Suta Vijaya: The Golden Village Boy

The following script was a result of interview which conducted and writen by Marta Yuliana of Sampoerna Foundation - 2007

Suta Vijaya, Policy, Government and Public Affairs Manager of Chevron Indonesia Company, never dreamt that his life would turn out the way it has. His parents were teachers with limited income and he had to struggle to pursue his study. His journey took him from an unknown place in East Kalimantan to one of the world's largest global energy companies. Equipped with his scientific approach and keen observation, he has now become one of the most credible names in issues management. Following are excerpts from a recent interview with him.

River Bank of Sanga-sanga

AJAR: Tell us a little bit about your childhood!
Suta: I was born in a small village in East Kalimantan named Sanga-Sanga. It was located along the tributary of Mahakam River, as a result it was quite difficult for me to go to school. I had to take a two-hour boat trip just to reach school. After graduating from high school, I thought I could not continue my study. I did not want to burden my parents, but I had high expectation and really wanted to have higher education. When alone, I would hide below my bed and cried. At one time, the news about me wanting to continue school traveled to the ears of the chief of an oil company. He heard about my story and decided to give me some money to go to Surabaya. From Surabaya, I went to Solo, Jogja and finally came to Bandung a year later. At that time, I tried hard to prepare for the university entrance. I studied anywhere I could, from a badminton field to any open space I could find. In Bandung, I applied at ITB as an Engineering student. Armed with only Rp 15,000/month, I had to learn to survive. Again, good fortune found me and I was chosen to receive a scholarship from Mr. Siswono Yudhohusodo, a sucessful businessman at that moment. My Rp 15,000 then became Rp 75,000 and I felt so relieved.“

House of Representatives, Sacramento CA

AJAR: After graduation, you decided to return to East Kalimantan, why?
Suta: The decision was not a rational choice, it was more because of my feelings. I was actually at a crossroad at that time. Personally, I wanted to pursue higher education, but due to financial constraint, I had to work. I received several orders from different companies, including a job offer to be a civil servant in Sumatera Utara. After consulting with several friends, I decided to work as a geoscientist in Balikpapan. My closeness and devotion to the province played an important factor in my decision, a decision which I do not regret.

AJAR: How did your career take off?
Suta: I was working at UNOCAL (which now is Chevron Indonesia Company) as Manager of Exploration Technology and in charge of the entire surveys for oil exploration, data processing and analyzing. One day, during a meeting, my boss called me to help the company solve a problem. During the Reformation era, a lot of demonstrations occurred and it also happened in our facilities. I was instructed to be the company’s spokesperson to talk to the local people and find solutions for both sides. For 30 days, after numerous deadlock, hearing sessions and negotiations, the problem was solved. When I returned to work, my boss asked me to temporarily help the company in managing the issues in public affairs and it has become a permanent position since. I learn to communicate with the community by applying all my science knowledge. Before as a geoscientist, I “talked” to the rock and tried to interpret the rocks by analyzing its layers, texture, particle size and internal structure. From that data, I then made my conclusions. It is the same when I am talking to the people. It is even better, because with people, they can give you feedback, so that we can check right away whether our messages get across or not. With my geo-science, I learn to interpret what the public is saying. I believe that all the earth signs and the principles of science that I learn are applicable in any situation and across all borders.

AJAR: How do you deal with issues management?
Suta: From the beginning, I have always reminded my company that acceptance from the locals is essential for our business. People say that acceptance is only possible through communication. I challenged myself that we need more than communication to deal with issues management. Of course, communication is important. That is the first step to build understanding. If we understand each other, we will then have a relationship. With relationship comes trust. Once there is trust, acceptance will come automatically. To achieve acceptance, we have to apply the whole concept. A big issue usually comes from a small issue. If we ignore a small issue, it will develop into a bigger issue. If it is not handled properly, it will be labeled and evolve into a big issue. Therefore, the ideal thing to do is how to manage and handle small issues, so that they do not develop into huge issues that will require more resources, time and energy to solve.

Headquarter of Chevron, San Ramon

AJAR: How important is education for you?
Suta: From my experience, I have concluded that only through education, I can liberate myself from poverty. One of my greatest moments was the first time I visited America. My company sent me to California to be stationed in their research center as a reward of my hard work. There I stayed at the best hotel in Los Angeles. I remembered looking out of the window, admiring the view of the city and saw my whole life flash before me. I was only a kampung boy, playing and swimming with my friends at the river. And I asked myself how did I get here. At that point, I was more convinced than ever that everything was only possible through education.

