Family business
Bakrie was born in
Jakarta on November 15, 1946. He attended the
Bandung Institute of Technology where he obtained a degree in electrical engineering in 1973. In 1972 he joined PT Bakrie & Brothers Tbk - the conglomerate founded by his father Ahmad Bakri - which had prospered during the
Soeharto regime.
[2] The Bakrie Group conducts business in agriculture, real estate, trade, shipping, banking, insurance, media, manufacturing, construction, and mining. Aburizal Bakrie, the eldest of four siblings, was the chairman of the family enterprise from 1999 to 2004. The Bakrie conglomerate went into deep debt after the 1998 Asian economic crisis and survived only after a refinancing process in 2000.
[3] The refinancing allowed the Bakrie family to maintain control over the conglomerate.
Public offices
In 2004 Bakrie resigned his positions within the Bakrie companies prior to being named Chief Economic Minister of Indonesia.
[4] This appointment by a president who planned to fight corruption was viewed with some reservation.
[5] Subsequently Aburizal Bakrie has been blamed for poor economic development and business nepotism.
[6] After a reshuffling of the cabinet in 2005, he became the Coordinating Minister for People's Welfare.
Previous positions included the presidency of the
ASEAN Business Forum for two consecutive terms from 1991 to 1995, and the chairmanship of the Indonesian Chamber of Commerce and Industry (Kadin) for two consecutive terms from 1994 to 2004.
[4] As a member of the
Golkar party Bakrie competed unsuccessfully to become Golkar's candidate for the presidency in 2004; eventually General
Wiranto became the party's candidate.
[7]Sidoarjo mud flow
On 27 May 2006 an earthquake occurred on the island of Java, which also happens to be the mostly densely populated island on earth. This earthquake became known as the most destructive earthquake to hit the island in modern times, leaving over 6,000 dead and 1,500,000 homeless. 100's of earthquakes of similar or even larger in size had little effect on the population compared to this particular earthquake.
Two days after the 27 May 2006 earthquake a number of volcanoes reactivated1 including Indonesia's infamous Semeru Volcano, incredibility 300 km away. What became even further intriguing was, at the same time the eruption of a mud volcano in the city of Sidoarjo 250km from the earthquakes epicentre.
This mud volcano wasn't your normal mud volcano for a number of reasons including the direct impact it had over a large population of more than 40,000 residents while spewing out up to 150,000m3 of hot mud each day. In addition controversy and intrigue surrounded the cause when it was revealed that an exploration company had been drilling for gas reserves in a deep sedimentary reserve nearby and may have triggered the mud eruption.
The exploration company PT. Lapindo Brantas would become the focus of global media reporting, from the fact that the majority owners, the Bakrie family were politically connected and in an unusual and strange act agreed to meet the financial needs of the affected population, while defending its position that the mud volcano was a natural act. However, this family wasn't so normal, listed as Indonesia's wealthiest (Forbes USD9bn 2007) they were considered secretive, private and media shy.
Lapindo Brantas Inc. was formed in 1996 with the purchase of American owned Huffington Corporations interest and operator-ship of the Brantas Block in East Java. The 15,000 km2 Brantas Block was awarded by regulator BP Migas (formerly known as PERTAMINA) in 1990. After two mandatory relinquishments, the current area of the PSC is 3,050 km2. The Brantas PSC (Production Sharing Contract) has drilled 8 exploratory wells from 1993 through to 2001, which led to the discovery of the Wunut gas field, 30 km south of Surabaya. The Wunut field is commercial and was put on production in January 1999. At the time a large number of promising shallow and deep prospects were identified including Banjar Panji-1.
The drilling exploration began March 2006. Apart from some minor equipment breakdowns no unusual events occurred. The actual borehole was easier to drill (actual drilling conditions) than expected, and therefore didn’t require additional steel casing3 as expected. The shareholders meeting on 18 May 20064 discussed the casing point, logging program and open-hole test. Minutes of this meeting clearly indicated that all three partners agreed to a case setting at 3580ft5
Eleven days after this meeting on May 27, an earthquake hit Jogjakarta.
