Operations at C. Sumatra oil block suspended due to dispute

Australian oil, gas firm Oilex Ltd reported on Wednesday that all operational activities on West Kampar PSC onshore Central Sumatra is currently suspended by the Operator PT Sumatera Persada Energi (SPE) pending resolution of commercial and financial disputes within JV.

Oilex and SPE were involved in dispute as SPE claimed in May 2009 that Oilex has lost its 45 percent interest in Kampar PSC due to failure to finance US$8 million commitment. Oilex, on the other hand, said on April 30 2009 that it had increased its stake at West Kampar by another 22.5 percent to 67.5 percent after SPE failed to pay US$3.5 million plus interests and costs to Oilex.

The JV initially planned to develop Pendalian discovery within the PSC that could produce up to 6,000 BOPD when fully developed.

?SPE and Oilex met in May 2009 to discuss a commercial solution to the issues which involved a sale of SPE?s interest to a third party whereby SPE repays its debt to Oilex and Oilex or the third party becomes the operator of the PSC. A number of third parties have expressed an interest and negotiations are proceeding with some of these parties. Oilex is vigorously pursuing its rights under various legal agreements to recover the funds owned by SPE to Oilex,? the company said.

Timing as to when these disputed matters will be resolved remains uncertain, Oilex said. (alex)