AJAR: What is the biggest lesson that your teacher has ever taught you?
Suta: When I was in high school, I was not confident at all and it showed in my behavior. Even though I could perform well in tests, I still had to cheat. I was never sure of my answers if I didn’t cheat. One day during a test, I cheated and my teacher saw what I did, but he pretended not to see me. When my teacher returned my test result, he gave me a note saying that if I were to work by myself, I would do even better, because he saw a potential in me. That note turned my attitude and my life 180 degrees and from that moment on, I never cheat anymore. Believe it or not, I still keep that note until now. This proves that you don’t need to use violence or embarrassment to educate a person. If my teacher did not prompt me that day, I would still probably be a weak person.

AJAR: Any tips for our scholars?
Suta: I am convinced that it is not how much you know about something, but how much you believe in it. Knowing much is not important, if we can’t materialize our knowledge or apply it in our lives. You can read a lot of books and know a lot of things, but if you never actually put it into action, your knowledge will be idle and useless.


Interviewed by: Marta Yuliana - 2007

Buku 30 tahun alumni ITB Angkatan 1977 - "Kisah-kisah sebuah Angkatan": Kata pengantar buku

Buku 30 tahun alumni ITB Angkatan 1977 - "Kisah-kisah sebuah Angkatan": Kata pengantar buku

MIGAS KALIMANTAN TIMUR

Kajian: Balikpapan dua-puluh tahun kedepan
Oleh: Ir. Suta Vijaya.

Intisari
Kalimantan Timur kaya akan sumber migas. Jumlah cadang minyak (terbukti dan potensial) kira-kira 13% dan cadangan gas kira 28% dari cadangan nasional, Sedangkan cadangan batubara kira 34% dari cadangan nasional. Disisi lain, saat ini Indonesia sudah tidak lagi tergolong negara pengekspor minyak, tapi sudah menjadi pengimport minyak (net importer country) sejak tahun 2004. Bagaimana peran kota Balikpapan pada masa datang? Memang pendapatan kota Balikpapan tidak secara langsung diperoleh dari sektor migas, namun sebagian besar pusat kegiatan industri migas berada di Balilkpapan. Untuk memahami dua pertanyaan diatas, marilah kita mulai dengan mempelajari kondisi neraca minyak dan gas nasional saat ini, potensi cadangan migas Kalimantan Timur, dan menafsirkan peran Balikpapan dalam industri migas.

Ketersediaan Migas nasional.
Pada tahun 1999, Indonesia meduduki peringkat ke tujuhbelas dunia sebagai negara pengekspor minyak atau kira-kira 2,0 persen dari produksi minyak dunia. Cadangan total minyak nasional kira-kira 9,8 milyar barrel (termasuk 5,3 milyar barel cadangan terbukti). Sejak tahun 1997, produksi Indonesia sebesar 1,58 juta barel perhari, terus menurun menjadai 1,56 juta barel perhari pada tahun 1998, menjadi 1,50 juta barel perhari pada tahun 1999, menjadi 1,3 juta barel perhari pada tahun 2002. Angka penurunan berlanjut terus menjadi 1,146 juta barel perhari pada tahun 2003. Kemudian tahun 2004, kemampuan produksi minyak Indonesia turun lagi menjadi kurang dari satu juta barrel perhari (Lihat Gambar 1).

Dunia industri minyak juga berhadapan dengan situasi paradoks. Pada saat cadangan yang ada terus berkurang, makin sulit menemukan sumber minyak baru, resiko finansial dan teknis semakin tinggi, harga minyak dunia berfluktuasi, pada saat yang sama Industri minyak harus juga menghasilkan profit. Sementara itu kondisi investasi dan kepastian hukum belum sepenuhnya menunjang industri migas untuk tumbuh dengan sehat agar terus melakukan eksplorasi dan pengembangan lapangan minyak baru. Bila penurunan produksi minyak ini terus berlanjut, maka Indonesia yang sekarang sudah menjadi “net importer country”, akan terus menjadi ”net importer country” dimasa-masa akan datang bila tidak ada penemuan-penemuan baru. Situasi ketersediaan energy minyak dimasa akan datang tentu sangat mempengaruhi kondisi ekonomi nasional maupun daerah, terutama di Kalimantan Timur yang banyak mengandalkan pendapatan dari sektor migas. Langkah strategis jangka panjang untuk menjamin ketersediaan energi perlu mendapatkan perhatian serius. Beberapa sumber energi yang tersedia dikawasan Kalimantan Timur yang belum dimanfaatkan secara optimal adalah gas bumi, batu bara, tenaga air, dan tenaga surya. Kalimantan Timur memiliki cadangan batubara sekitar 13,128 Miliar Metrik Ton atau 34% dari cadangan batubara nasional (Lihat Tabel 2).

