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Exxon, Inpex to pour $144.5m into new blocks

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Indonesia: Oil Exploration
Exxon, Inpex to pour $144.5m into new blocks

Exxon Mobil Corp, the world's biggest oil company, and Inpex Corp, Japan's biggest explorer, on Friday won new oil and gas exploration rights in Indonesia and pledged a total investment of at least $144.5 million over the next three years.

Exxon, through its subsidiary Esso Exploration Int Ltd, won the rights to explore the Gunting block in East Java. For the first three years of exploration, it is committed to invest $17 million.

Inpex won exploration rights in the Semai II block off West Papua. It will carry out exploration with two partners, Consortia Murphy Overseas Ventures Inc and PTT EP. They will invest $127.5 million in the first three years.

The two companies were among the winners of 9 new oil and gas blocks announced by the Energy and Mineral Resources Ministry on Friday.

The government expects to draw in total investment of $465 million from the 9 blocks, including signing bonuses of $69.5 million, said Evita H. Legowo, the ministry's director general for oil and gas.

Indonesia's oil and gas industry adopts a production sharing contract (PSC) scheme, under which the government and operating firms share the output of the block. The government's share from the projected output from these 9 blocks is between 65 and 85 percent for oil and between 60 and 70 percent for natural gas.

The announcement for these blocks was due to be made two weeks ago. Evita cited tough competition between applicants as the reason for the delay.

"We had difficulties selecting the winners. We needed more time to contact several authorities to help in the selection process," she said.

The most contested block was the Semai V block in West Papua. Six oil firms, including French oil giant Total E&P Indonesia, state oil and gas company PT Pertamina, and Hess Corp, the fifth biggest US oil producer, applied for exploration rights in this block.

Hess eventually won and pledged to invest $143 million to back three years' exploration in the block.

The government initially offered 21 blocks in the 2007-2008 regular tender. But only 9 blocks attracted investors.

Two weeks ago, the winners of 22 new oil and gas blocks were announced. The total three-year investment commitment from these blocks is $375.5 million.

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