Thailand’s national upstream company PTTEP has lost a landmark lawsuit brought on behalf of Indonesian seaweed farmers who claimed they lost their livelihood due to pollution from the 2009 oil spill at the operator’s Montara field offshore Australia.

The Federal Court of Australia on Friday ruled in favour of Daniel Sanda, a seaweed farmer who had launched a class action lawsuit on behalf of some 15,000 seaweed farmers.

Federal Court Justice David Yates ordered subsidiary PTTEP Australasia Ashmore Cartier to pay Sanda close to 252 million rupiah (US$17,533) plus interest for his damaged crop and loss of income.

This payout could be the first of many, with further compensation claims potentially totalling millions of dollars.

Yates upheld the plaintiffs’ claims that oil from the Montara field had reached the waters around Indonesia’s Rote Island and Kupang regency damaging seaweed crops, and that PTTEP had breached its duty of care.

“I am satisfied that oil spilled from the H1 well blowout reached certain areas of Indonesia… I am satisfied that this oil caused or materially contributed to the death and loss of his crop,” Justice Yates said in his judgment.

“I am satisfied that, although difficult to assess… the applicant’s loss can be calculated and that he is entitled to an award of damages.”

Justice Yates also sought further submissions to help determine how many other seaweed farmers are also entitled to compensation and how much.

PTTEP said it will “carefully consider the judgment and the appeal avenues available to it”.

PTTEP Australasia in 2012 pleaded guilty in the Darwin Magistrates Court to four charges relating to the Montara oil spill.

Mistakes should never be repeated

“From the outset we have admitted responsibility for the incident and deeply regret it occurring. Mistakes were made that should never be repeated,” PTTEP Australasia chief executive Ken Fitzpatrick said at the time.

The Montara H1 ST1 well on 21 August 2009 had an uncontrolled hydrocarbon release. All 69 people on board the jack-up drilling rig West Atlas were safely evacuated however about 400 barrels of oil per day leaked into the sea for 74 days.

Lawyers acting for Sanda called the result a “a significant victory” for those affected and estimated that the total damages bill could run into the millions of dollars.

“This is one of the first environmental class actions to go to trial and win and the first funded class action to be brought against an Australian company for cross border pollution-related damage suffered by foreign claimants,” Maurice Blackburn principal lawyer Richard Ryan was quoted by the Jakarta Post.

PTTEP has admitted negligence in its operations at Montara, while resolutely claiming that no oil ever reached islands' coastlines.

“No oil reached shore. The closest that oil came to making landfall was recorded at 35 kilometres from the Australian coastline and 94 kilometres from Indonesia coastline (West Timor),” reads PTTEP’s 2017 ‘Montara Lessons Learned’ report.

The operator said that even if the oil had reached the Indonesian coastline – some 30,000 barrels were spilled - it would have effectively disintegrated and therefore not have been at a concentration that was toxic to seaweed.

However, Sanda told the court his seaweed started to die when he found “blocks [of oil] which were of a yellowish and greyish colour” in the waters around Rote Island.

The Indonesian government has formed a taskforce, led by the Office of the Coordinating Maritime Affairs and the Investment Minister, to resolve all issues surrounding the 2009 oil spill, including seeking compensation from PTTEP for those impacted.

Coordinating Maritime Affairs and Investment Minister Luhut Pandjaitan welcomed the court’s ruling, adding the taskforce had helped the plaintiffs in the class action lawsuit by providing satellite imagery of waters around Rote Island and sending experts to testify in the court.

PTTEP’s ‘Montara Lessons Learned’ report maintains that the oil spill response coordinated by Australian Maritime Safety Authority was successful – “no oil reached the coastline of Australia or Indonesia”.

“Natural dispersion was aided by the aerial application of limited oil dispersants and skimming/ recovery was used,” reads the report.

The Australian Government in November 2010 set up a Commission of Enquiry into the Montara incident.

The Commission found that the main causes of the Montara incident were failure to maintain verified well barriers, lack of personnel competence, failure to follow procedures and limited corporate oversight.

One of the more significant 100-plus recommendations by the Commission was for Australia’s Minister of Resources and Energy to review PTTEP AA’s license to operate.

Following an independent review by Noetic, the Australian Government’s auditors, the government decided not to withdraw PTTEP AA’s license to operate but imposed special title conditions.

PTTEP AA operated under close government scrutiny by a Deed of Agreement between February 2011 and June 2013, during which time there were five reviews by Noetic.

The Thai operator in 2018 sold its 100%-operated Montara asset to Singapore-headquartered Jadestone Energy, which had no involvement at the time of the oil spill.