PTTEP stops leak, blaze

PTT Exploration & Production Plc has successfully plugged a two-month-old oil well leak in northwestern Australia and extinguished a fire that broke out on the rig two days ago.

PTTEP’s West Atlas rig smoulders yesterday after a fire was extinguished, and a nearby rig pumped 3,400 barrels of heavy mud down a relief well to stop a two-month-old leak.

The company had been attempting to plug the leak from the West Atlas rig in its Montara field that had been spilling oil and gas into the Timor Sea since Aug 21.

Experts on board a nearby rig pumped about 3,400 barrels of heavy mud down a relief well to stop the leak, PTTEP said in a statement yesterday. The main fire at the wellhead platform has been put out, although some material on the rig may still be ablaze, the company said.

PTTEP has estimated that up to 400 barrels of oil a day were seeping into the ocean.

Chief executive Anon Sirisaengtaksin said the company would start assessing the damage to the platform within 24 hours to ensure there would be no more fire risk.

"We will monitor the site very closely and co-ordinate with the Australian government as much as possible to make sure that we have complied with local environmental and safety standards," he said.

PTTEP has not yet considered revising its projection of output from Montara, where it hoped earlier to pump up to 35,000 barrels a day next year, raising its total production to 240,000 barrels.

The company has earlier delayed the production startup to the second quarter next year and now it has rescheduled the start to the end of 2010.

Subsidiary PTTEP Australasia is working with the Australian Maritime Safety Authority (AMSA) and related environmental organisations to continue monitoring conditions.

"We can't estimate whether the platform will collapse or not as we need to wait for the fire extinguishing team and experts to assess the damages to the rig first. Its future for production has not known yet," Mr Anon said.

PTTEP is committed to paying all the cleanup expenses and has set aside US$160 million in provisions against the costs of the leak. It has insurance coverage of US$270 million. It will soon start working to claim the damages. which will be booked as income in the next quarter.

Kitichan Sirisukarcha, a senior vice-president at Kim Eng Securities, said PTTEP was likely to realise the losses in the fourth quarter.

He said the immediate impact on PTTEP's finances was unlikely to be significant, given the company had already set aside loss provisions in addition to existing insurance coverage.

But PTTEP would likely see a financial impact over the next two years from the incident, Mr Kitichan said.

"Production at the field will likely be delayed 18 months until the fourth quarter of 2011. It represents around 8% of PTTEP's daily production," he said.

The decline in PTTEP's share price showed that investors had already discounted the impact of the fire into valuations, he added.

PTTEP shares fell seven baht yesterday on the Stock Exchange of Thailand to 130 baht in heavy trade worth 5.8 billion baht. Over the past five trading days, the price has dropped 16%.

"If the losses from the fire exceed PTTEP's insurance coverage, we might see further declines in share prices. But I think that if [share price] losses are extended, it will be from other factors, such as oil prices or dollar trends and foreign fund flows," Mr Kitichan said.

Relate Search: PTT Exploration & Production Plc, Timor Sea, Anon Sirisaengtaksin