Japex to start RI project by year end

Japex to start RI project by year end

TOKYO (Dow Jones): Japan Petroleum Exploration Co. plans to
commence the first exploration drilling at Indonesia' Semirak
bloc, onshore Irian Jaya, by the end of 1998, Japex officials
said yesterday.

Japex was awarded a production-sharing contract for the bloc
by the state-run Pertamina, Thursday.

After a feasibility study on the Semirak block which ran from
November 1996 to April 1997, Pertamina and Japex signed a joint-
operating production-sharing agreement. Japex holds a 60 percent
stake in the concession while Pertamina takes the remainder, they
said.

The 30-year production-sharing contract includes an
exploration period of 10 years.

Under the accord, Japex will conduct one seismic drilling and
two test exploration drillings over the next three years at an
estimated cost of US$35 million, the officials said.

The onshore Semirak block covers 2,757 square meters.

"The Semirak block is promising as it's located adjacent to
Wiriagar, Berau blocks where Atlantic Richfield Co. (ARC) and
Japan's Kanematsu Corp. have been successfully developing," a
Japex official said.

"We plan to sell possible gas output (from Semirak block) in
the form of liquefied natural gas to Japan."

The initial exploration cost of $35 million for the first
three years will be financed entirely by Japex, with loans and
investment from Japan National Oil Corp, the officials said.

Japex separately is required to pay a US$1.8 million bonus for
the concession to Pertamina within one month.

Japex established by the end of March its wholly-owned project
company, Irian Jaya Gas and Oil Co. capitalized at Y400 million.
Japex plans to invite foreign and domestic partners to
participate in its Semirak project, the officials noted.