Australian oil and gas giant Santos is facing a tenfold cost blow-out in its clean-up of the world's largest mud volcano in East Java, a new report shows.
The study says the only way to mitigate the disaster resulting from a drilling incident in May 2006 is to transport the mud 14km to the ocean to create a wetland.
The UN Environment Program and AusAid conducted the study, which has been leaked to Fairfax newspapers.
Santos, which has yet to admit liability, has been accused of downplaying the severity of the disaster. The report estimates clean-up costs to be $830 million - 10 times higher than Santos has revealed to the stock market. Total economic losses from the mudflow so far is estimated at $3.4 billion.
Tim Lindsay, director of the Asian Law Centre at Melbourne University, said most of the public does not understand the magnitude of the problem.
"If the projections are correct, it will be catastrophic for any company held responsible," Professor Lindsay told Fairfax.
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