Indonesia memiliki cadangan gas alam terbukti (proven natural gas reserve) sebesar 92.5 triliun stadar kaki kubik, dan cadangan potensial sebesar 68.5 triliun stadar kaki kubik. Dengan demikian cadangan total adalah 158.3 triliun kaki kubik (Lihat Tabel 3) atau setara dengan 27.0 miliar barel minyak. Ini berarti cadangan gas Indonesia setara dengan tiga kali cadangan minyak nasional yang mampu memasok kebutuhan energi Indonesia sampai dengan 50 tahun dengan asumsi tingkat kebutuhan energi seperti sekarang ini.

cadangan MIGAS kALIMANTAN TIMUR
Pada tahun 2002, Kalimantan Timur memiliki cadangan (cadangan terbukti dan potensial) minyak sekitar 1,3 miliyar barel atau 13% dari cadangan minyak nasional yang besarnya 9,7 milyar barel, and memiliki cadangan gas total sebesar 47.8 TCF (Trillion Cubic Feet - triliun stadar kaki kubik) atau setara dengan delapan miliyar barel minyak, atau hampir setara dengan cadangan minyak nasional. Cadangan gas Kalimantan timur yang besarnya sekeitar 28 % dari cadangan nasional mempunyai arti penting dalam perekomomian nasional dan daerah dimasa datang.

Pada tahun 2004, Kalimantan Timur memperolah dana perimbangan paling besar dari empat-belas daerah penghasil migas lainnya yaitu sebesar Rp. 3,101 triliun (Lihat Gambar 2).


Peran Balikpapan dalam Industri migas
Potensi migas: Sekarang, Indonesia sudah tergolong sebagai negara pengimpor minyak (net importer country). Namun demikian, Balikpapan akan tetap memainkan peran penting dalam industri migas, bukan karena memiliki lapanga-lapangan migas, tetapi karena Balikpapan adalah pusat kegiatan industri migas dan layanan pendukung. Kalimantan Timur memiliki cadangan gas sangat besar yaitu 28% dari cadang gas nasional atau setara dengan delapan milyar barel minyak, ditambah dengan cadangan minyak sekeitar 1,3 milyar barel. Walaupun gas yang dihasilkan di Kalimantan Timur tidak diolah di Balikpapan, tapi diolah di Bontang, namun peran Balikpapan sebagai pintu gerbang Kalimantan Timur, menjadikan Balikpapan tetap berperan penting dalam layanan penunjang sektor industri dan perdagangan di Kalimantan Timur.
Kalimantan Timur, pada kwartal pertama (Maret) tahun 2005, tiga industri migas -Unocal, Total, dan Vico - memproduksi minyak lebih kurang 135 ribu barel perhari (Lihat Gambar 3) atau sekitar 13% dari produksi minyak nasional, dan memprodukksi gas lebih kurang 3.804 MMSCF (juta standard kaki kubik)/ hari(Lihat Gambar 4) atau 49% dari produksi gas nasional.