Following account from Lapindo Brantas operations -rig staff and site manager, drilling and exploration managers; “The drilling rig and porta buildings on the site suddenly started shaking violently we heard soon after that a large earthquake had been recorded. 7-10 Minutes after the earthquake the well experienced a loss of mud – a loss of approximately 20 bbls of drilling mud. This was controlled to standard industry practises. Over the next 5 hours two large aftershocks were felt and a major loss circulation occurred. This loss was approximately 130 bbls of drilling mud. The emergency drilling team managed the loss by pumping a loss circulating material that plugged the loss. The well no longer suffered any losses, and was static for the next 7 hours. It appeared that the loss had something to do with the tectonic activity from the earthquake. Then shocking news reached us, the earthquake had killed more than 4000, with the death toll rising by the hour. We decided to halt further drilling due to the seismic activity from the earthquake and begun to extract the drilling bit from the well. The driller started to pull the drill string out of the hole by employing the normal method to avoid swabbing the well in. When the bit was halfway out, the well took a water kick that displaces some drilling mud out. The Blow Out Preventer (BOP) was shut in as per standard method. This kick was later killed using a standard method successfully. The well was now dead with no more pressure in the well, the BOP was open and the well was in a safe condition. We were started to continue to pull the drill string out, but found that it was differentially stuck. A preparation to fish the stuck pipe was underway when at 5am May 29 our team were alerted to a broach 150-200 meters from our drilling site. Naturally we were concerned of the situation, the broach wasn’t on our land, but we had access to experts that could advise on possible causes and importantly potential ways to halt the broach. Under normal PSC and operating requirements we reported the broach to BP MIGAS and our joint venture partners. An investigation was launched into the source of the mud and ways to stop it."
It was subsequently discovered that the broach (mud eruption) 150-200 meters from the drilling site was not the only location and that mud was erupting from five (5) other locations up to 1000 meters from the drilling site. Within a week of the mud eruption an article published in the Jakarta Post newspaper NGO (Walhi) and JV partner (Medco) were fingering blame on Lapindo Brantas for triggering the mud eruption. It seems a letter was leaked to the Jakarta Post from Medco pointing out that they had earlier reminded Lapindo Brantas to install steel casing to 8500ft which wasn’t done and therefore quickly became the catalyst for the wide spread belief that negligent drilling was the cause of the mud eruption. From this point onwards the cause was deemed a man-made event.
The Jakarta Post, Jakarta Environmental activists demanded Tuesday the government shut down PT Lapindo Brantas' gas prospecting operation after a botched drilling job caused hot, toxic mud to flood 30 hectares of land in Sidoarjo, East Java. The East Java arm of environmental watchdog Walhi urged the government to revoke the drilling license of PT Lapindo Brantas for environmental mismanagement. Television news reports Tuesday said more than 500 people from the affected area have received hospital treatment after breathing in toxic sulfur hydroxide gasses emanating from around the well. Hydrogen sulfide is a potentially hazardous and toxic compound that occurs naturally in coal pits, sulfur springs and gas wells.High levels of the compound are harmful, causing health effects ranging from eye irritations to severe respiratory tract irritations to death in severe cases. Walhi director Ridho Syaiful Ashadi told The Jakarta Post the leak was an ecological disaster that had displaced whole villages and caused widespread damage to farms and commercial operations. The watchdog and other activists said company executives should be prosecuted under environmental laws for gross negligence. "(PT Lapindo Brantas) has no reason to continue operating in the area," Ridho said. In a letter to PT Lapindo management obtained by the Post last week, partner firm PT Medco E&P Brantas said the company had failed to properly case the drilling hole to a depth of 2,615 meters (8,500 feet) a move meant to ensure the hole could be sealed off if the drilling operation encountered significant problems. PT Medco accused PT Lapindo of gross negligence and said under the agreement it was liable for damage caused by the deluge of mud. PT Lapindo executives have said natural causes, including the May 27 earthquake that jolted Yogyakarta and Central Java, was to blame for the mud flows. However, a chronology of drilling events attached to the letter obtained by the Post indicates that PT Lapindo experienced drilling problems when it hit a depth of 2860 meters -- on May 27, the day mud started flowing from the well.
