Access To CNPC Wells In Indonesia Blocked

Access to 14 oil and gas wells operated by China National Petroleum Company (CNPC), China's largest oil producer by output, has been blocked by a local government in Indonesia, according to a report Wednesday by The Jakarta Post.

Gde Pradnyana, secretary of upstream oil and gas regulator SKKMigas under Indonesia's Ministry of Energy and Mineral Resources, condemned the blockade by the local administration in Sumatra, saying that the action had led to state losses, the report said.

"We regret the baseless action of sealing state assets," he was quoted as saying by the report, noting that the regulator would push the authorities to "take serious action" in the case.

Beginning from Friday, East Tanjung Jabung administration sealed 14 oil and gas wells of a subsidiary of CNPC, claiming the Chinese company had failed to obtain the proper permits to carry out their activities.

But Novie Latanna, communications manager at PetroChina International Companies Inc Indonesia, told The Jakarta

Post that the company had submitted the permits nine months ago, as requested by the local government.

Latanna told Reuters earlier this week that the wells were still producing 433 barrels of oil and around 11 million standard cubic feet (0.31 million cubic meters) of gas a day.

But because the gates to the wells were locked, the company was unable to ensure that the operation was safe as workers from PetroChina could not get in to conduct daily maintenance, she said.

According to Latanna, the local government had asked PetroChina to supply 5 million standard cubic feet (0.14 million cubic meters) of gas per day for local electricity supply last year.

"But the process to supply that gas has been lengthy … perhaps the local government wanted it quickly," she said.

Calls to CNPC's Indonesia office Wednesday were not answered.

Liu Weijiang, an official at CNPC's international business department, told the Global Times Wednesday that he had no information to be disclosed regarding the issue.

"When it comes to resource exploration, Chinese companies should always be alert to local political and environmental risks," Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University, told the Global Times Wednesday.

But Lin said the issue will probably soon be resolved by talks between both parties.

It is not the first dispute over exploitation of resources between Chinese companies and local authorities overseas.

South Sudan's government last year expelled the head of Chinese-Malaysian oil consortium Petrodar - which is mainly controlled by Sinopec, CNPC and Malaysia's Petronas - on the grounds of "lack of cooperation."

Pagan Amum, secretary-general of the ruling Sudan People's Liberation Movement, said relations with China were good, "but there were difficulties with some oil companies."

An economist told the Global Times on condition of anonymity that as well as cases that have been made public, there have been many occasions when Chinese energy companies chose not to say anything.

This is because a public dispute could impact the companies' stock performance and investors' confidence in their ability to handle such issues, the economist said.

(globaltimes.cn , edited by Topco)