Produksi gas dimasa akan datang dari Kalimantan Timur akan lebih meningkat lagi, sehubungan dengan rencana Unocal, yang sekarang diakuisisi oleh Chevron-Texaco, untuk memproduksi gas dari pengembangan lapangan gas dilaut dalam Selat Makassar. Sekarang Unocal memasok lebih kurang 7% dari jumalah gas yang diolah LGN Bontang. Pada tahun 2012, Unocal merencanakan memasok 30% dari seluruh kebutuhan LNG Bontang. Sedang Total Indonesie dalam sepuluh tahun kedepan diperkirakan memproduksi gas dengan jumlah yang tidak jauh berbeda dengan keadaan sekarang. Oleh sebab itu Kalimantan Timur, maka dalam dua-puluh tahun kedepan posisi Balikpapan terus akan memaikan peran penting dalam kelangsungan industri migas di Kalimantanan Timur
Kilang Balikpapan: Indonesia memililki tujuh kilang dengan kapasitas terpasang (installed capacity) total sebesar 1,057 juta barel perhari. Kapasitas kilang terbesar adalah kilang Cilacap di Jawa Tengah yang mempunyai kapasitas 348 ribu barel perhari, kilang Balikpapan di Kalimantan Timur adalah 260 ribu barel perhari, dan kilang Balongan di Jawa adalah 125 ribu barel perhari.
Kilang minyak Balikpapan dirancang hanya mengolah minyak impor, tidak untuk mengolah minyak yang berasal dari lapangan minyak yang ada sekitar Balikpapan. Oleh sebap itu kegiatan kilang Balikpapan tidak secara langsung terkait dengan tingkat produksi migas dalam negeri. Sekalipun bahan baku kilang Balikpapan tidak tergantung pasokan minyak dari lapangan minyak yang ada di Kalimantan Timur, namun Kilang Balikpapan membutuhkan pasokan gas dari lapangan migas sekitar Balikpapan untuk memasak minyak mentah import.
Peran Balikpapan sebagai pusat distribusi Bahan Bakar Minyak (BBM) untuk kawasan Indonesia Timur (Lihat Gambar 5) makin penting. Alur pelayaran tanker minyak keluar dan masuk teluk Balikpapan akan tetap sibuk. Arus barang dan jasa untuk menunjang aktifias kilang dapat menajadi salah satu penggerak ekonomi Balikpapan.
Dua fakta penting diatas yaitu potensi migas di Kalimantan Timur, dan keberadaan kilang Balikpapan yang juga pusat distribusi BBM untuk Indoneisa Timur, dan ditambah cadangan batubara yang sebagian aktifitasnya ditunjang dari Balikpapan masih menjadi faktor penting bagi ekonomi Balikpapan

Penutup
Kelangkaan energi didunia membuat harga pasar migas dan batubaru membumbung tinggi. Kenaikan harga minyak diperkirakan bisa mencapai seratus dolar per barel. Harga energi yang tinggi akan berdampak langsung pada kemampuan pemerintah dalam penyediaan energi listrik yang memadai untuk masyarakat. Cadangan sumber daya energy yang besar di Kalimatan Timur tidak ada jaminan kemudahan bagi Kalimantan Timur untuk mendapatkan pasok minyak atau gas untuk menghasilkan tenaga listrik. Inilah keadaan paradoks yang dihadapai oleh Kalimantan Timur. Untuk memposisikan Kalimantan Timur pada posisi ekonomi yang baik dimasa akan datang maka Pemerintah Propinsi hendaknya melakukan dua hal berikut: (a) Pemerintah Propinsi perlu mengkaji lebih dalam tentang dampak harga migas yang tinggi terhadap perekonomian Kalimantan Timur, dan (b) Pemerintah Propinsi perlu merumuskan Kebijakan Energi Daerah (Regional Energy Policy)

Potensi Gempa dan Tsunami di Pesisir Kalimantan Timur

Ir. Suta Vijaya
Ikatan Ahli Geologi Indonesia – Kaltim.

Apakah mungkin tsunami terjadi dan menimpa pesisir Kaltim? Masyarakat Kaltim terutama yang berada di pesisir pantai sering bertanya-tanya setelah serangkaian peristiwa gempa yang diikuti oleh gelombang pasang atau tsunami yang melanda Aceh, Nias, dan baru-baru ini di terjadi di kawasan pantai selatan Jawa Barat.

Sekalipun beberapa ahli geologi dan geofisika berpendapat, bahwa Kaltim aman dari gempa dan tsunami. Alasan ini kemudian didukung oleh penjelasan yang bersifat teoritis. Apa memang demikian?

