Indonesia To Award Exploration Rights to TotalFinaElf

Indonesia is likely to award TotalFinaElf the Donggala oil block in the Makassar Strait, a senior mines and energy ministry official said on Wednesday. "We are still evaluating the tender for the Donggala oil block but based on a preliminary judgment, TotalFinaElf may win the tender for that oil block," said Rachmat Sudibyo, the director general of oil and gas. "We hope to sign production sharing contracts for six oil blocks by the end of this month." We will open another tender for about 20 oil blocks soon after signing the contracts for the six," Sudibyo added.

TotalFinaElf and Unocal are among three companies to bid for the 3,800-square kilometer offshore Donggala block and its potentially large hydrocarbon reserves. Indonesian Mines and Energy Minister Purnomo Yusgiantoro has said TotalFinaElf and Unocal should cooperate in the Donggala block but he has left it up to the companies to decide for themselves.

Indonesia opened tenders for nine oil blocks earlier this year and five blocks have already been awarded to foreign oil companies, including BP for the Bawean block in East Java and Conoco for the Nila block in the Natuna Sea.

Indonesia, Asia's only OPEC member, is struggling to boost its oil production, which is estimated to fall significantly next year if security conditions at key sites do not improve. Indonesia's oil output fell to 1.10 million barrels per day (bpd) in October from 1.22 million bpd the previous month.