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Towards a solution in Melaka?

After waiting for 7 years, it appears that the last 59 families who had to move when the oil refinery in Melaka was established, will finally get their compensation. However, the amount is less than their claim, and it is given ex gratia, not because Petronas thinks they are entitled to it, but because the company wants to finish the case. At the same time, both the refinery and the local environmental authorities receive a stream of complaints about air pollution and noise problems. The head of the refinery's environmental department is not satisfied. The employees at the refinery are not allowed to establish independent, national trade unions, and Statoil obviously does not have a problem with that.
Artikkelen er mer enn to år gammel. Ting kan ha endret seg.
After waiting for 7 years, it appears that the last 59 families who had to move when the oil refinery in Melaka was established, will finally get their compensation. However, the amount is less than their claim, and it is given ex gratia, not because Petronas thinks they are entitled to it, but because the company wants to finish the case. At the same time, both the refinery and the local environmental authorities receive a stream of complaints about air pollution and noise problems. The head of the refinery's environmental department is not satisfied. The employees at the refinery are not allowed to establish independent, national trade unions, and Statoil obviously does not have a problem with that.


By Morten Rønning
Norwatch

NorWatch visited the area for the first time in 1996 while part 2 (PSR2) of the refinery, of which Statoil owns 15%, was under construction (see newsletter 2/97). At that time, the local population was raging over unpaid compensations, loss of mosques and closure of the village cemeteries.

When we visited the area again in January this year, nothing had changed. The 59 families who did not accept the initial compensation, still had not received more than the 1,63 ringgit (RM) (0,43 US dollar) per square foot which they were paid to begin with. At first, they made a memory of understanding (MOU) with the developer, the national Malaysian oil company Petronas, about a compensation of 5,80 RM. It now seems like they will get 4,30 RM.

Still bitter
Tuan Haji Makunim and the other people who had been forced to move, whom we talked to in Melaka in 1996, were - if possible - even more dejected when we visited them again in January. It seems impossible to fight against the powerful national oil company and its two foreign partners, Statoil and Conoco.

Petronas "buying" of their areas was carried out in co-operation with the authorities. It is the local authorities who have negotiated with the local population about compensation, which will later be paid by Petronas. Whether Petronas pays the authorities more than this compensation is difficult to find out, but the affected people have a feeling that the local authorities also profit from this deal.

The 59 families have held on to the MOU all the time. When the opposite party abandoned this agreement, it was taken to court, and the families won the case. The case was appealed to a higher court, and this time the judge asked the parties to settle the case outside the judicial system.

The families in Kampung Tanah Merah lost both access to the sea, their two mosques, and free access to their cemeteries. When NorWatch raised these questions with Statoil's management in Kuala Lumpur in 1996, the company promised to discuss the question of the cemeteries with its partners as soon as the construction period was over, in order to find a more flexible solution.

Director Søren Baltzer Nielsen in Statoil Malaysia says to NorWatch that the people who were forced to move are now content with the solution, which means that they can visit the cemeteries during the two-weeks long Aidil Fitri festival, and during the 4-days long Aidil Adha festival.

Tuan Haji Makunim and the others we talked to in Melaka do not agree with this conclusion. Two festivals a year do not meet their need to visit their family burial places.

Nauseating smell
Both houses, schools and other industry are located near the refinery. Head of the environmental department of the refinery, En Busari Jabar, tells NorWatch that the company receives many complaints from the local population, both of air pollution, noise and the security of the refinery. The manager of the refinery, Ahmad Pathil Haji Muhamud, says to NorWatch that such complaints are registered, and that 4 complaints were registered in 1999, mostly complaints of bad smell.

It is especially the smell of mercaptan (CS2 /C2S2), an additive which is added to LPG (Liquid Petroleum Gas) to make it easy for the consumers to detect gas leakage, which is a problem for the neighbours of the refinery. According to En Busari Jabar, there are no proven health problems as a result of mercaptan, but the smell makes people sick and feeling that they have to vomit. En Busari Jabar says that mercaptan comes in barrels, which are emptied with hoses. When the barrel is empty, the workers often forget to close it, and then the smell spreads.