Saya berbeda pendapat dengan pendapat diatas. Justru Selat Makassar rawan akan tsunami. Sejak tahun 1900, tidak kurang delapan belas tsunami terjadi diwilayah Sulawesi, enam diantaranya terjadi di Selat Makassar. Tidak ada catatan bahwa imbas tsunami sampai ke pesisir Kaltim. Tetapi dari simulasi komputer dapat diketahui dampak tsunami di pesisir Kaltim memang ada, namun kecil. Sehingga gejalanya seperi kejadian pasang surut biasa. Sekecil apapun dampak tsunami, kita tetap harus waspada.

Note: Untuk referensi lanjutan, silahkan baca makalah yang ditulis oleh: G. S. PRASETYA,W. P. DE LANGE and T. R. HEALY Coastal Marine Group, Department of Earth Science, University of Waikato, Private Bag 3105,Hamilton, New Zealand

Mekanisme Gempa di Selat Makassar.
Mekanisme gempa yang terjadi di Aceh, Pulau Nias, Padang, Bantul-Yogyakarta, dan Pangandaran adalah akibat benturan kerak samudra Indo-Australia dengan kerak benua Euro-Asia.

Gempa yang terjadi di Selat Makassar pada umumnya akibat pergerakan mendatar antar kerak benua. Contohnya Patahan Palo-Koro di wilayah utara Selat Makassar, dan Patahan Pastenoster atau Patahan Adang di selatan Selat Makassar. Patahan dengan gerakan mendatar kecil kemungkinannya menyebabkan tsunami. Namun, bila patahan mendatar yang disertai gerak relatif turun/ naik atau gempa yang terjadi lalu menyebabkan longsoran tebing laut yang curam (shelf edge), hal inilah yang dapat menimbulkan tsunami. Disebelah timur maupun barat Selat Makassar, tebing lautnya sangat curam. Kedalaman laut berubah dari 100 meter dengan cepat berubah menjadi 1000 meter.

Gambar 01: Peta tektonik Kalimantan-Sulawesi

Hampir seluruh daerah di Indonesia pernah mengalami gempa. Namun, ada daerah-derah yang lebih sering mengalami gempa, dan yang hanya sesekali itupun gempa skala kecil. Pada gambar 2 terlihat sekali bahwa pusat gempa di Indonesia terletak didaerah Pulau Sumatra, Jawa, Sulawesi, Halmahera, dan Papua. Sedang Pulau Kalimantan frekwensi gempa sangat jarang, dan kalau pun terjadi kekuatanya kecil. Tetapi ingat! Longsoran dasar laut perairan Kalimantan bisa terjadi akibat gempa yang berada di Sulawesi. Longsoran dasar laut inilah yang bisa menimbulkan tsunami. Kita harus terus waspada, dan jangan menunggu tsunami terjadi baru percaya.

Gambar 02: Rekaman getaran gempa di Indonesia antara tahun1990 - 2000

menjorok kearah laut. Akumulasi air yang berlebiha tidak bertahan lama, dan segera menyebar menjahui episentrum gempa. Gelombang yang dihasilkan akan semakin besar ketika makin mendekat kedaerah pantai

Tanda Tsunami
Bila kita merasakan adanya getaran gempa bumi, dan air ditepi pantai mendadak surut, bergegaslah meningglkan kawasan pantai untuk menyelamatkan diri. Selain air yang mendadak surut, tanda-tanda lain dapat berasal dari satwayang menunjukan prilaku yang tidak biasa. Misal: ular-ular yang dalam waktu bersamaan berpindah dari tanah kepepohonan, demikian juga unggas yang berterbangan mencari tempat hinggap dipohon-pohon.

Tanggap Darurat
Setiap kali ada bencana termasuk bencana gempa dan tsunami yang memakan banyak korban, setiap kali pula kita berharap agar peristiwa yang memilukan hati ini adalah yang terakhir kali. Semua orang tahu, bahwa persiapan menghadapi bencana dapat mengurangi resiko. Tapi, setelah bencana berlalu untuk beberapa saat, kita cendrung lupa. Kalau toh ada diskusi tentang tanggap darurat, sering bicara soal aturan, hukum, dan undang-undang.

