Indonesia Awards North Kalimantan's Offshore East Ambalat PSC to Pertamina

Indonesia transferred North Kalimantan's offshore East Ambalat oil and gas block, relinquished by U.S. major Chevron Corp., to state-owned PT Pertamina, the country's Minister for Energy and Mineral Resources Sudirman Said said Wednesday, as quoted in a report Thursday by local media Jakarta Globe.

The Minister said the handover of the East Ambalat block, located 50 miles (80 kilometers) east of Tarakan in water depths of 6,562 feet (2,000 meters) in the Ambalat Sea, North Kalimantan in border areas between Indonesia and Malaysia to Pertamina is likely to boost the firm's petroleum production over the next three decades.

Pertamina has set up a subsidiary Pertamina Hulu Energi Ambalat Timur to develop the East Ambalat block, which Chevron relinquished, citing Malaysia's claim over the border areas for raising tension between the two Southeast Asian neighbors and made it more risky to explore the block.

Indonesia and Malaysia have been embroiled in a long-running dispute over the oil-rich Ambalat area, with bilateral with tensions heightened by the International Court of Justice ruling in 2002 that the Sipadan and Ligitan islands off northeastern Borneo belonged to Malaysia.

Pertamina Hulu Energi, which holds 100 percent stake in the 1,828 square mile (4,735 square kilometer) East Ambalat Production Sharing Contract (PSC) for a 30-year period, has estimated that production in the first three years to be worth $8.5 million, Wianda Pusponegoro, Pertamina's vice president of corporate communications, said in Jakarta Globe. The block is capable of producing up to 40,000 barrels of oil per day.

The addition of East Ambalat block will raise Pertamina's contribution to Indonesia's oil and gas production, now pegged at around 26 percent of the country's total .

The awarding of the new contract forms part of the government's effort to increase Indonesia's oil and gas production from its 21.5 billion barrels of oil reserves which are now not commercially viable to develop because of the current oil price environment as well as their locations in remote and inaccessible parts of the archipelago.

“We awarded fewer contracts this year, but we're still optimistic,” Sudirman said in capital Jakarta at the 40th Indonesian Petroleum Association Convention and Exhibition 2016, Jakarta Globe reported.

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