Russia’s LUKoil and Indonesian state-owned Pertamina secured an agreement to conduct a joint study of several promising blocks in Indonesia.
Indonesia’s potential reserves are not big and are estimated only at 150 million tons of oil equivalent, but LUKoil is looking to gain access in Indonesia with a prospect to enter into the raw materials markets of the Asia-Pacific region, according to Russian industry reports.
The two sides signed the agreement last week in Jakarta during Russian President Vladimir Putin’s visit to Indonesia.
Under the agreement, the two sides agreed to develop a cooperation that began in April after signing a memorandum of understanding regarding cooperation in exploration and development of oil and gas fields.
Pertamina is looking to LUKoil for technical assistance as oil production decreases in Indonesia and the country already does not fulfill OPEC quotas. The attraction of large foreign oil companies to the industry may help improve the situation.
Vagit Alekperov, president of LUKoil, said: "There may potentially be about 150 million tons of oil equivalent there. We have to find out what it is, gas or oil."
Lithuania faces pipeline repair difficulties
Lithuania’s Federal Technical Inspectorate came up with a program to repair the northern line of the Druzhba oil pipeline, but Russia’s Transneft says it might not complete the project.
Transneft will need to finance the completion of the program, which should begin this fall, according to the Russian Oil and Gas Report.
But Transneft officials say that the company will not allocate money for the program and is not interested in restoring work on this part of the pipeline. Thus, chances for restoration of the pipeline by political motives of the Kremlin become minimal.
Lithuanian politicians characterized the break of the pipeline as artificially caused by political motives, first of all, the sale of Mazeikiu nafta, the only refinery in the Baltic republics, to Polish corporation PKN Orlen and not to Russian oil companies.
Transneft denied any political motives in this step. For a long time, representatives of the company have not ruled out that the pipeline may be repaired if expert examination shows expedience of this repair and if it is economically efficient.
Norway’s Norsk Hydro takes stake in Indian block
Norwegian oil major Norsk Hydro acquired a 10 percent participating farm-in stake in the state-owned Oil and Natural Gas Corp.'s KG-DWN-98/2 deepwater block in the Krishna-Godavari basin, off coastal Andhra Pradesh.
Under the agreement, Norsk Hydro has agreed to acquire a 10 percent stake interest in the block, with an option to increase it by another 10 percent after commercial launch.
According to media reports, the agreement was a follow-up of the development and co-operation agreement signed in July between the two companies.
According to the July agreement, Norsk Hydro had agreed to buy a 10 percent participating interest in KG-DWN-98/2, with an investment cap of $26 million during the appraisal phase, and with an option to increase it by another 10 percent.
Norsk Hydro is also working with ONGC for thin-oil-ream exploitation in Vasai East, near Mumbai, which was one of the areas identified in the earlier agreement.
The Norwegian firm has also expressed interest in going in for a participating interest in more New Exploration Licensing Policy blocks. ONGC has 32 offshore blocks under NELP, of which 26 are in deepwater and six in shallow water.
Closing oil prices, Sept. 11, 3 p.m. London
Brent crude oil: $74.56
West Texas Intermediate crude oil: $76.13