SPE starts arbitration lawsuit against Hexindo

By Romel S. Gurky

SGX-listed Ramba Energy Limited said that Super Power Enterprises Group Ltd (SPE) had commenced arbitration proceedings in Singapore against PT Hexindo Gemilang Jaya over ownership dispute in the Lemang PSC in Indonesia.

Ramba said in a statement Thursday that it owns 80.4 percent of the share capital in Hexindo. Hexindo is a limited liability Indonesian company incorporated under the laws of the Republic of Indonesia and it is the entity through which the group carries out its oil and gas exploration activities in the Lemang Production Sharing Contract (Lemang PSC).

Ramba explained that Hexindo and SPE entered into a contractual joint venture established under a joint operating agreement (JOA) on October 13, 2009. Under the JOA, Hexindo and SPE each held a 51 percent and 49 percent participating interests in the Lemang PSC respectively.

The arbitration notice is in relation to a claim by SPE over the forfeiture of its 49 percent participating interest in the Lemang PSC by the government of Indonesia (GOI) more than three years ago which resulted in its eventual substitution by a third party, Eastwin Global Investments Limited, as owner of the said 49 percent participating interest in the Lemang PSC.

In commencing the arbitration proceedings, SPE is seeking (A) a determination that the forfeiture of the Lemang interest and the subsequent substitution with Eastwin were, and continue to be, unlawful because, inter alia, (i) the forfeiture provisions in the JOA which were relied upon by Hexindo were allegedly penal and unenforceable, and (ii) in any event, the forfeiture allegedly did not follow the requirements of the JOA; and secondly, (B) damages, less any compensation due to Hexindo, plus interest up to the date of the award.

The claimant?s request for reliefs left damages effectively to be assessed by the Singapore International Arbitration Center?s (SIA) tribunal.

Upon the GOI approving the substitution by Eastwin as the new owner of the Lemang Interest on August 26, 2011, Hexindo and Eastwin subsequently signed a new joint operating agreement on December 19, 2011 (new JOA). Under the new JOA, Eastwin assumed all rights and liabilities of SPE.

?Accordingly, the (Ramba) board sees no merit in SPE?s claims and Hexindo will vigorously defend its rights against SPE in the latter?s claim against the forfeiture of the Lemang interest,? Ramba said.

The Lemang block is located in the northern most part of the hydrocarbon-rich South Sumatra basin, a proven region for oil and gas production with transportation infrastructure already in proximity. Located approximately 300 kilometres from Singapore, the Lemang block is ideally situated for oil and gas distribution to regional markets.

Editing by Reiner Simanjuntak