But Indonesia’s Capital Market Supervisory Agency (Bapepam) has nullified the sale of Lapindo Brantas to the Freehold Group, as already carried out by PT Energi Mega Persada Tbk.

The reason for this, according to Bapepam head Fuad Rahmany, is that there still is not yet any clear explanation as to who will be held responsible for the Lapindo mudflow disaster, including the payment of compensation to the general public.

“It is within the context that we have the authority to nullify Lapindo’s spin-off,” he said.

In October, Lapindo Group estimated the total costs for tackling the effects of an out of control mudflow to be about $US180 million and claims to have already spent about $US30 million. The mudflow was probably caused by careless drilling at a gas wildcat operated by the company.

On May 29, the well was drilling at a depth of 2833.7m when steam, water, mud and gas were seen venting to the surface some 200m away from the drilling location. The mud has been flowing ever since at rates estimated at between 50,000 and 120,000 cubic metres per day.

The flow shows no sign of abatement and the area may have to be permanently evacuated.

Eight villages have already been drowned in mud and more than 12,000 people have been relocated.

The regulator’s ruling came just over a week after Lapindo owner Abu Rizal Bakrie – who is also Indonesia’s Social Welfare Minister – sold the company for $US1 million ($A1.3 million) to an American business acquaintance.

There had been fears that the intention was to drive the company bankrupt so the minister can avoid further financial responsibility.

In his first comments on that deal on Wednesday, Bakrie said: “It doesn’t matter who the shareholders are; Lapindo must continue to bear the responsibility.”

Hours later a gas pipeline in the mudflow area exploded, causing massive fires and at least 13 deaths.

Bakrie is a leading player in the Golkar party, which was the former ruling party in the Suharto era and is still a powerful force in Indonesian politics.