Pertamina names Marsh and AON as insurance brokers

State owned oil and gas company has named Marsh of United Kingdom, and AON of Australia as brokers to handle its loss insurance coverage which is estimated to reach combined value of about US$20 billion, Financial Director Ainun Naim said.

"With the appointment of the two brokers, Pertamina will have no difficulties in handling its insurance claim, as well as when it has to pay compensation to other parties such as in the Karaha Bodas case," he was quoted as saying by Bisnis Indonesia.

According to him, Pertamina?s total insurance coverage in all its oil, gas and geothermal projects has reached about US$20 billion. The contracts with Marsh and AON will valid for a year, he added.

In its recent decision, the International Arbitrary Body recently ordered Pertamina to pay compensation worth US$261 million to Karaha Bodas Company LLC (KBC) for the suspension of the latter?s geothermal power project.

The Karaha Bodas project is one of dozens of mega projects which were suspended by the government after the financial crisis hit the country in late 1997. The government, however, revoked the decision in 1998 after protests from developers, Caithness Energy, Florida Power, Japan Tomen Power and their local partner PT Sumarah Daya Sakti. But in early 1998, the government again issued a decree to re-suspend the project.

Not happy with the decision, the developers then sued Pertamina on the behalf of the government through the International Arbitrary Body, which then issued a ruling in favor of the Karaha Bodas developers. Pertamina opposed the compensation payment order and said that the ruling was illegally flawed. (*)