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Indonesia: Eni concerned over Ambalat development security

17 Jun 2005

The Italian oil-and-gas company Eni SPA has asked Indonesia to delay the operator's commencement of exploration work at the Ambalat oil block, concerned over potential disruptions from warships patrolling the area disputed by Indonesia and Malaysia, The Jakarta Post has reported. The paper quoted oil-and-gas regulatory body BP Migas chairman Kardaya Warnika as saying that Eni's local unit, Eni Ambalat Ltd, wants to slow down its activities at the Ambalat block until the situation has improved. "We cannot force people to work in an area where they are not comfortable," Warnika was quoted as saying. Tension emerged between Indonesia and Malaysia after the latter's state oil company Petronas granted energy giant Shell a concession in the Ambalat area. Jakarta claims the Ambalat area as part of its territorial waters and said the concession granted by Malaysia overlaps with those granted to Eni and US-based Unocal Indonesia Ventures Ltd. Eni holds the concessions for Ambalat and the adjacent Bukat block, which is entirely within undisputed Indonesian territory, Migas said. The East Ambalat block has been awarded to Unocal. Eni must explore the two blocks together because of their proximity, Warnika said. Consequently it has also asked for a delay at Bukat. Another report by Kompas quoted BP Migas deputy for planning Zainal Achmad as saying that operations at both blocks are expected to come on stream after eight years of exploration and development works. In 1999 Indonesia awarded the Ambalat block to Ambalat Shell BV. Kompas said Shell withdrew from the block in October 2001. Eni, which already had the concession for the Bukat block, was then appointed to take over the Ambalat operations. Eni drilled three wells at Bukat, which Warnika said, showed promising results and may indicate that Ambalat contains "good reserves" as well. Last February Shell regained concessions for areas overlapping the Ambalat block through Malaysia.

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