Taufik Wijaya, Palembang, Indonesia – A law enforcement crackdown against widespread opportunist oil extraction has shuttered at least 95 illegal wells following a spate of deaths in Indonesia's South Sumatra province, police said.
"I appeal to the people still working in this illegal supply chain to consciously change their professions," South Sumatra police chief Albertus Rachmad Wibowo said in a statement.
On June 27, a fire broke out at an oil well in Sungai Lilin, a subdistrict on Sumatra's arterial highway between the cities of Jambi and Palembang. Police said deliberate damage to an oil pipe there to enable illegal extraction caused an oil leak, which culminated in a blast that killed four people.
Less than a month later, another fire in the early hours of July 21 in Sungai Lilin killed a local resident.
Police in South Sumatra have arrested and charged at least two people in connection with the June explosion.
A string of other fires and explosions have occurred at illegal oil refineries and storage sites since the start of the year. Blasts are often reported at the estimated 10,000 illegal oil wells located in Musi Banyuasin, just one district of Indonesia's Sumatra island. (Sumatra is home to more than 150 districts and cities; Musi Banyuasin encompasses Sungai Lilin.)
Previous incidents included fires at illegal oil refineries and storage warehouses in the Musi Banyuasin subdistricts of Babat Toman, Keluang and Sanga Desa, leading to multiple arrests.
In response to the string of accidents, the acting governor of South Sumatra, Elen Sutiadi, issued a decree initiating a crackdown on the sector. Elen was special adviser to Indonesia's chief economics minister, Airlangga Hartarto, until his appointment as acting governor in June.
Drill bit
In its heyday in the 1990s, crude oil production in Indonesia was 1.7 million barrels per day. But a lack of new finds to replace aging wells meant the country became a net oil importer in 2004.
That dynamic has placed pressure on Indonesia's current account ever since, prompting the government to increasingly blend biodiesel made from palm oil into retail fuels to curb the nation's import bill.
Opportunist oil mining in Musi Banyuasin began in the late 1980s, with locals extracting crude oil from old wells left by the Standard Vacuum Oil Company, a New Jersey-based firm that incorporated in The Hague in 1912 to meet requirements by the Dutch East Indies colonial government.
The company, commonly known as Stanvac, made vast oil discoveries in what is now South Sumatra province, beginning with the Petak oilfield in 1914 and followed by the far larger Talang Akar find in 1921.
A series of reforms passed by the Sukarno government in the wake of Indonesia's 1945 declaration of independence steered oil extraction toward divestment and nationalization, including a 1960 law that restricted foreign oil companies to acting as government contractors.
In the decades that followed, Stanvac sold much of its business to Indonesia's state oil company Pertamina, culminating in the sale of all remaining assets to Medco Energy, a Jakarta-bsed company founded by Indonesian billionaire Arifin Panigoro in 1980.
The parent companies of Stanvac later merged to become ExxonMobil, one of the world's largest energy firms.
Today, many of the active wells that remain in Musi Banyuasin are managed by PT Petro Muba, a company owned by the Musi Banyuasin district government.
"Regarding illegal drilling, we agree to take action because it is clearly a criminal act," Mualimin Pardi Dahlan, an independent board member of Petro Muba, told Mongabay Indonesia.
He added the company's drilling activities are conducted jointly with Pertamina, and as such, "The central and regional governments need to find a good solution, especially for safety, as well as social and economic problems of the local community."
Forest clearing for industrial plantations was the major driver of deforestation in South Sumatra over the past two decades. However, a large share of forest loss is attributed to oil extraction.
Between 2002 and 2023, Musi Banyuasin lost 135,000 hectares (334,000 acres) of humid primary forest, accounting for a 68% reduction in its old-growth primary forest area.
Well oiled
Field research published in 2018 by Mulyanto at South Sumatra's Sriwijaya University illustrated the risks and opportunities people face from participating in the illicit oil economy.
Initially, people hauled containers out of abandoned wells by hand using ropes, a wearying and labor-intensive means of extraction. However, the introduction of motorcycle and car engines helped realize new efficiencies, enabling people to quickly extract 20-to-30-liter (5-8-gallon) containers from wells more than 300 meters (around 1,000 feet) below ground. Operations ran 24 hours a day, with workers bringing up the oil in shifts.
This increase in productivity meant that oil extraction quickly became more lucrative than tapping rubber, once the dominant vocation in Musi Banyuasin. The move to oil also insulated rubber tappers from the increased price volatility in raw latex.
Extraction from abandoned wells paved new avenues for opportunity, including shallow drilling for oil at depths of more than 100 m (330 ft) and theft from company pipelines.
"The new livelihoods as oil miners or refiners are a substitute for their former livelihoods as rubber farmers," Mulyanto wrote in the 2018 paper.
However, this increase in prosperity has come with far greater risk of injury or death, in addition to widespread environmental damage and lost revenue for the government.
Rachmad, the South Sumatra police chief, cited research by Bogor Institute of Agriculture (ITB) academics calculating the state losses from illegal drilling in the province at 4.8 trillion rupiah, around $320 million.
However, authorities face complex challenges on the ground as police move in with excavators to plug illegal oil wells across Musi Banyuasin. Police in South Sumatra have acknowledged the depth of the challenge given the extent to which illicit oil extraction has become integral to the South Sumatra economy, despite the risks of injury or death.
Last year, police arrested three men in Musi Banyuasin who were refining crude oil into diesel in premises next to a restaurant.
The refined fuel was sold for up to 6,000 rupiah (38 cents) per liter, slightly less than the official pump price for the cheapest variant of diesel subsidized by the government. Police said the illegal operation processed around 15 metric tons of crude oil per day.
Sandi Fahlepi, the acting head of Musi Banyuasin district, said illegal oil wells supported some 230,000 people out of the district population of 622,000.
"Police personnel who are part of the Illegal Drill and Refinery Task Force are ordered to not hesitate in taking firm action against any perpetrators," said Albertus, the police chief.
"Because these illegal activities have caused environmental damage, many fatalities, and state losses."