Bambang Dwi Djanuarto

Indonesia to Fight Malaysia’s Ambalat Oil Claims

Indonesia will “fight till the end” to protect its claim to an oil-rich zone off the coast of Borneo Island that is disputed by Malaysia, the country’s outgoing energy minister said, shortly after being appointed to the defense ministry on Wednesday night.

The Ambalat region “is totally Indonesia’s,” Purnomo Yusgiantoro told reporters in Jakarta, following President Susilo Bambang Yudhoyono’s announcement that he would be the next defense minister.

The government will not cooperate with Malaysia in jointly patrolling the area because it would suggest an admission that the region is open to dispute, Purnomo said.

The two countries have awarded licenses to different international oil companies to drill in the area. Eni SpA, Italy’s biggest oil producer, halted exploration in Ambalat in June 2005 after Indonesia and Malaysia sent warships and military planes to the region.

The Indonesian government wants to exploit untapped oil deposits to stem a decline in production that forced it to withdraw its membership in the Organization of Petroleum Exporting Countries last year. The country is working with Eni to produce as much as 50,000 barrels of crude a day in the Ambalat region.

Eni owns a 66.25 percent stake in the Ambalat block, while US energy giant Chevron holds the remainder, according to data provided by the Ministry of Energy and Mineral Resources.

The country claims that a concession given by Malaysia to Royal Dutch Shell overlaps with drilling areas in Ambalat and East Ambalat, where Unocal, which merged with Chevron in 2005, was awarded a separate drilling license by Indonesia.

Malaysia disputed Indonesia’s claim, saying it had sovereignty in the areas under a 1982 United Nations convention.

Purnomo, along with other cabinet members, were sworn in on Thursday.

Bloomberg

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