Australia, RI agree to do more on Timor Gap projects
By Riyadi
NUSA DUA, Bali (JP): Australia and Indonesia agreed here on Thursday to provide more incentives for ongoing projects in the Timor Gap's zone of cooperation (ZOCA).
Indonesian Minister of Mines and Energy Kuntoro Mangkusubroto and Australian Minister for Industry, Science and Resources Nick Minchin noted in a joint statement that significant oil and gas development opportunities exist in the ZOCA, the area shared by Australia and Indonesia.
Preliminary engineering studies were completed in 1998 for the upstream development of the Bayu-Undan gas field and development planning for the Jahal oilfield was well advanced, they said.
"Ministers agreed it was important to facilitate the development of these opportunities," they said.
The two ministers cochaired the ninth ministerial council meeting of the Australia-Indonesia Joint Authority for the Timor Gap Zone of Cooperation on Thursday.
They said senior officials of both governments, in consultation with the joint authority and in consideration of production-sharing contracts, would meet in May to finalize the form of incentives for the projects.
Kuntoro said more incentives were needed because exploitation of gas and oil in the area was costly.
"As development of oil and gas projects in the area is economically not viable, we are considering giving them more incentives. We will discuss this matter further in May," he said.
Australia's Broken Hill Pty Co Ltd (BHP) and Phillips Petroleum Co, big shareholders in the gap, have found a significant amount of gas reserves in the Bayu-Undan field.
They have proposed building a plant in the region to process natural gas reserves.
BHP, as the lead unit operator, plans to commence production from a new US$1.5 billion natural gas/condensate project in 2002.
But gas production has turned out to be not viable economically, Kuntoro said.
BHP has begun commercial oil production from the gap's Elang, Kakatua and Kakatua North since July 1998, with revenue divided evenly between Indonesia and Australia.
Estimates put potential revenue from the Timor Gap at up to $11 billion, based on reserves of 30 million barrels of oil and 175 million barrels equivalent of liquefied natural gas, plus plentiful supplies of condensate.
Kuntoro downplayed the estimate, saying the Indonesian side had collected only US$1.1 million from the Elang and Kakatua oil fields.
"So far only Zone A (ZOCA) has proved to have oil and gas reserves. We have not found any reserves in the other zones in the Timor Gap," he said.
The Timor Gap treaty, signed by Australia and Indonesia in 1991, splits the sea between East Timor and Australia into three zones, one Australian, one Indonesian and the ZOCA.
The treaty is in effect until Feb. 2031 unless East Timor is granted independence by Indonesia. (rid)