Shell, Petronas asked to clarify

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)