Pacific Tsunami Warning Center (PTWC) yang berpangkalan di Pantai Ewa Hawaii bertugas memberi peringatan kepada hampir seluruh negara terutam negera-negara yang berada dikawasan Pasific, termasuk Indoneisa.Banyak pula kalangan mengeluhkan sistem peringatan dini (early warning). Sebenarnya pokok persoalan bukanlah peringatan dini, tetapi peringatan dini tidak bisa disampaikan dengan cepat dan akurat kepada pihak-pihak yang berkepentingan, terutama masyarakat yang kemungkinan terkenda dampak bencana. Contohnya, tsunami yang menimpa kawasan pantai selatan Jawa Barat, lima belas menit sebelum gelombang tsunami menghantam kawasan pesisir, Pacific Tsunami Warning Center (PTWC) telah mengeluarkan peringatan. Tapi apa yang terjadi, masih juga ratusan nyawa tak terselamatkan. Kalau kita mau jujur, bahwa persiapan tanggap darurat belum mengalami perkembangan yang memadai. Alat peringatan dini seperti seismomter dan alat-alat lainnya memang dibutuhkan dalam mendeteksi gempa, tetapi yang jauh lebih penting adalah: serine tanda bahaya, pendidikan kepada masyarat, latihan tanggap darurat yang semuanya tidak banyak membutuhkan biaya besar, dan dapat dilakukan segera. Jangan terlalu mengandalakan intrument yang canggih, sementara instgrument belum ada, bahaya masih terus mengancam. Sudah waktunya kita mempersiapkan diri dengan apa yang sedang kita miliki sekarang.
Tentau kita kali ini tentu berharap, sekalipun ada bencana, masyarakat dapat selamat dari bencana.

Lewat tulisan ini, penulis ingin menghimbau terutama pada masyarakat pesisir Kalimantan Timur dan pesisr barat Sulawesi, agar tidak perlu cemas terhadap ancaman bencana tsunami, tapi tetap harus waspada. Sebelum ada petunjuk baku tentang bagaimana bertindak bila ada gempa. Berikut ada beberapa langkah sederhana yang disingkat ABC yang artinya:


Ketika ada gempa, lakukan langkah-langkah berikut:
A: Aktifkan tanda BAHAYA. Masyarakt pesisir dapat membuat kesepakatan tentang tanda-tanda bahaya, dan siapa yang berhak memberikan tanda bahaya. Ingat! Bila anda menunggu sampai anda melihat gelombang pasang datang mendekati pantai, anda sesungguh sudah terlambat untuk menghindar, oleh sebab itu setelah mendengar peringatan bahaya lakukan langkah berikut:

B: Bawa (ajak), semua anggota keluarga berkumpul ditempat yang telah ditentukan (assembly area). Bawa perlengkapan seadanya. Setelah yakin tidak ada anggota keluarga tertinggal, segera:

C: Cepat menghindar ketempat yang lebih tinggi sesuai arahan pimpinan regu. Masyarakat dapat berunding dan menyepakati daerah mana yang dianggap aman bila untuk menghindar dari gelombang pasang. Tetaplah berada ditempat menghindar sementara sampai keadaan aman kembali.



Ketika gempa selesai, lakukan langkah-langkah berikut:

A: Aktifkan tanda AMAN

B: Balik kerumah masing-masing, dan periksa kelengkapan anggota keluarga masing-masing

C: Canangkan terus kewaspadaan. Walaupun gempa yang terjadi tidak menimbulkan tsunami, kemudian jangan beranggapan kalau terjadi gempa kemudian lalu mengabaikannya. Tirulah kebiasaan masyarakat pulau Siberu yang selamat dari bencana tsunami beberapa tahun lalu. Mereka selalu cepat menghindar ketempat-tempat yang lebih tinggi bila terjadi gempa. Hasilnya, masyarakat setempat dapat terhindar dari bencana tsunami. Ingat ABC.

Untuk mengurangi dampak destruktif tsunami, maka perlu tataruang kawasan pesisir yang juga mempertimbangan berbagai aspek seperti aspek kependudukan, ekonomi, sosial, lingkungan, dan kemungkinan bencana alam seperti tsunami.

Semoga bermafaat bagi masyarakat luas.

Major Issues in Mining Industries - 2006: A Lesson Learn

Balikpapan, February 28, 2006

On February 2006, I identify two outstanding external issues that might relevant to business environement. Those two issues are as follows:

1. Goodwill Agreement between Government of Indonesia and PT Newmont Minahasa Raya (PT NMR) on sustainable development and scientific monitoring in the post-mine era in North Sulawesi. That was the optimal result of the out-of-court settlement over the civil lawsuit (pollution case) against the company that had previously been filed the Indonesian government as represented by the Indonesian ministry of environment. In fact, PTNMR and the Government of the Republic of Indonesia agreement will not stop the ongoing criminal case that directed to Newmont Minahasa Raya President Director Richard Ness.


