VZCZCXRO7954
RR RUEHCHI RUEHCN RUEHDT RUEHHM
DE RUEHJS #0073 3200631
ZNR UUUUU ZZH
R 160631Z NOV 07
FM AMCONSUL SURABAYA
TO RUEHC/SECSTATE WASHDC 0107
INFO RUEHJA/AMEMBASSY JAKARTA 0097
RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS
RHMFIUU/DEPT OF ENERGY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHJS/AMCONSUL SURABAYA 0109

UNCLAS SURABAYA 000073 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR EAP/MTS, EB/ESC, DS/IP/EAP, CA 
 
E.O. 12958: N/A 
TAGS: ASEC EPET ID
SUBJECT: EAST JAVA: INAUGURATION OF HESS PROJECT CANCELLED BY 
PEACEFUL DEMONSTRATION 
 
 
This message is sensitive but unclassified.  Please protect 
accordingly. 
 
¶1. (SBU) On November 15, beginning at approximately 1100, 
hundreds of demonstrators blocked the entrance to the Hess 
Onshore Processing Facility in Gresik, north of Surabaya, 
demanding Hess (the facility's operator) discontinue operations. 
 The protestors, residents of three villages surrounding the 
facility, complained that Hess was ignoring local needs by 
failing to establish a community development project and was 
polluting the surrounding area without regard to the health and 
safety of residents.  The demonstration, which lasted until 
1730, blocked access to the facility by the American Citizen 
President of Amerada Hess, the Minister of Energy and Mineral 
Resources Purnomo Yusgiantoro, and other officials, causing the 
planned inauguration of the Ujung Pangkah Field to be cancelled. 
 PO Surabaya was inside the facility during the first three 
hours of the demonstration. 
 
¶2. (SBU) Despite substantial local police presence, the 
demonstrators were able to reach the gates of the facility and 
hang English-language banners criticizing the Amerada Hess 
president by name.  They chanted anti-American and anti-Hess 
slogans, sang songs, and demanded a meeting with Hess's 
president.  Hess officials provided demonstrators with water and 
erected a tent to protect demonstrators from the sun.  According 
to local police officials, the demonstration broke up after Hess 
representatives announced the establishment of a community 
development fund of Rp 300 million (USD 32,000) to be utilized 
in the three surrounding villages. 
 
¶3. (SBU) Hess employees admitted to PO that Hess had been slow 
to initiate a community development program in the area.  They 
added that the complaints about pollution stemmed from recent 
problems with the gas flare at the facility.  Gas produced at 
Ujung Pangkah has a high H2S content, that must be scrubbed 
before processing.  Due to design problems with the flare, and a 
failure of temporary measures to remove the H2S in recent weeks, 
a strong smell of sulfur had led to complaints by local 
residents.  Hess employees insisted that there was no health 
risk, but admitted that the smell was unpleasant.  Hess is 
bringing in new equipment to eliminate the problem. 
 
¶4. (U) No property was damaged and no personnel injured during 
the demonstration.  The local police chief and his senior 
officials consulted closely with Hess officials and with 
Surabaya RSO during the incident and facilitated PO's departure 
with a police escort. 
 
Project Background 
----------------------- 
 
¶5. (SBU) Amerada Hess, the field operator, has a 75% stake in 
the Ujung Pangkah PSC, offshore East Java.  Kuwait Foreign 
Petroleum Exploration Co is a minority partner.  BPMIGAS, the 
Indonesian Government agency which regulates the upstream 
petroleum sector on behalf of the government, is a silent 
partner.  Currently, Hess supplies approximately 17.5 million 
cubic feet per day (MMCFD) of natural gas to the state 
electricity firm PLN under a 20-year contract for its Gresik 
power plant.  Hess officials tell us they will reach peak 
production of 100 MMCFD in the coming months.  They also plan to 
produce 6,000 barrels per day of liquid propane gas from the 
block by late 2009. 
 
MCCLELLAND