BP Migas unsure about oil reserves in disputed Ambalat block

BP Migas, the government's regulatory agency in charge of oil and gas exploration and production activities, says that it is unsure if the disputed Ambalat oil block off the coast of Sulawesi has massive oil reserves as reported by the press.

"The much talks about the oil reserves in the Ambalat oil block are only prediction. We don't know if the oil deposits really exist," Kuswo Wahyono, the head of the agency's exploration department was quoted as saying by Neraca daily on Wednesday.

He said that it was too early to say there were large oil deposits in the Ambalat oil block. "We will know only after an exploration is carried out," he said.

"Even if the deep sea area has proven to contain large oil reserves, it would be too expensive to carry out production activity because it should be carried out at the depth of 1,500 kilometers," he added.

Tensions between Indonesia and Malaysia over the offshore oil block flared recently after the neighboring Malaysia awarded an oil exploration right to Dutch oil company Shell in the area, which is also claimed by Indonesia.

The Indonesian government had also awarded oil concession rights to two oil companies along before the Malaysian government's move to award the oil concession rights to Shell. (*)