At least 10,000 people have been displaced and entire villages inundated by the mud that has flowed since a drilling accident in May, causing an environmental disaster in the Sidoarjo area, near Surabaya.

"A few days ago, we not only lost our houses but also our paddy fields and all the infrastructure because of Lapindo," Muhammad Kudori, a representative for the protesters, said after meeting local officials and the head of the operator of the oil well.

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The Banjar Panji well was operated by Lapindo Brantas, a unit of Energi Mega Persada - partly owned by the Bakrie Group, which is controlled by the family of Indonesia's chief social welfare minister, Aburizal Bakrie.

The firm has denied the mud flow is directly linked to the drilling. So far, it has offered a monthly stipend of 300,000 rupiah (HK$240) to villagers who have lost homes and rent for new accommodation. It has also set aside 6.9 billion rupiah to cover agricultural losses in the coming years.

Anger has been mounting with hot mud gushing at a rate of 50,000 cubic meters a day from the well, despite efforts to plug the leak. The flow was also blamed for a gas pipeline explosion last Wednesday that killed 11 people.

REUTERS