Pacific-Western Oil: The Sembilan Plant

Pacific-Western Oil (Pac-West), a U.S. firm, is one of the world's largest integrated oil and gas companies. Pac- West is a 35% shareholder in P.T Sembilan (Sembilan), a liquefied natural gas (LNG) plant. Pac-West's natural gas production in Aceh and its share in the Sembilan plant are a major source of revenue for the firm. The Sembilan LNG plant is located in the Indonesian province of Aceh and is jointly owned by Pac-West, Indonesia's state-owned oil monopoly Pertamina, and Samco, a Tokyo-based consortium. For more than a decade, the Indonesian military had been involved in an effort to suppress dissent in Aceh. In late 1999, violence is escalating in Aceh and evidence has surfaced that for more than a decade, the Indonesian military had been involved in a brutal effort to suppress dissent. In addition, human rights groups have made allegations against Pac-West and Sembilan should be held responsible for human rights abuses that occurred near the LNG plant. With the situation looking increasingly unstable, Pac-West senior management must decide whether LNG production should be reduced at Sembilan.