Govt to split MFK oil block

The government will split the Mountain Front Kuantan (MFK) oil block in Riau into two areas before being offered to investors, Bisnis Indonesia daily reported on Monday quoting a senior government official.

Novian M. Thaib, the director for exploration and production at the Ministry of Energy and Mineral Resources, said that the move was necessary because the Mountain Front area has already been producing oil, while the Kuantan area still requires exploration work.

"We'll split the block. The Mountain Front area will be offered separately from the Kuantan area because huge funds are still required for exploration work to develop the latter part," he said.

Elsewhere, Novian said that the plan to put the MFK block on tender this month may have to be delayed due to ongoing internal conflict within the Riau administration, which has yet to decide on how it would particpate in the tender.

"The tender may have to be delayed for another month because they (the Riau administration) have yet to settle (their) dispute," he said.

Sources previously said that the conflict occurred because the Riau provincial administration recommended local private company PT Sarana Pembangunan Riau to join the tender, instead of its owned company PT Riau Petroleum.

The ministry initially planned to tender the MFK on June 25, together with the auction of 27 new oil and gas blocks. But the conflict within the Riau government forced Jakarta to reschedule the tender into July. The MFK oil block was formerly operated by PT Caltex Pacific Indonesia, whcih ended its 30-year contract on January 20, 2005. Caltex did not seek to extend the contract.(*)