Marianne Kearney, Jakarta – Local villagers set fire to four oil wells belonging to the country's largest oil producer in Riau province in Sumatra, causing as much as US$240,000 damage.

The villagers started the fires late on Monday as their latest protest against PT Caltex Pacific Indonesia in a dispute over land compensation. The fires burnt for two hours on Monday, damaging the oil well pumps but failing to create flaming infernos of burning oil. An environmental disaster was avoided by the rapid police response and by the shutdown of the oil wells, said Caltex general manager Gary Fitzgerald.

Mr Fitzgerald said the villagers, who live near the oil fields in Batang, had arrived at the wells on Monday afternoon and piled up wood around the four wells before setting the wood alight. "Two separate farmer groups are involved. One has been compensated for their land and the other was supposed to be compensated by the other group. So perhaps it was a form of revenge," he said.

The wells will be shut for at least a week, causing a 500-barrel-a-day shortfall in production.

Riau has seen many protests by villagers demanding land compensation and jobs, as well as claims that Caltex has been polluting the surroundings over the past few weeks. Last month, villagers in Duri, demanding positions with Caltex, blockaded access roads and burnt vehicles, putting production on hold for over a week.

Periodic disruptions in Caltex's Riau operations this year have cost it about 15,000 to 30,000 barrels per day in lost production out of the company's target of 740,000. Such protests in the impoverished province, which has one of the lowest standards of living in Indonesia, have been staged with increasing frequency since the downfall of former president Suharto.

PT Caltex Pacific Indonesia is the local unit of Singapore-based Caltex Corp, a joint venture between Chevron Corp and Texaco Inc.