Govt denies Malaysia's claim over oil blocks

Govt denies Malaysia's claim over oil blocks

Dow Jones
Jakarta

The government on Thursday denied Malaysia's claim over
potentially rich offshore oil and gas blocks off Borneo Island,
saying the blocks are within Indonesian territory.

"Malaysia has made a unilateral claim," Iin Arifin Takhyan,
Director General of Oil and Gas at the Ministry of Mineral
Resources and Energy, told Dow Jones Newswires.

Malaysia's national oil company, Petronas, said in a statement
it "was in advance stages of awarding the ultra-deepwater
blocks...which are within the Malaysian territorial boundary."

But Pertamina, Indonesia's state-owned oil and gas company, is
also planning to award exploration contracts for the two blocks,
located about 150 kilometers off Malaysia's eastern state of
Sabah and Indonesia's Kalimantan province, Malaysia's New Straits
Times newspaper reported.

An official from Pertamina later clarified the report, saying
the authority to award oil blocks is in the hands of the
government.

The blocks lie near the islands of Sipadan and Ligitan, which
for years were the subject of a dispute between Malaysia and
Indonesia. The International Court of Justice handed Malaysia
sovereignty over the islands in 2002.

Another official at Indonesia's Ministry of Mineral Resources
and Energy said Malaysia is not one of the signatories of the
United Nations Convention on the Law of the Sea, meaning its
water territory spans only up to 12 miles from the Sipadan and
Ligitan islands.

Iin said the governments of the two countries have discussed
the matter, but the talks have become deadlocked.

"The best solution could be a joint operation (mechanism), so
that the two countries can exploit oil (from the blocks) and
share it," he said.

Malaysia has also been stepping up its maritime claims around
a zone rich in oil and natural gas near the Borneo island state
of Sarawak which has been disputed by neighboring Brunei.

The ambiguity resulted in a confrontation in March last year,
when a Malaysian navy patrol vessel ordered out an exploration
team from Total, the French company awarded the exploration
contract by Brunei. Subsequent negotiations on production-sharing
are believed to have stalled.