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PTTEP freezes new investment in Indonesia

Lawsuit over 2009 oil spill ratchets up environmental dispute

Somporn Vongvuthipornchai, chief executive of PTTEP, told reporters in Bangkok that the company will not proceed with new investments in Indonesia

BANGKOK -- PTT Exploration and Production, Thailand's state-owned oil and gas company, said on Tuesday that it will halt all new investments in Indonesia until a dispute with the government there over an oil spill in 2009 is settled.

"As of today, PTTEP made the decision to suspend any new investment until the issue becomes clear and a conclusion could be reached," Chief Executive Somporn Vongvuthipornchai told reporters in Bangkok on Tuesday. He said that this could mean that more than one "potential merger and acquisition project" will be shelved.

"We will shift our priorities in investment expansion [to] other countries such as Thailand, Myanmar, and Malaysia," he said.

Last week, the Indonesian government filed a lawsuit against PTTEP, its parent company PTT and subsidiary PTTEP Australasia, demanding 27.5 trillion rupiah ($2.06 billion) in compensation for environmental damage caused in the wake of an explosion on a rig in the Timor Sea off northwest Australia.

PTTEP has denied any damage occurred in Indonesian waters, and has cited a joint investigation with the Australian government. It is waiting for court papers to be translated by the Indonesian government before deciding on any further course of action, Somporn said. He also noted that the company will not be provisioning for the compensation claim.

In 2011, an Australian court fined PTTEP 510,000 Australian dollars ($375,411), and that is the only payment that has been made in connection to the spill.

The Indonesian press reported earlier that there were moves afoot to suspend PTTEP licenses and assets. A PTTEP subsidiary has an 11.5% interest in an oil and gas field in the Natuna Sea, near Indonesia's border with Malaysia.

Producing roughly 1,200 barrels of crude oil and 224 million cubic feet of natural gas per day, the project accounts for around 1% of PTTEP's total sales, the company said.

"This ongoing project will continue -- our legal advisor said that asset seizures would be impossible," Somporn said without elaborating.

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