Cement firm pays $100 for Java mudflow stake

INDONESIA’S largest public oil company, PT Medco Energi, has sold for $US100 ($A124) its entire 32% stake in the East Java drilling concession where the Banjar Panji gas well started spewing mud 10 months ago.
Cement firm pays $100 for Java mudflow stake Cement firm pays $100 for Java mudflow stake Cement firm pays $100 for Java mudflow stake Cement firm pays $100 for Java mudflow stake Cement firm pays $100 for Java mudflow stake

According to a Bloomberg report, Medco disposed of the interest to Indonesian cement works company, Prakarsa Group, which will assume liability for the disaster. Perhaps the outfit hopes to use the mud in its business operations?

The news report quoted Medco president Hilmi Panigoro as saying that Medco was now exempted from all liabilities incurred by the mudflow.

The mudflow has swamped several villages and displaced at least 12,000 people.

Indonesian operator Lapindo Brantas owns half of the field, while Santos owns the remaining 18%. If the price paid for Medco’s stake is a good indication, Santos’ share would be worth $56.

Last month, Santos announced that it had boosted its provision for the mud disaster from $24 million to $89 million. This was partly offset by booking $22 million of insurance proceeds.

At this point, the extent of Santos's mud-related liabilities can only be guessed at.

But Lapindo and Medco disagree over what caused the mudflow and the parties responsible for clean-up and compensation.

In November, Medco filed an arbitration claim to seek exemption from paying for the damages, alleging the incident was due to “gross negligence” on the part of Lapindo.

Indonesia’s energy ministry and regulator BPMigas have said a police investigation will determine whether Lapindo is responsible for the incident.

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