Limited impact is expected from Indonesia's lawsuit demanding US$2 billion from PTT Exploration and Production Plc (PTTEP) over alleged environmental damage from an oil spill in the Timor Sea eight years ago, stock analysts say.
The Indonesian government has long sought to claim compensation from SET-listed PTTEP and the process has now reached the lawsuit stage, but it will take time for a verdict, Land and Houses Securities (LH Securities) said in a research note.
"Moreover, PTTEP confirms there is no verifiable scientific evidence that can be used to support the claim," the broker said. "We initially believe that impacts will be limited."
The Indonesian government is suing PTT, its petroleum explorer PTTEP and PTTEP Australasia (PTTEP AA) for environmental damage in the Timor Sea from the leakage of hundreds of thousands of litres of oil off the northern coast of Western Australia in 2009 from the Montara wellhead operated by PTTEP AA.
The Jakarta Post earlier reported the Indonesian government was preparing to suspend PTTEP AA's licences and assets in the country.
PTTEP said in a filing with the Stock Exchange of Thailand yesterday that PTTEP and PTTEP AA are aware of reports that a lawsuit has been filed, but they have not received any notification of the substance or extent of the claim.
"PTTEP and PTTEP AA have put great effort to sincerely cooperate with the government of Indonesia to prove its point based on evidence, however we have not reached any agreement," PTTEP said. "PTTEP and PTTEP AA maintain their position, based on extensive independent scientific research overseen by the Australian government, that no oil from Montara reached the shores of Indonesia or Australia, and that no long-term damage was done to the environment in the Timor Sea."
PTTEP Netherlands Holding Cooperatie UA (a subsidiary of PTTEP) now has one operating asset in Indonesia through an 11.5% stake in the Natuna Sea A project.
The project's total sales volume of natural gas is 224 million cubic feet per day with 1,200 barrels per day of crude oil representing some 1% of PTTEP's total sales volume.
PTTEP's shares opened slightly lower at 93.75 baht yesterday before dipping to the day's trough of 93.25 baht. Buying on weakness cancelled out early losses, with the stock closing unchanged at 94.50 baht in trade worth 931 million baht.
Tisco Securities echoed LH Securities' comment on a muted impact.
"We anticipate years and multiple courts before a final settlement is reached. Natuna Sea A contributes about 1% to PTTEP's sales volume and roughly the same contribution to PTTEP's asset base, in our estimation. We believe the risk of a costly settlement is low," it said.
An analysts who requested anonymity said news of the lawsuit has hardly affected PTTEP's share price because investors could be familiar with the report after a group of Indonesian political activists took legal action against the petroleum explorer last year.
If PTTEP is found guilty, the company's cash on hand of 150 billion baht would be sufficient to settle the case, said the analyst, adding even if the company's assets in Indonesia are seized, it will not significantly affect PTTEP's production capacity.