Following account from Lapindo Brantas The chairman of our parent company Mr. Nirwan Bakrie instructed our management team to assist the task force and to immediately address 3 important areas;
• Ensure the safety of the surrounding communities. • Identify options to stop the broach. • Determine the causes that triggered the broach.
We engaged the services of western and Indonesian experts to seek ways to halt the broach. We mobilized 2 rigs to drill relief wells and a snubbing unit to seal off the mudflow. These attempts failed. Our experts advised us that due to the size and complexity no positive solutions could be found. Experts advised that the best option was to channel the mud towards the Porong River and eventually out to sea. This plan would stop the mud spreading to the surrounding communities in Sidoarjo. An environmental impact study predicted that local fishing communities would be affected, but these adverse conditions would not be long term, as the mud was a mixture of salty-muddy water and non- toxic. Unfortunately this solution wasn’t approved as local NGO‟s lobbied that environmental damage out-weights the affects to the communities surrounding the broach. We believe that this decision in not redirecting the mudflow ultimately impacted and lead to the unnecessary destruction of the nearby villagers and businesses.
The Indonesian Vice President (Kalla) visited the eruption site and remarkably without any legal basis, demanded that the Bakrie Group to bear responsibility for all losses. "The Bakrie family must be seen to be standing up front," he said, pointing towards Nirwan and directors of Lapindo. "As a national company, Lapindo must be seen to set a good example."
Tempo Magazine No. 43/VI June 27 - July 03, 2006 Cover Story The Bakrie family is being asked to bear the cost of all damages resulting from the Sidoarjo mudflow. Medco and Santos could be asked to share the responsibility. What has long been waited for has eventually happened. In Porong market, Sidoarjo, East Java, Nirwan Bakrie, accompanying the entourage of Vice President Josef Kalla, arrived to meet with the thousands of victims evacuated because of the mudflow disaster. The appearance of the person who now controls the Bakrie Group of businesses, on Tuesday last week created a great deal of attention. He was directly bombarded with demands for compensation. This is because Lapindo Brantas Inc., a subsidiary of the Bakrie Group, stands accused of being responsible for the hot mudflows that have appeared during this month in the subdistrict of Porong, Sidoarjo. The mudflows have covered the villages of Jatirejo, Renokenongo, Siring and Kedungbendo. Previously productive paddy fields that are also now covered in mud total about 127.29 hectares, while another 503 hectares are threatened. The mudflows have also flooded part of the Gempol-Surabaya toll road to a height of 20 centimeters. Jusuf Kalla has asked that the Bakrie Group bear responsibility for all losses. "The Bakrie family must be seen to be standing up front," he said, pointing towards Nirwan and directors of Lapindo. "As a national company, Lapindo must be seen to set a good example." Nirwan, who was accompanied by Ari Saptari Hudaya, the President Director of PT Bumi Resources (a subsidiary of the Bakrie Group), and Imam P. Agustino, General Manager of Lapindo, nodded his head in agreement.
In the issue of compensation, according to Jusuf Kalla, Lapindo also has to pay the wages of factory workers forced to close down by the catastrophe, the repairs to damaged roads and schools, as well as ensuring that local residents' homes are returned back to the condition they were in before the mudflows."Residents should not be losing a single cent," he said. Nirwan promised to meet this demand. "In the name of the Bakrie family, I apologize," he said.
What we do know: 1. Actual drilling plan was approved by all 3 partners 2. Drilling procedures (internationally) do not require steel casing throughout the borehole. 3. Drilling operations experienced problems minutes after the earthquake occurred with areas surrounding the drilling operation and nearby land producing large cracks, which appeared soon after the earthquake. 4. No mud erupted from Lapindo Brantas drilling hole despite the BOP being in the open position. 5. From the time after the well kick was killed on May 28, 2006, until the mud eruption, the BOP was kept in the open position. If the well was fractured, in order to propagate the fracture to surface, it would require sustained high pressure and for the BOP to be kept closed. 6. The borehole was only 13 inches in diameter. This size hole can pump a maximum 70,000 barrels a day, whereby LUSI was erupting up to 1,000,000 barrels a day. 7. Earthquake reactivated Mt. Semeru (300kms) from the earthquakes epicentre and exactly 2 days after the earthquake hit- same time as the mud erupted.
