U.S. court fulfills Pertamina's request not to post $275 million guarantee

The U.S. Delaware district court decided on July 18 that state oil and gas firm Pertamina was not obliged to post a US$275 million bond to satisfy an arbitral award granted to Cayman Islands-registered geothermal firm Karaha Bodas Company (KBC), according to Pertamina legal officer Simson Pandjaitan.

In early July, the Delaware district court issued a ruling to uphold a motion by KBC requiring Pertamina to post $275 million as a guarantee fund in case it wins the case against Pertamina in federal courts in New York and Texas. Pertamina lodged complaints to the Delaware court.

?The Delaware district court accommodated our complaints. It issued a verdict on July 18 that Pertamina was not obliged to post $275 million as guarantee,? Pandjaitan said in a news conference at Pertamina.

In 2000, an arbitration panel in Switzerland ordered Pertamina to pay KBC $261 million in compensation for the termination by the government in 1998 of its contract to develop a geothermal power project in Karaha District in West Java. Karaha claimed it had invested $100 million and that the project cancellation had cost it some $161 million in potential profit.

Courts in the United States, Hongkong and Singapore confirmed the award given by the Swiss arbitration panel to KBC despite repeated complaints from Pertamina that the $261 million was too big as compensation for the Karaha project suspension.

KBC is controlled by U.S. companies Florida Power Energy LLC and Caithness Energy LLC. (leo)