Baltzer Nielsen in Statoil says to NorWatch that this problem has been solved by improving the routines of handling the barrels.

En Busari Jabar has worked for a different solution.

- I have suggested a closed system for handling mercaptan. In fact, I have suggested that for quite some time, he says despondently.

Still, he is not willing to take responsibility for all the air pollution in the area.

- When the school complains of pollution, it may just as well come from other industry, or from the traffic. Besides, the school is located at the opposite side from where the production takes place.

The sound of the two gas flames is also a problem for the neighbours. When NorWatch inspected the plant, the sound was at its lowest, according to En Busari Jabar. He estimated it to 65 decibel at 100 metres distance. Frequently, the sound is louder. The closest houses are maybe 300 metres away.

Fear
The neighbours also fear the general security of the plant.

- People with low education generally fear that the refinery will blow up. People with higher education have more trust in our information, but they have more specific questions about warnings signs and things like that, says En Busari Jabar.

Many people who contact the refinery want to be anonymous, and this makes it difficult to get back to them with concrete answers to their questions. To improve communication with the local population, a committee of people from the company, from the environmental authorities in Melaka and leaders from the villages has been established. The committee meets once every second month, and discusses possible problems in the local community caused by the activity. In spite of this, the local population does not seem satisfied with the situation.

- I don't know to what degree this information reaches everybody, says En Busari Jabar, who does not attend these meetings himself. The company is represented by people from the Public Affairs department. In spite of the complaints, he will not admit that the company has a communication problem with the local community.

- There is other industry as well as traffic which create pollution in the area. But we are blamed for everything, because we are the biggest company, he says.

NorWatch also visited the Ministry of Environment in Melaka to get their opinion on the situation at the refinery. An employee, who wanted to be anonymous, seemed quite content with the activity, but confirmed that the ministry received many complaints from the local population. NorWatch's request to see statistics over such complaints was turned down by the employees superiors.

- Certification is being delayed
The first refinery which was established in the area, PSR 1, which is fully owned by Petronas, was ISO-14001 certified in 1998 after a two years long process. This certification includes the environmental management of the activity, and it obliges the company to continuous improvement of the environmental control systems. PSR 2, of which Statoil is one of the owners, started its production the same year. So far, the three owners of PSR 2 have shown little will to certify this plant, according to En Busari Jabar. The certification agency Sirim has allowed the company an extension in this process.

Baltzer Nielsen in Statoil says to NorWatch that the ISO 14001 certification process will start by a mapping of the environmental aspects and impacts of PSR 2, which will be finished by the first quarter of this year.

En Busari Jabar is not satisfied with the situation.

- I think the foreign owners should put some pressure on Petronas, in order to get this process going. But their main concern is that the plant's activity follows Malaysian law.

En Busari Jabar is head of a department with three employees, who are responsible for the plant's environment.

- I am not satisfied with the results we achieve on the environmental side, he admits.

The company reports monthly and quarterly to the environmental authorities in Melaka about pollution of the air, water and subsoil water and about noise. Director Ahmad Pathil Haji Muhamud in Petronas says to NorWatch that this information is not official.

Effluents
In September 1998, 5.000 barrels of oil leaked from the plant when a pipeline broke because of a fault in construction. This happened at night, and it took several hours before it was discovered, as there was no warning system on the pipeline. The oil followed the creeks in the area into the sea, but the company managed to collect much of it before it reached the sea.

The oil got lumpy in the water and was quite easy to collect. The company hired local fishermen and other personnel to collect the oil, and estimates that 95% of the oil was collected. This work took 2-3 weeks. This information is confirmed by local fishermen and the environmental authorities.

The fishermen in the area claim that the fish in the waters near the refinery disappeared for 2-3 months after the accident, and that they had to fish in areas further south. En Busari Jabar does not have much confidence in this.

- These fishermen always complain anyway, he says resignedly.

The fishermen themselves are not worried. There is high demand for their fresh fish, and if the catch decreases for a while, it only means that the prices rise.

