JP/13/AMBALAT

JP/13/AMBALAT

RI seeks clarification from Shell, Petronas over Ambalat

Fabiola Desy Unidjaja
The Jakarta Post/Jakarta

Jakarta will seek explanations from oil giants Royal Dutch/Shell
and Malaysia's Petronas about their involvement in the issue of
sovereignty over the East Ambalat offshore block, which is
claimed by Indonesia and Malaysia.

The two companies have been asked to attend later this week a
series of meetings with the government, represented by the
Upstream Oil and Gas Executive Agency (BP Migas) and the Ministry
of Energy and Mineral Resources, and the House of
Representatives.

"We need clarification of the business reasons behind the
dispute, and to ensure that they were not using our data during
their negotiations before agreeing to the concession (over the
East Ambalat block)," Iin Arifin Takhyan, the Ministry of Energy
and Mineral Resources' director general for oil and gas, said on
Sunday.

Iin was referring to the contract agreed to between Petronas
and Shell last month to develop and exploit the disputed area --
a move that heated up the sovereignty row between Indonesia and
Malaysia over Ambalat.

Only months earlier, Indonesia awarded a similar contract to
another multinational oil giant, Unocal.

But because Shell was also awarded the right to exploit the
Ambalat block -- located next to the East Ambalat block -- by
Indonesia in 1999, there is concern that Shell used data from
Indonesia during its negotiations with Malaysia.

If the company did use the data, Iin said, it would be a
violation of the 1999 agreement that stipulated all data
regarding oil reserves and other specifications about the block
must be returned to Indonesia in the event the contract was
terminated.

Shell did terminate the agreement in 2001 and handed over the
concession to Ambalat to Italian oil producer Eni.

"The agreement means Shell must not use our data to appraise
the oil potential in the East Ambalat area," Iin said.

BP Migas chairman Rachmat Sudibyo said it was no surprise
foreign companies wanted into Ambalat given the large oil
potential in neighboring areas.

Separately, Andang Bachtiar, chairman of the Indonesian
Geologists Association, estimated the oil reserves in Ambalat
were between 100 million and one billion barrels. Such a large
deposit would go a long way toward improving Indonesia's
dwindling oil production.

These huge reserves were the key point in the dispute over
Ambalat, according to Andang, who claimed that geologically
speaking, the area belonged to Indonesia.

"The Ambalat area belongs to Indonesia as it is a part of the
Tarakan Basin (in East Kalimantan). Malaysia extended its
coastline to the south by 10 kilometers in 2002, claiming that it
was an archipelagic state, while, in fact, it is not," Andang
said.

Iin said that after receiving clarification from both Shell
and Petronas, the government would decide on its next step.

"We will hear their explanation of the matter and then decide
what we should do." (005)