill, in September 2009. The contamination presents on the water as a mirror-like oily sheen with scattered waxy particles that clump together and form swirls. Photo by Chris Sanderson for WWF-Australia

PTTEP AA conducted its own modeling, and said the Indonesian Throughflow (ITF), an ocean current flowing from east to west between Timor and northern Australia, carried oil from the Montara platform away from Indonesian territory and out to sea.

A 2012 email from a PTTEP AA spokesperson said their findings were independently assessed, and found that it was “highly unlikely any oil passed over the ITF and impacted Indonesian coastlines.”

But Muin said PTTEP AA’s model dramatically overstated the ITF’s impact. “This mistake [resulted in] the wrong conclusions in PTTEP AA’s study that oil did not reach Indonesian coastal waters,” Muin explained in a 2011 presentation to the Indonesian government.

“I think our simulation was better,” Muin said.

The Monitoring Plan

As oil continued to spurt into the Timor Sea in October 2009 — about a month and a half after the spill began — the Australian government was still negotiating the terms of an environmental program to study its waters with PTTEP AA.

The Montara Commission of Inquiry said that under the existing laws at the time, the government could not require PTTEP AA to either implement or pay for a study. Australia lacked the funding, resources and equipment to conduct its own research, leaving the company in control of scientific monitoring for damages caused by the spill.

While commending PTTEP AA for eventually funding a series of studies collectively known as the Monitoring Plan, the Commission said it was “unacceptable” that the plan took so long — some 50 days — to implement after the blowout began, and cited multiple reasons why the studies’ overall efficacy is questionable.

Once a major spill has begun, scientists are ideally on the water within a few hours. The goal is to track where the spill is going, and to gather data at beaches, marshes and shorelines before oil arrives. This baseline data gives researchers a snapshot of the pre-spill environment which can then be contrasted with post-spill observations.

The commission said that with “the absence of baseline data, it is likely to be very difficult to assess the ongoing consequences of the spill.”

Three members of a WWF expedition into the waters affected by the spill, undertaken in September 2009, photograph the contamination. It forms long bands across the horizon. Photo by Kara Burns for WWF-Australia

About two weeks after the spill began, the Australian Department of Sustainability, Environment, Water, Population and Communities (DSEWPaC) — now part of the Department of the Environment and Energy — conducted small-scale wildlife surveys, and found dozens of birds contaminated with oil. DSEWPaC concluded that “the only way to ascertain the true impacts of the Montara oil spill on the region’s biodiversity is to conduct a systematic, long-term monitoring effort.”

With regard to the PTTEP AA-funded Monitoring Plan, a DSEWPaC spokesperson told Mongabay that there was a “short delay” before implementation, and that the absence of baseline data was a “limiting factor,” but said the studies were able to assess the long-term impacts on communities and ecosystems, which they said were negligible.

Jeffrey Short, a retired research chemist with the U.S. government and one of the world’s foremost oil pollution experts, told Mongabay that there are “almost certain environmental effects” when a spill with the magnitude of the Montara blowout occurs. Short said the month-long delay in a significant study was prohibitive to understanding the extent of the spill.

“By failing to act appropriately and timely, both the spiller and the government agencies have foreclosed on the options of even assessing what most of the long-term damages of the spill are,” Short said. “They could have been horrific, we just don’t know.”

PTTEP AA said that the studies were “the most extensive of [their] type ever undertaken in Australia,” and that the results show there was “little or no detectable impact” from the spill. In an August press release responding to the seaweed farmers’ lawsuit, PTTEP AA said that if the reefs closest to the Montara well — where oil and dispersant concentrations were highest — did not show adverse long-term impacts, then it was “improbable” that West Timor would have sustained damage.

A pair of bottlenose dolphins, one of which is clearly emaciated, suffer from the knock-on effects of the spill. The image was shot during WWF-Australia’s expedition to affected areas near the Montara platform in September 2009. Photo by Chris Sanderson for WWF-Australia

Spies, the American marine ecologist, disagreed with PTTEP AA’s and DSEWPaC’s positive assessments.

“There were quite a few studies done by the Australian government, but they were all too late,” Spies said. “The government concluded that there were no effects, because they went out there too late. It’s not logical. Without witnesses, the lack of evidence does not mean there were no effects.”

Spies added that he’s been critical of the Australian government for working so closely with PTTEP AA, and of the company’s influence over what studies were done.

Spies’ doubts were echoed by the commission of inquiry’s report: “Mention has been made…to this Inquiry of very limited impacts of the blowout on wildlife. It is unlikely that this reporting depicts the extent of the impact on species. The area is vast and the aerial and other surveillance undertaken is unlikely to have revealed what really happened.”

Regardless of what occurred in Australian territory, Indonesian officials are adamant that their country’s studies, done a few years after the spill, revealed detrimental effects.

“We found reduced fish production and seaweed production. And as a result, incomes were faltering,” Hilman said. As the negotiations began to stutter, Hilman said, the results of the studies were never discussed.

