by AFX News Limited
Thursday, September 04, 2008

Indonesia has approved U.S. oil major Chevron Corp's proposal to develop natural gas fields offshore from East Kalimantan, Borneo island, the mines and energy minister said on Thursday.

The Gehem and Gendalo deepwater natural gas projects would be the deepest offshore gas fields in Indonesia, at water depths ranging from 2,500-6,000 feet (760-1,800 meters), according to an official at oil watchdog BPMIGAS, who declined to be quoted by name.

Chevron previously said that it planned to invest about $6 billion to develop gas fields off the coast of Borneo, including the Gehem and Gendalo projects, which would help Indonesia to crank up its flagging gas output.

"The government has agreed to Chevron plans to develop gas fields offshore East Kalimantan. I signed the Chevron proposal on August 29," Purnomo Yusgiantoro told Reuters by phone.

A Chevron official in Jakarta said the company was still waiting for the official government approval of the Gehem-Gendalo deepwater gas projects.

Chevron submitted plans to develop several gas fields, including the Gehem and Gendalo projects, to the government in August 2007.

The combined natural gas reserves in the area covered by the plan are estimated at more than 3 trillion cubic feet, the BPMIGAS official said.

Indonesia, Asia Pacific's only OPEC member, which has far more gas than oil, has pushed companies to move faster in developing areas as the country badly needs the gas for domestic industries and exports.

Chevron currently produces gas from several other fields in East Kalimantan, but the output is in decline.

Indonesia, the world's second-biggest liquefied natural gas (LNG) exporter after Qatar, has been struggling to meet export commitments due to declining gas output being diverted to the domestic market.

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