Shell, Petronas asked to clarify

Fabiola Desy Unidjaja, The Jakarta Post, Jakarta

Indonesia will be seeking explanations from oil giants Royal Dutch/Shell and Malaysia's Petronas about their involvement in the sovereignty issues between Indonesia and Malaysia over East Ambalat area.

Scheduled for later this week, the two parties have been invited to a series of meeting with the government, represented by the Oil and Gas Regulatory Implementing Body (BP Migas) and Ministry of Energy and Mineral Resources, and the House of Representatives.

"We need to get clarifications on the business reasons behind the dispute and to ensure that they are not using our data during their negotiation before agreeing on the concession (over East Ambalat Block)," Iin Arifin Takhyan, the ministry's director general for oil and gas, said on Sunday.

Iin was referring to the concession contract agreed to between Petronas and Shell last month to develop and exploit the disputed area -- a move that revived the row between the two country with each claiming sovereignty over the area. Only months earlier, Indonesia awarded similar contract to another multinational oil giant Unocal.

But, since Shell was also awarded the rights to exploit the Ambalat block -- located side by side with the East Ambalat block -- by the Indonesia in 1999, there was a possibility that Shell might have used the data during its negotiation with Malaysia.

If they did, Iin said, it would be a violation to the 1999's agreement which stipulated that all data regarding oil reserves and other specifications about the block should be returned to Indonesia if the contract was terminated.

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

"The agreement means Shell must not used our data to appraise the oil potential at the East Ambalat area," Iin remarked.

Meanwhile, BP Migas chairman Rachmat Sudibyo explained that it was not a surprises for the foreign companies trying to get the area, due to the large oil potential in neighboring areas.

Separately, Andang Bachtiar, chairman of the Indonesian Geologists Association, estimated the deposit of oil in Ambalat would range from over 100 million to one billion barrels. A huge deposit that could contributes to the country's dwindling oil production.

These huge reserves serves had become the key point in the dispute, according to Andang, who claimed that geologically speaking, the area belongs to Indonesia.

"The Ambalat area practically belongs to Indonesia as it is a part of the Tarakan Basin (in East Kalimantan). Malaysia has extended its coastline to the south by 10 kilometer in 2002, claiming that it was an archipelago state. While in fact, it is not," Andang remarked.

Elsewhere, Iin said that, upon learning the clarification from both Shell and Petronas, the government would decide on the next step.

"We'll see their explanation over the case and then decide what should we do against it." (005)