Govt gives Chevron go-ahead to develop Galan gas block

Ika Krismantari, The Jakarta Post, Jakarta | Fri, 05/02/2008 1:33 PM

The government has approved a proposal by U.S. company Chevron to develop gas fields of the so-named Galan block located in deep water off East Kalimantan, a minister says.

"A few days ago, I signed the approval for Chevron to develop a gas block in East Kalimantan's deep waters," Energy and Mineral Resources Minister Purnomo Yusgiantoro said Wednesday.

Purnomo said a persistent surge in oil prices had made the development of deep sea blocks, previously considered problematic and costly, more attractive as the price of gas is expected to soar in line with oil costs.

"The current price of oil has reduced the risks of developing deep sea gas blocks."

Figures from the ministry's Directorate General for Oil and Gas show Chevron has committed to spending up to US$311.64 million to develop the block, which is believed to have the potential to produce an average of 800 million cubic feet per day.

Indonesia, the world's third largest gas exporter is under pressure to increase its gas production to meet gas export contracts, as well as to supply for increasing domestic demands.

Chevron spokesperson Santi Manuhutu said the company had yet to receive the approval letter.

Chevron holds 80 percent of participating interests in the block, while the remainder is owned by Italian oil and gas company Eni.