PTT halts Indonesia growth

PTT halts Indonesia growth

Energy giant seeks to mitigate risks as threat of lawsuit persists

PTT Plc, the national oil and gas conglomerate, has suspended new investment in Indonesia as a recently withdrawn lawsuit against its subsidiary risks re-emerging.

"We think the Indonesian government may resume legal action because the previous lawsuit was filed against PTT's previous name, the Petroleum Authority of Thailand, which was controlled by the Thai government before PTT privatised to list on the Stock Exchange of Thailand in 2001," said president and chief executive Tevin Vongvanich.

The danger persists that the government may refile the court documents with the correct company name, he said.

The lawsuit, which the Indonesian government withdrew against PTT Exploration and Production's (PTTEP's) wholly owned subsidiary, PTTEP Australasia (Ashmore Cartier) Pty, was filed for alleged environmental damage from the 2009 Montara oil spill in the Timor Sea.

PTTEP was sued last May for US$2.1 billion (65.9 billion baht) in damages. After the filing, PTT and its subsidiaries suspended new investment in Indonesia, including oil and gas drilling and oil and petrochemical trading.

Coal mining is the only activity the group still carries out in the country, with annual output of 10 million tonnes.

The suspension of new investment was done after another subsidiary, PTT Global Chemical Plc, scrapped a feasibility study on development of an oil refinery and petrochemical complex in Indonesia with a state-owned oil firm, PT Pertamina, in 2016.

Moreover, PTT sold all of its oil palm plantation assets in 2015, for which it had obtained a licence in 2008.

The oil palm project in Kalimantan, Borneo was intended to provide biodiesel feed stock to serve the Asean market at a time when the global oil price was above $100 a barrel and a biofuel boom was believed to be imminent.

The oil palm asset was purchased as the coal mining operations got under way.

Mr Tevin said that if the Indonesian government takes legal action against PTT's affiliated firms, further investment will stop because of "a loss of trust" in local authorities.

"There is no need to commit to future investment until we prove that we have done nothing wrong," he said. "We want to express our interest in doing business as long as the game is fair, otherwise both parties may miss out on business opportunities."

In a related development, PTT's new top executive is expected to be chosen next week, with the winner to be announced by the selection committee next Friday.

Mr Tevin will retire at the end of August.

There are four shortlisted candidates, all from PTT: two chief operating officers, Wirat Uanarumit and Auttapol Rerkpiboon; chief technology and engineering officer Chansin Treenuchagron; and senior executive vice-president Wittawat Svasti-xuto.

Duangdaran Eusawad, a local businesswoman, was disqualified a week ago.

PTT shares closed yesterday on the SET at 534 baht, up two baht, in heavy trade worth 10 billion baht.

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