Oil block within our area: KL

Oil block within our area: KL

Agencies, Kuala Lumpur

Malaysia on Monday rejected a protest from its giant neighbor
Indonesia for granting Royal Dutch/Shell Group an oil exploration
concession in an area claimed by Jakarta, saying the bloc was
within Malaysian territory.

The spat comes amid strain in Malaysia-Indonesia ties ahead of
the crackdown from Tuesday on hundreds of thousands of illegal
Indonesian workers in Malaysia.

Malaysia's national oil and gas company, Petronas, earlier
this month awarded production sharing contracts (PSCs) to two of
Shell's Malaysian units and to Petronas Carigali Sdn. Bhd. for
deep-water blocks ND6 and ND7, off the coast of Malaysia's Sabah
state on Borneo Island.

Shell Malaysia, a subsidiary of Shell group, has active
interests in 17 PSCs in various offshore blocks in East and West
Malaysia

Borneo or Kalimantan, the world's third-largest island, is
shared by portions of Malaysia and Indonesia, and all of Brunei.

Indonesia says the area is part of its territorial waters and
has sent a formal protest note to Malaysia.

"It's a violation of our sovereignty," Indonesian Foreign
Ministry's chief spokesman Marty Natalegawa said in Jakarta on
Saturday.

"If they (Shell) want oil concessions, they must talk to us,"
Marty added during a press conference.

Malaysian Prime Minister Abdullah Ahmad Badawi said the
concession was within his country's waters.

"The people at Petronas know that the area is within our
territory. If the area is somebody else's, why should Petronas go
in there?" he was quoted as saying by the official Bernama news
agency.

Foreign Minister Syed Hamid Albar stressed it was within
Malaysia's jurisdiction to award the concessions but said the
government would strive to resolve the dispute amicably.

"This is our area and we want to proceed in giving
concessions," he said.

"At the end of it, we have to find a solution that is
acceptable. As far as we are concerned, we have done on the basis
of our understanding what is within our right, maritime right, in
order to issue those concessions."

Jakarta has blasted Petronas' action, saying it was unlawful
as the concession was granted based on a map Kuala Lumpur had
unilaterally drawn up in 1979, that was never recognized by
Indonesia or a few other Southeast Asian countries.

Unlike Malaysia, Indonesia said it had granted concessions in
the Sulawesi Sea to various oil companies including Shell since
the 1960s in accordance with its internationally recognized
territorial rights.

Indonesia and Malaysia previously disputed the ownership of
two small islands in the Sulawesi Sea, which is between
Indonesia's East Kalimantan province and the Malaysian state of
Sabah.

However, Indonesia claims that Malaysia's water territory
extends up to just 19 kilometers (12 miles) from the islands. The
exact location of the oil blocks has not been disclosed.

Indonesia in November awarded a production sharing agreement
contract to Unocal Corp. to explore and exploit oil and gas in
the East Ambalat Block, located in the same disputed waters.

But in December 2002, the Hague-based International Court of
Justice concluded that the islands -- Ligitan and Sipadan off
Borneo island -- belong to Malaysia.

Marty said Indonesia recently increased maritime patrols near
the border with Malaysia.