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.