The fishermen demanded compensation for loss of fishing areas when the company got established in the area and built a gigantic jetty there. Nobody has seen anything of the 2 million USD they claimed. For security reasons, the fishermen in the area cannot fish near the jetty, but according to themselves, they do it anyway. Fishing nets are set up between the poles, and the fishing is described as very good. The company's guards tell them to stay away, but nothing more happens.

- The guards are local people, like us, the fishermen on the Tanah Merah beach explain.

Their own trade union
According to Malaysian law, the employees of state-owned companies like Petronas cannot organise in trade unions together with employees of other, private companies. This means that the employees of the Melaka refinery cannot organise together with the employees of Shell's and Esso's refineries in the country. The employees are organised in Petronas' own, national trade union.

The trade union leader at the refinery, who would have preferred to organise together with other refinery workers, told NorWatch that about 25% of the 700 employees are organised. He described the wage level as being in the lower end within this industry in the country. Wage negotiations take place every third year, and the wage is made up of two parts: one general part for all Petronas employees, and one local part. The leader points out that the foreign companies' involvement seems to have led to an increased pressure on profitability in the company.

The refinery is automatised, which implies that there are few workers in the production. Still, they are bothered quite a lot by smell from, among other things, mercaptan. The smell of this chemical is so strong that workers sometimes have to leave the place.

The trade union is engaged in dialogue with the management in order to initiate surveys of the employees' health. More allergy, and the fact that the workers have extraordinarily many girl babies compared with what is normal, are things that the union wants to have examined. This work is progressing slowly, says the leader.

Statoil has acknowledged seven of ILO's main conventions as regulative of its international activity. One of them concerns the right of free and independent organisation.

Baltzer Nielsen in Statoil says to NorWatch that this is irrelevant in this case, as long as Statoil is in a joint venture in Melaka.

- Malaysian authorities have enacted laws on the trade union structure of the country. Statoil will always follow the laws of the country where we operate, he says.

Solution ahead?
In January, NorWatch talked to the lawyer of the people who were forcibly moved in Tanah Merah, Dato Tan, in the company Tan & Co. Tan pointed out that the question of compensation depended on the political leadership of the state. The present state minister had, according to Tan, signalled will to finish up this case, and Tan was optimistic about the possibility of finding a solution in the near future.

- Petronas is planning to stay here for a long time, and they do not benefit from being involved in this conflict, Tan told NorWatch.

The director of the refinery, Ahmad Pathil Haji Muhamud, says in a telefax to NorWatch that the company has now decided to give the 59 families a compensation ex gratia, an amount close to their demands. He does not want to tell us the exact amount. Ex gratia means that the company does not give this compensation for judicial reasons, but because they want to settle the dispute.

In principle, the 59 families hold on to the intentional agreement of 5.60 RM, but they are willing to discuss this. Dato Tan has demanded 4.30 RM in the latest negotiations with the authorities, and he believes that the amount finally will be around 4.15 RM. This is so little that many of the people who were forcibly moved will probably not accept it.

- The Petronas management has sympathy for the demands of the 59 families, even though judicially they are not entitled to this, says Baltzer Nielsen.

Baltzer Nielsen emphasizes that this is not only a question of money for the powerful Petronas corporation, it is also a question of principles.

It remains to be seen whether such an offer will be accepted by the 59 families who have had to fight for 7 years for a compensation which they think they were promised through  the MOU to begin with.

Statoil in Malaysia
Malaysia Refining Company Sdn Bhd owns and operates a refinery in Melaka, Malaysia. Total production capacity is 100.000 barrels of crude oil per day. The refinery (PSR 2) is connected with a 100% Petronas-owned refinery (PSR 1). PSR 2 was established in December 1998. Petronas, the national Malaysian oil company owns 45%, Conoco 40% and Statoil 15%. This implies 15.000 barrels of oil a day for Statoil.

"I am not satisfied with the results we achieve on the environmental side"
En Busari Jabar, head of the environmental department of Malaysia Refining Company, 20 January 2000

"These fishermen always complain anyway"
En Busari Jabar, head of the environmental department of Malaysia Refining Company, 20 January 2000

Norwatch Newsletter 2/00