Commercial oil production to start in Timor Gap

Commercial oil production to start in Timor Gap

JAKARTA (JP): Commercial oil production will start early next
year in the Timor Gap, an offshore area disputed by Indonesia and
Australia, Minister of Mines and Energy I.B. Sudjana says.

The Elang Bloc at Zone A of the Australian-Indonesian area of
cooperation, which has been explored by BHP Petroleum of
Australia, is estimated to have oil reserves of 50 million
barrels, he told reporters after the fifth meeting of the
Ministerial Council, an agency assigned by the two countries to
supervise exploitation of the Timor Gap.

The gap, under an agreement signed in 1989, is divided into
three zones. Zone A, which is in the middle of the area, is
jointly supervised by Indonesia and Australia, which will share
taxes and revenues from oil and gas production in the zone. Zone
B is controlled by Australia and Zone C by Indonesia.

The Elang Bloc, where 23 wells will be drilled, can now
produce 17,170 barrels per day (bpd) of oil from its existing
three wells, Sudjana said.

"But, the commercial activities should await the completion of
final testing at two new wells, Kakatua and Sikatan, which are
now being drilled at the Elang Bloc," he said.

Yesterday's meeting, with the main agenda of setting up a
five-year corporate plan, a two-year business plan and a one-year
budget plan for the Joint Authority of the Timor Gap Development,
was attended by Australian Minister for Resources David Beddall,
Indonesian Ambassador to Australia Sabam Siagian, Indonesian
Director General of Oil and Gas Suyitno Patmosukismo, the
president of the state oil company Pertamina, Faisal Abda'oe and
the executive director of the Joint Authority, Derajat Zahar.

Suyitno said that since the Timor Gap treaty came into force
in 1991, 13 wells have been drilled at Zone A, including the
three productive ones at the Elang Bloc.

Two new wells will be drilled next month, he said.

No disputes

Beddall said that Zone A is seen as positive business and
political cooperation between the two countries which are thus
far weighed down by political issues, such as human rights and
East Timor.

"There are no disputes at all between Indonesia and Australia
on the Timor Gap development," Beddall told reporters after
yesterday's meeting.

"What is important for us now is how to share revenues from
the Timor Gap cooperation," he said.

Sudjana said that: "The Timor Gap development even shows to
the world how close we (Indonesia and Australia) are now and how
successfully we have settled any misunderstandings."

The cooperation plan at the Timor Gap is regarded as
temporary, while the two countries are seeking an agreement on
the boundary at waters south of East Timor, which was integrated
with Indonesia in late 1976. Australia has recognized Indonesia's
sovereignty in East Timor since 1979.

Eleven contracts have been thus far awarded to major companies
to explore for oil and gas reserves at Zone A with total
investment commitments of around US$197 in the first three years
of exploration since 1992.

The contracts were given to BHP Petroleum for ZOCA-1 and 12
fields, Shell for ZOCA-2 bloc, Woodside for ZOCA-3 and 4, Sagasco
for ZOCA-8, Enterprise for ZOCA-9 and 14, USX-Marathon Oil Co.
for ZOCA-10 and 11, Philips for ZOCA-14.

"The Joint Authority is now offering three other contracts at
ZOCA-5, 6 and 7 fields," Sudjana said.(fhp)