M'sia, RI in territorial dispute over oil: Report

M'sia, RI in territorial dispute over oil: Report

Agence France-Presse, Kuala Lumpur

Malaysian national oil and gas company Petronas' plan to develop two new oil and gas blocks off Borneo Island may be in jeopardy due to overlapping claims by neighboring Indonesia, a report said Wednesday.

The New Straits Times newspaper said Indonesian national oil company Pertamina is planning to award exploration contracts at the end of the month for an area that falls within the two blocks.

A few months ago, Petronas called for a major international oil and gas companies to bid for Block ND6 and Block ND7 located some 150 kilometers (94 miles) off Tawau in the eastern Sabah state.

Petronas plans to award production sharing contracts in the deep waters of the Sulawesi Sea before the end of the year, it said.

The "intrusion" of Indonesia was worrying, the newspaper cited an oil and gas industry source as saying, since it could disrupt Petronas plans.

"The matter will have to be resolved between the governments of the two countries," he added.

Indonesia has began negotiations with several companies this month for a direct tender for exploration works in what is known as the East Ambalat block and awards are expected to be made soon.

Seismic studies have indicated potentially significant gas reserves, arousing the interest of oil companies, the newspaper said.

Malaysia is also engaged in a territorial dispute with Brunei that has halted oil exploration work for months involving two huge offshore blocks. But officials recently said they are moving closer to resolving it.

Brunei, a tiny enclave surrounded by Malaysia's Sarawak state on Borneo island, is the fourth largest producer of natural gas in the world and third largest oil producer in Southeast Asia after Indonesia and Malaysia.

The contested area represents about half of Brunei's entire offshore territory and is vital to its plans to diversify its oil-dependent economy.