Tanoni of the West Timor Care Foundation said he has been calling on PTTEP AA to invest the time and money to investigate West Timor’s waters to determine if there are any lingering environmental effects.

“Since until last year, my group still writes and asks them, why don’t you do independent research? If you find nothing, then pay nothing,” Tanoni said. “They’re too scared of what they’ll find in Indonesian waters. It’s worse than they think.”

The negotiations

As Australia assessed the damage from the spill, representatives from PTTEP AA and its Thai parent company began negotiations with the Indonesian government in July 2010. The two parties convened dozens of times over the next year in Australia and Singapore, according to official meeting minutes obtained by Mongabay.

A memorandum of understanding (MoU) was eventually drafted, and was scheduled to be ratified by both parties. But PTTEP AA delayed signing the MoU on numerous occasions and the negotiations evaporated, according to the Indonesian side’s Hilman, who said the company effectively reneged on its offer for compensation.

PTTEP AA told Mongabay that it was “unclear” why the MoU was never resolved, and declined to comment on the specifics of the negotiations, on the delays or on what dollar amounts were discussed. “As the MoU was not concluded, no formal discussions on the issue of compensation took place,” a PTTEP AA spokesperson said in an email statement in September 2016.

“We have always acted cooperatively and in good faith in our past discussions with the Government of Indonesia, and we will continue to do so,” the spokesperson added.

Oil slicks from the Montara blowout in the Timor Sea are shown on Aug. 25, 2009, four days after the spill. Photo by Chris Twomey/Flickr

However, Hilman said that PTTEP AA was “always delaying the signing, starting from political reasons to natural causes.”

At the first meeting in June 2011, PTTEP AA said it “would like to show good-will and good corporate citizenship by funding a corporate social responsibility program in Indonesia,” the framework of which would be discussed in the coming weeks, according to minutes of the meeting that were signed by both Hilman and Jacob, the PTTEP AA chief operating officer.

Indonesia had originally sought 23 trillion rupiah (US$1.7 billion) to cover economic losses, compensate for environmental impacts and pay for long-term environmental monitoring.

In December 2011, it was agreed by both parties that some hydrocarbons from the Montara well entered Indonesian waters and “potentially impacted resources identified in the Government of Indonesia claim [as] fisheries, fish, and turtles,” according to the meeting minutes. Both parties agreed to give urgent priority to resolve the economic and social impact of the spill as it affected the fisheries sector.

A framework for a MoU was negotiated, calling for a “dual-track” approach for compensation, the first track of which included a “good faith” interim corporate social responsibility (CSR) payment of between US$3 million and US$5 million dollars, according to the minutes. The second track was to include a bank guarantee of approximately US$100 million.

A three-person “neutral committee” was established in June 2011 in Singapore to review the claims. At this meeting, PTTEP AA suggested it pay just US$3 million in total, according to Hilman.

“They wanted to erase compensations and just pay US$3 million as part of the CSR,” Hilman said. “We strongly objected, because they had already agreed on paying full compensation.”

Despite these differences, the parties agreed to finalize the MoU in August 2011. But PTTEP AA requested a delay because a new government had convened in Thailand.

“The postponement was to allow the then new Thai Government — a major shareholder in PTTEP — to be fully briefed on the status and outlook for the compensation negotiations,” said an email statement from a PTTEP AA spokesperson in 2012. “The new administration was keen to ensure continued good relations between the Governments of Thailand and Indonesia.”

According to Hilman, the MoU was set to be signed at the end of August 2011, but was delayed again on two occasions. In November 2011, the Thai administration requested a delay due to heavy flooding in Thailand. The MoU was expected to be signed by end of December, but never was.

Hilman retired in 2013, and proposed suing PTTEP AA. She said there was already discussion among several high-ranking Indonesian ministers to bring a lawsuit, which appears to be coming to fruition this week.

To date, the company has yet to pay Indonesia a cent.

Aftermath of the fire that raged on the Montara oil platform and the attached West Atlas portable jackup drill rig on Nov. 1-3, 2009. Photo courtesy of SkyTruth/Flickr
The class action

The seaweed farmers’ lawsuit was filed in August 2016 and began with some 5,000 plaintiffs. It is expected to grow to over 13,000, according to Ben Slade, a lawyer with the firm Maurice Blackburn representing the claimants. Slade said that given PTTEP AA’s “warlike attitude toward the farmers’ claim,” the suit could take three to five years to settle.

“It’s sad that this relatively nascent industry that had been promoted by the Indonesian [government] had taken off and was such a boon,” Slade told Mongabay. “People had pulled themselves out of poverty for the first time in a century. But [the seaweed industry] was struck down by this company’s incompetence.

“It’s extraordinary that so many people can suffer such a loss of their livelihood only to be confronted by total deniability.”

Additional reporting by Fidelis E. Satriastanti.

The News Lens has been authorized to publish this article from Mongabay, an environmental science and conservation news and information site.

TNL Editor: Edward White

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