THAI COMPANY ACCEPTS GAS PLANT INSURANCE SETTLEMENT

Oct. 22, 1990
The Petroleum Authority of Thailand (PTT) has agreed to accept a 253 million baht ($10 million) insurance settlement in compensation for damages to its Rayong gas processing plant on Thailand's eastern seaboard. The settlement comes when PTT remains embroiled in a related lawsuit with Unocal Thailand and Toyo Engineering Corp., claiming 942.97 million baht ($37.68 million) in compensation for alleged damage to its $320 million plant (OGJ, July 23, p. 22).

The Petroleum Authority of Thailand (PTT) has agreed to accept a 253 million baht ($10 million) insurance settlement in compensation for damages to its Rayong gas processing plant on Thailand's eastern seaboard.

The settlement comes when PTT remains embroiled in a related lawsuit with Unocal Thailand and Toyo Engineering Corp., claiming 942.97 million baht ($37.68 million) in compensation for alleged damage to its $320 million plant (OGJ, July 23, p. 22).

Senior PTT officials unofficially concluded the agreement with the Thai state owned insurance firm Dhipaya and a group of foreign reinsurers led by London broker Sedgewick after long negotiations. The amount falls far short of about $36 million PTT originally claimed, but PTT Gov. Anat Arbhabhirama said the company is pleased.

LAWSUIT UPDATE

In the lawsuit, PTT alleged Unocal Thailand was responsible for supplying mercury contaminated natural gas from its Gulf of Thailand gas fields to the Raoyng plant.

It also alleged Toyo provided poor construction work.

The plant, at Mab Ta Phud, Rayong, was paralyzed for 124 days in June-October 1989 because of what PTT claimed was excessive mercury content in the offshore natural gas stream.

PTT later spent millions of dollars for repairs and installation of mercury decontamination equipment to put the troubled plant back on stream.

The plant produces most of Thailand's liquefied petroleum gas as well as feedstock for Thailand's first gas based petrochemical complex.

The 350 MMcfd plant started up in 1985.

UNOCAL'S RESPONSE

In its application for dismissal of PTT's allegations, Unocal insisted the gas stream it delivered to PTT was in full compliance with quality specifications contained in gas sales contracts.

"The problem at the gas separation plant could have been caused by design, engineering, process or material selection, construction, or operating and maintenance practices with which Unocal Thailand has no involvement," it said.

Unocal also contends the complaints filed by PTT are improper because the gas sales contract requires the two parties to resolve disputes through international arbitration.

Anat said he expects to decide within 1-2 months whether the case should be resolved by arbitration but reaffirmed PTT's view that the suit also is a civil case that could be tried in Thai courts.

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