Update 1: Govt approves of East Kalimantan?s deepwater gas project

(Adds the investment as stated by Director General of Oil and Gas Evita Legowo on the sixth paragaraph)

The government had approved of the plan of development (PoD) for a natural gas exploitation project in the deepwater areas of East Kalimantan owned by American energy giant Chevron Corp.

The projects aims to exploit natural gas from the Gendalo, Maha, Gandang, Gehem and Ranggas fields of the Ganal and Rapak PSCs, which are part of the Ganal and Rapak PSCs, owned by Chevron (80 percent) and Italian firm Eni SpA (20 percent).

?The approval was signed by Minister of Energy and Mineral Resources Purnomo Yusgiantoro on Aug. 29," oil and gas upstream authority BPMIGAS said on its website on Thursday, adding it will be the first deepwater project approved by the government in the country.

The gas from the fields will boost supply to a liquefied natural gas (LNG) plant at Bontang in East Kalimantan province and thus will boost the country?s LNG production.

?Most of the LNG produced from the gas these fields produce will be exported,? Edy Hermantoro, Upstream Director at the Ministry of Energy and Mineral Resources, said. ?We will allocate at least 25 percent of the output for the domestic market.?

Director General of Oil and Gas Evita Legowo told Petromindo.Com that Chevron and its partner would invest US$6.984 billion for the project, including $2.196 billion for the drilling of 28 wells and $4.788 billion for the construction of production facilities.

BPMIGAS said it would tightly supervise the implementation of the project.

?BPMIGAS must perform supervision, especially to good technical method apply, development of local people, labor use (including 3rd parties), domestic production goods and services use, and development cost efficiency and operation, safety, work health and environment management cost efficiency, and post operation activity based on the Law,? the agency said. (Godang/bernard)