2. PT Freeport, the world's largest gold and copper mine, suspended their operation on February 22 – 25, 2006, after “illegal miners” blocked the road leading to the site in Indonesia's remote Papua province .

Remarks: Local people in Papua earn living from what present around operation. They retrieving and selling tiny amounts of gold and copper from waste rock dumped by the mine. Hundreds of families in the area are believed to earn a living by searching for small deposits of gold in waste rock left behind by the mine. Experiences in Papua tells us that security approach to disperse local people was not a good choice.


PT. Newmont Minahasa Raya Case

Issue:
· Civil case: The Environment Ministry had lodged the civil case to PTNMR in 2005, seeking damages of around $133 million. In November, a lower court dismissed the case, but lawyers for the ministry appealed.

· Criminal case: In the criminal trial, Newmont Minahasa Raya President Director Richard Ness, from Minnesota, could face a jail term of up to 10 years and be fined around $68,000 if convicted.

Controversies
· PT Newmont Minahasa Raya dinned of wrong doing.
· A government-commissioned probe and a police study have concluded that the bay was polluted, but several other studies, including one by the World Health Organization and the Indonesian Health Ministry, did not support that charge.

Settlement
· On February 15, 2006, PTNMR and the Government of the Republic of Indonesia signed a scientific monitoring agreement as part of an effort to resolve the long-standing Buyat Bay controversy. The agreement also provides for enhanced community development programs in North Sulawesi.

· PT NMR will also provide a fund of USD30 million that will be spent during the period of 10 years. The company will provide initial funding of $12 million to cover the cost of the monitoring and community development programs. Over a ten-year period, Newmont will contribute an additional $18 million. The funds will be managed by an organization governed by interested stakeholders. Accountability for the fund will be ensured through yearly reports that will be made available to the public. The transparency of the scientific panel's activities will also be assured through annual reports to the public.

Unsettled issues
· PTNMR and the Government of the Republic of Indonesia agreement will not stop the ongoing criminal case.
· Meanwhile Indonesian non-governmental organizations (NGOs) rebuke the agreements between the central government and Newmont over the case of environmental pollution at Buyat bay in North Sulawesi.


PT. Freeport Incident
Chronology of Incident in Freeeport, February, 2006

February 21, 2006
Police and company security guards tried to disperse the miners, who earn their living retrieving and selling tiny amounts of gold and copper from waste rock dumped by the mine. Hundreds of families in the area are believed to earn a living by searching for small deposits of gold in waste rock left behind by the mine.

February 22, 2006
Production at the world's largest gold and copper mine was suspended Wednesday after “illegal miners” blocked the road leading to the site in Indonesia's remote Papua province. Around 400 “illegal miners” set up wood and stone barricades on the road leading to the Grasberg mine in Indonesia's Papua province, which is run by a local unit of New Orleans-based Freeport-McMoRan Copper & Gold Inc.

Note: Copper & Gold Inc., in a telephone interview today. Grasberg produced 660,000 metric tons of copper in 2005, about 4 percent of global output.

February 23, 2006
Students attacked the building housing offices of a U.S. gold mining giant in Indonesia's capital on Thursday, as the company's mine in western Papua province remained shut for a second day due to protests, police said. Up to 20 Papuan students broke windows and damaged facilities in the lobby of the building in the pre-dawn attack, said police chief Gen. Sutanto. Thirteen people were arrested.

February 24, 2006
Talks between protesters blockading the world's largest gold mine and its U.S. owners yielded no visible progress. The government was sending hundreds of troops Friday to safeguard PT Freeport Indonesia as a roadblock continued at the mine site in Papua province, halting its production for a third consecutive day.

"Today, the government has mobilized 300 police personnel and one battalion of (about 700) Army soldiers to secure Freeport," National Police spokesman Brig. Gen. Anton Bachrul Alam said in Jakarta.

The deployment of troops was ordered by Coordinating Minister for Political, Legal and Security Affairs Widodo Adisucipto, Energy and Mineral Resources Minister Purnomo Yusgiantoro said separately.

