Pertamina asked to pay compensation of $34.4 million
Saturday, June 13 2009 - 02:56 AM WIB
The dispute between both firms came after Pertamina and Lirik Petroleum formed a joint operating body (JOB) in 1995 to develop the Lirik block. The block belonged to Pertamina. Pertamina often invite other parties to jointly develop its blocks under the JOB or TAC (Technical Assistance Contract) arrangements
Lirik Petroleum later proposed to develop four fields in the block, that is Lirik, North Pulai, South Pulai and Molek but Pertamina only gave it a go-ahead to develop the Lirik field. This led Lirik Petroleum to file an arbitration suit against Pertamina, citing that the latter's move had caused potential losses.
The firm filed the arbitration suit with the International Chamber of Commerce (ICC) International Court of Arbitration in 2008, that is more than ten years after the case happened. And the arbitration court issued the verdict on Feb. 27, 2009.
PT Pertamina EP?s Head of Public Relations Affairs M. Harun said that the company had raised objections over the verdict, saying there are several points in the verdict that the company sees as too much, such as a decision to ask Pertamina to pay compensation of $34 million, while Lirik only demanded $9 million.
?Besides, the question that should be addressed is as to why they filed the suit today (last year rather than in 1990s),? he told Kompas in Jakarta on Friday.
?Pertamina?s position then was like that of BPMIGAS. Out of the four fields (that Lirik Petroleum) proposed to operate, Pertamina viewed only one met requirements for development. This is natural, like when BPMIGAS has to reject a work of plan that does not meet the requirements,? he aid.
BPMIGAS is the government agency tasked with regulating the oil and gas upstream sector. The agency had the right to give a go-ahead for a development plan proposed by an oil and gas contractor or reject it. In the past, the job was handled by Pertamina, who acted simultaneously as an oil firm and the regulator of the country's oil and gas industry.
An international arbitration verdict needs confirmation form a local court so that it can be executed. In the case of Indonesia, it is the Central Jakarta District Court that has been tasked by the government to examine or confirm all verdicts by international arbitration.
Harun said Pertamina will file a complaint with the Central Jakarta District Court over the arbitration ruling. (*)