Pertamina spokesman Toharso said residents in the district had objected to construction of a new three-kilometre (two-mile) pipeline parallel to the old one as compensation for the land had not been agreed.

"We have started the construction of 1.6 kilometres of the three-kilometre pipe but we cannot finish it," he told the official Antara news agency.

"Residents reject the route we are using because the land settlements have not been agreed," said Toharso.

A change in the route would shorten the pipe but bring it closer to the danger zone around the "mud volcano," he said.

Pertamina also has to wait for construction of an 800-metre long dyke to protect the pipeline, which was expected to be completed in February.

A system of dykes is holding back the steaming mud, which is bubbling up at a rate of up to 150,000 cubic metres (5.25 million cubic feet) a day.

Experts have been working to channel the mud into the nearby sea.

An Indonesian minister, Aburizal Bakrie, claimed last month the flow was a "natural disaster" unrelated to the drilling activities of a company, Lapindo Brantas Inc, which belongs to a group controlled by his family.

However, a study by British experts said that the eruption was most likely caused by drilling for gas.

President Susilo Bambang Yudhoyono has ordered Lapindo to pay 3.8 trillion rupiah (420 million dollars) in compensation and costs related to the mud flow.

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