Eni requests rescheduling of work in Ambalat block
Leony Aurora, The Jakarta Post, Jakarta
On the back of the ongoing territorial dispute between Indonesia and Malaysia, Italian oil giant Eni SPA has asked for a rescheduling of its exploratory work in the disputed Ambalat oil block, a top official says.
The company, whose local unit, Eni Ambalat Ltd., manages the block, wants to slow down its activities offshore East Kalimantan until the situation had improved, said chairman of the Upstream Oil and Gas Regulatory Agency (BP Migas), Kardaya Warnika, on Wednesday.
"We cannot force people to work in an area where they are not comfortable," said Kardaya after meeting with members of the House of Representatives.
Patrolling warships in the disputed area could disrupt Eni's exploratory drilling work, he added.
Indonesia launched a major protest a few months back after Malaysia's state oil company Petronas awarded a concession to international oil giant Royal Dutch/Shell to work on blocks ND6 and ND7.
The government claimed that the blocks were located within Indonesian territory and overlapped with its own oil and gas blocks, Ambalat and East Ambalat. The two countries are currently engaged in negotiations and are scheduled to meet every two months in an attempt to settle the issue.
Eni holds the concessions for Ambalat and the nearby Bukat block until 2029 and 2028 respectively, while U.S. firm Unocal was awarded the right to explore in East Ambalat late last year.
Kardaya said that Unocal had yet to submit any rescheduling plans as it was still conducting initial studies, which were expected to be completed this year.
He further said that because the Ambalat block was adjacent to Bukat -- the latter being entirely within undisputed Indonesian territory -- the two blocks needed to be investigated together. Consequently, Eni would also delay its work in Bukat.
"Eni has drilled three exploratory wells in Bukat and the results were promising," Kardaya told legislators during the hearing. Initial estimates reckon that the block holds reserves of up to 1 trillion cubic feet of gas and 400 million barrels of oil, he added.
Eni has also drilled a well in Ambalat, but this came out dry. "However, the results from Bukat show that Ambalat could have good reserves as well," said Kardaya.
Eni as the contractor had been required to drill another well this year in Ambalat.
The Ministry of Energy and Mineral Resources' director general of oil and gas, Iin Arifin Takhyan, said that the government understood Eni's position.
However, he added, "their commitments are not only limited to physical development. They can move forward in the meantime with other work, such as budgeting."
In 1999, Shell was awarded a production sharing contract by Indonesia to investigate hydrocarbon prospects in the area, but the company terminated the agreement two years later and handed the concession over to Eni.
Some local media here have speculated that Shell offloaded the concession after finding only small amounts of oil and gas, but then turned around and participated in the Petronas tender after learning of the large volume of reserves in the area.