Pertamina to fight on Karaha asset seizures

Indonesia state oil company Pertamina said on Wednesday it was not aware of any steps yet by independent geothermal firm Karaha Bodas to seize assets worth $261 million, and would contest Karaha on the issue.

"Not yet," Pertamina president director Baihaki Hakim told reporters when asked whether he was aware of Karaha following through on a statement it would begin seizing Pertamina assets around the world in execution of a $261 million arbitration award.

"What I know is we will continue to fight on this issue. There will be a hearing on March 15 at which Pertamina and the (Indonesia) finance ministry will be represented," he said.

Hakim did not elaborate on what kind of hearing or where it would be.

Pertamina signed an agreement with Karaha Bodas to develop geothermal energy in 1994, but the government suspended the project in 1998 following the regional economic crisis, which hit Pertamina especially hard.

The Karaha statement on Monday said the firm invested over $100 million to develop the project and had filed for arbitration following the suspension, winning the award in December 2000.

"Pertamina has refused to pay any portion of the award, requiring Karaha to begin seizing Pertamina's assets around the world in order to satisfy the award," Karaha said.

Indonesia currently generates about 300 megawatts (MW) of electricity from geothermal energy.

Indonesia has said it has potential to get 19,000 MW of electricity from geothermal sources.

Hakim said earlier this month that Pertamina was in the process of re-valuing its assets, which could be worth around $19.6 billion. (*)