Unocal wins oil rights in disputed waters

Unocal wins oil rights in disputed waters

Jakarta, Associated Press

Unocal Corp., a U.S. oil and natural- gas company, was awarded rights by Indonesia to explore for oil and gas in waters off Borneo island that are also claimed by Malaysia, a government official in Jakarta said.

Unocal bid for the rights to explore in the East Ambalat block and will be issued a letter of guarantee by Indonesia's government, said Iin Arifin Takhyan, Indonesia's director general of oil and gas. Malaysia's state-owned Petroliam Nasional Bhd., or Petronas, has said the area falls within its ND6 and ND7 blocks that it offered a few months ago.

"We are preparing a letter of guarantee and we expect the contract to be signed in December," Iin said in an interview. The director general said on Oct. 1 the governments of Indonesia and Malaysia will hold talks to settle the dispute, adding that the area is within Indonesian territory and the country will continue to offer exploration rights.

Unocal, based in El Segundo, California, will invest $1.5 million in the first three years of exploration, said Novian M. Thaib, director of exploration and production at the energy ministry. The company will also make a one-off payment to the government of $100,000 for the rights.

The areas lie near the islands of Sipadan and Ligitan, which for years were disputed by Malaysia and Indonesia. Though the International Court of Justice handed Malaysia sovereignty over the islands in 2002, the two countries have yet to agree on maritime boundaries.