Total case will spook investors: IPA<\/p>\n
Fabiola Desy Unidjaja, The Jakarta Post\/Jakarta<\/p>\n
While the legal battle involving Total E&P Indonesie -- a local
\naffiliate of French oil giant Total SA -- and its contractors is
\nonly in its early stages, it is already sending a bad signal
\nabout Indonesia's investment climate.<\/p>\n
President of the Indonesian Petroleum Association (IPA) Chris
\nB. Newton said the bankruptcy case against Total was not helping
\nthe investment climate at all, and feared it would scare away
\nbadly-needed foreign investment.<\/p>\n
"This is not helping with the overall investment climate.
\nTotal is a large company and I am sure they have their reasons
\n(on the case)," Newton told The Jakarta Post on Friday.<\/p>\n
IPA groups together oil and gas contractors and service firms
\nin Indonesia.<\/p>\n
On Jan. 14, PT Istana Karang Laut and PT Sanggar Kaltim Jaya
\nfiled a bankruptcy petition in the Jakarta Commercial Court
\nagainst Total, accusing the company of breaching a contract over
\na project in the Tunu field in East Kalimantan, by failing to pay
\nUS$7.2 million in claims.<\/p>\n
A contract was signed in 2001 between Total and contractor
\nSanggar Kaltim, but Sanggar later subcontracted the work to
\nIstana Karang. The block's Tunu and Peciko fields supply PT Badak
\nNGL, one of the world's biggest LNG plants.<\/p>\n
The contractors argued that Total was $7.2 million short in
\nfulfilling the contract. Total is denying the claim, saying there
\nis no substantial evidence of such debt and insisting that they
\nhave fulfilled all of their obligations to the contractors.<\/p>\n
Newton added that investors would get confused over the fact
\nthat in Indonesia a company as large and financially-sound as
\nTotal could be declared "bankrupt" over relatively small amounts
\nof funds.<\/p>\n
Total SA is currently the world's second largest liquefied
\nnatural gas (LNG) producer.<\/p>\n
"The law on bankruptcy is an issue, because it can actually
\ndeclare a multi-billion dollar company bankrupt over a very small
\namount of money," Newton, who is also a top executive at Santos,
\nremarked.<\/p>\n
Oil and gas analyst Kurtubi also acknowledged the magnitude of
\nthe case, and the impact it could have on the industry as a
\nwhole. He therefore urged that the court be prudent in deciding
\nthe case, and that the country should not be prejudiced from the
\nongoing trial process.<\/p>\n
"Should the court grant the (bankruptcy) petition, it should
\nbe made in such a way that it will not burden the country. It is
\nup to the court but they have to keep in mind that this case
\nconcerns the state," he told the Post.<\/p>\n
However, the contractors' lawyer O.C. Kaligis argued that the
\ncase should not be seen as a threat to foreign investors as all
\ncompanies operating in Indonesia must abide by the law.<\/p>\n
"This is a simple case, they owe some money that they have to
\npay. It is impossible for Total to stay here for so many years
\nwithout benefiting from their projects," Kaligis said.<\/p>",
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"sponsor": "Okusi Associates",
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