A solution to the standoff was reached Friday night during a meeting between protest leaders, local tribal figures and Freeport management

February 25, 2006
Hundreds of protesters ended their three-day roadblock at the entrance of PT Freeport's Grasberg mine in Timika, Papua, on Saturday with a traditional outdoor peace ceremony, officials said.

The illegal miners lifted their barricades and abandoned the mine after holding a traditional ceremony in which they burned stones as a sign of peace and read out their demands.

Spokesman Siddharta Moersjid was quoted as saying by Reuters :"We are very pleased to report that the situation at the Grasberg Mine in Papua has been resolved peacefully and our operations resumed at approximately 6 p.m. on Saturday,"

After reaching an agreement with the company, protesters obstructing access to the site left on Saturday after conducting a tribal ceremony, and wanted to benefit from the initiatives and programs established by the company for locals in the vast province of Papua.

The Amungme tribe leader said he had assured Freeport management there would be no more trouble at the mine as long as Freeport pay attenetion to the following matters:

1. Freeport and the government were committed to hearing the protesters' demands.

2. Protesters want to meet directly with Freeport Chief Executive James Moffet to deliver their aspirations.

3. "The company said it would try to meet the demand within a month," he said.

4. Locals wanted Freeport to improve their welfare by offering them more employment opportunities in the mine and promotions for existing employees, Yoseph said.

5. The protesters also urged Freeport to stop using soldiers as its security guards.

6. The locals want the nine Freeport security guards from military backgrounds replaced with civilians.

Note: A recent U.S. report revealed the company has made direct payments to soldiers who guarded the mine, leading to allegations Freeport had acted improperly and was fueling corruption in the military


DISCLAIMER:
This research is only for historical analysis, and information on this research were adopted from several deferent sources. The future analysis on this research is an efforts to foresee possible challenges that may impact the business environment, and there is no guarantee the challenges that described in analysis will happened.

High Oil Price

Oil hit a record high of $72.20 a barrel Tuesday – April 18, 2006, as Iran defied world pressure to halt its nuclear program, raising new fears of a cut in supplies from the world's fourth biggest crude exporter. The fluctuation of oil price would possibly around $60/barrel in 2007.

Trend

Analysts believe prices will soar further and could break the psychological level of $80 per barrel on higher demand from the United States, China and India.

Brief Analysis

There is no evident that global high oil price will be going on temporarily and remains unpredictable because of complex world issues. The global oil prices will soar further and could break the psychological level of $80 per barrel on higher demand from the United States, China and India.

Oil facilities in Gulf of Mexico has not yet recovered that cause US needs to import oil to secure domestic energy demand.

In 2006, the economic growth of China is higher then anticipated that causes significantly increase domestic oil consumption (40%). To close the gap, China mostly imports oil from Iran.

Although some producer countries such as Angola, Brazil, and Russia increase their production, but some have production decline such Norway, England, and Indonesia, and some are still have internal conflict such as Nigeria and Iraq.

Impact to Indonesia: global oil prices, which have soared to more than US$70 a barrel, could undermine the state budget and derail economic growth. Government of Indonesia plans to adjust the current fuel subsidy on state budget from Rp54.3 to Rp70.0 Trillions (about 30%). The trade off is that government has to sacrifice other sectors.

It is not clear yet whether Government of Indonesia will raise fuel price. The parliament strongly indicates that there will be no raise. Rising oil prices in the middle of last year caused a meltdown in the Indonesian economy after the government decided to cut the soaring fuel subsidy by raising fuel prices. The impact of that decision is still being felt today in the form of higher inflation and interest rates.

Possible Social Impact to Extractive Industries

If Government of Indonesia has a budget deficit, here is a preliminary assessment of possible social problems may raise around our operation.

1. Community may have higher expectation toward the company to help them facing socio-economic problems.


2. Fishermen may not go to fish because of fuel scarcity. It will bring about degradation of income and life quality such as mal-nutrition for their children, drop out of school (because they can not afford school fee), and possibly epidemic.


3. Fishermen may cut mangrove to substitute fuel for cooking that causes environmental degradation.


4. Unemployment and poverty will grow over time.

Those are few possible social problems that may develop into more serious social issues which off course affect the business environment. It may not happened immediately but it may take time.

Synthesized from several different sources by Suta Vijaya