Malaysia downplays territorial dispute with Indonesia

Malaysia, attempting to downplay recent concerns about a possible military conflict with Indonesia, said the Bukat Block, operated by Eni, falls outside the territory disputed with Indonesia.

Eric Watkins
Oil Diplomacy Editor

LOS ANGELES, Oct. 29 -- The Malaysian government, attempting to downplay recent concerns about a possible military conflict with Indonesia, said the Bukat Block, operated by Italy's Eni SPA, falls outside the territory disputed with Indonesia.

"The Bukat Block is located outside Malaysian territory, based on the 1979 Malaysian map," said Mohd Norhisyam Mohd Yusof, first secretary for bilateral and regional cooperation at the Malaysian embassy in Jakarta.

In making his announcement, Norhisyam said some parties had wrongly referred to the block as part of the maritime area of Ambalat, off eastern Kalimantan, which is thought to contain huge reserves of oil and gas.

Indonesia's Energy and Mineral Resources Minister Purnomo Yusgiantoro last week said Eni had sought government protection in building a floating LNG plant on Bukat Block due to concerns of an ongoing dispute over the area between Indonesia and Malaysia.

"Eni has found big oil and gas reserves in the block. They are now planning to build a floating LNG plant in the area. For this, the company is asking the government to provide certainty for its operations," said Purnomo after meeting with visiting Eni Chief Executive Paolo Scaroni.

Indonesia and Malaysia have long been involved in a dispute over the Ambalat territory, which consists of the Ambalat block and the East Ambalat block.

In 2007, Malaysia sent naval ships and warplanes into Indonesian waters to protect its ND-6 and ND-7 Blocks, which overlap the Ambalat Block.

In 2005, Eni suspended explorations on both Bukat Block and Ambalat Block when tensions between the two countries rose over the territory.

At the time, Eni had drilled three wells in the Bukat Block that indicated large reserves of oil, according to Kardya Warnika, then head of Indonesia's oil and gas executive board (BP Migas).

Tensions have recently resurfaced, with both sides adding to them.

On Oct. 21, Indonesia's Armed Forces commander Gen. Djoko Santoso said elements of Malaysia's armed forces were committing territorial violations in and around Ambalat Block.

Santoso said Malaysia was continuing to claim the block as part of its territory and that Indonesia would respond by intensifying maritime and air patrols around the block to match the presence of Malaysian troops.

According to analyst Global Insight, "the growing build up of troops in the region raises the possibility of disruption to Eni's development plans as well as armed clashes which would scupper ongoing negotiations between the two countries on demarcating a mutually acceptable maritime border for the disputed zone."

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