Marsh & Jardine insure Badak NGL plants

Two foreign reinsurance firms Marsh and Jardine of Britain have won a tender to provide insurance coverage for seven liquefied natural gas (LNG) trains owned by PT Badak NGL Co. in East Kalimantan.

State oil and gas company Pertamina's finance director Ainun Naim said the two foreign re-insurance brokers had gone through a tender process that was participated by seven reinsurance companies. Marsh and Jardine demanded a premium of $3.5 million to cover Badak plants.

Ainun said Pertamina, which partly owns Badak NGL Co., opened the tendering for insurance coverage for Badak plants after it revoked its cooperation agreement with existing brokers - those owned by Bob Hasan -- because of various reasons, including graft allegations.

Pertamina had severed contracts with insurance brokers linked to Bob Hasan, namely Tugu Reinsurance Broker (TRB) incorporated in Singapore and Energex, since July.

TRB had in the post monopolized the insurance coverage for Badak.

Ainun said that insurance coverage for Badak would later be taken over by Tugu Pratama Indonesia (TPI) that was controlled by Pertamina.

Bob Hasan used to own 35 percent in TPI, but Pertamina scraped that ownership because it claimed that Bob never submitted any money or share for his 35 percent stake at TPI.

PT Badak NGL Co. has seven trains, Train A to Train G, that in 1998 produced a total of 19 million tons of LNG. It exported the LNG to Japan, Taiwan, and South Korea. (*)