Medco, CRC try to resume production from disputed E. Java block in 2007

Despite locked in legal battle, JSX-listed oil and gas firm Medco Energi Internasional Tbk. and operator Camar Resources Canada (CRC) tried to resume crude production from Camar field in Bawean PSC offshore East Java first quarter of next year, Medco said in a filing with JSX released Friday.

The operator of the block it trying to get approval from BPMIGAS to resume production, the company said.

Medco said the block had proven and probable reserves of 14.72MMBO. Camar field began production on January 2001 and had been stopped since August 2004 due to the absence of storage tanker at that site. Medco said average oil production in 2004 was 800 BPD.

Medco has 65 percent interest in Bawean PSC after CRC agreed to transfer 65 percent out of 70 percent working interest it owned in the PSC for US$15.2 million. The remaining 30 percent balance was held by Indo Pacific Resources (Java) Limited (IPR), a subsidiary of Canadian firm Fortune Oil& Gas Inc.

IPR and Fortune filed second lawsuit against CRC and Medco?s subsidiary Medco International Ventures Limited in a Canadian court, objecting the dilution of IPR's working interest exercised by CRC. According to Medco, CRC is entitled to dilute IPR's interest as compensation for non-payment of IPR?s debts in Bawean block. IPR argued that the dilution was improper.

Medco said the trial would be concluded in January 2007. (alex)