Indonesia refuses to meet OPIC?s demand in West Seno project

The U.S. government-owned Overseas Private Investment Corporation (OPIC) has asked the Indonesian government to amend its bilateral agreement with the U.S. as the condition for the disbursement of the loan for the development of the offshore West Seno oil filed, about 190 kilometers from Balikpapan, Bisnis Indonesia reported on Friday.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro said in Jakarta on Thursday that OPIC made the request after the Indonesian government refused to guarantee the loan for the development of the West Seno oil field which is estimated to have oil and gas reserves of between 210 million and 320 million barrels of crude oil.

"Our position is clear that we don?t want to guarantee the project. But we agree the proposal to amend the bilateral agreement with the U.S.," the minister was quoted as saying. Purnomo added that the government also refused to guarantee the project because the loan would not be in the form of debt financing but equity financing.

OPIC, which specializes in providing insurance to U.S. companies? overseas investment, has agreed to guarantee about US$350 million of the funding to develop the West Seno project. Of the total funds, about $300 million will be used to finance offshore production and processing facilities, and a 60-kilometer pipeline which transmits oil and gas to Unocal?s receiving terminal in Santan, East Kalimantan.

The remaining $50 million will be used to finance exploration and production activities at the West Seno II project.

Pertamina owns 10 percent in the offshore oil field, which is operated by Unocal. The project is expected to start production early 2003 with an initial capacity of 60,000 barrels per day. (*)