Aceh peace treaty could lead to local oil boom

MULTINATIONAL oil company ExxonMobil may be one of several to increase their gas and oil exploration activities in the tsunami-wracked province of Aceh, Indonesia, following this week’s peace treaty, according to Indonesian vice president Jusuf Kalla.

Kalla is reported as saying the peace treaty - signed in Helsinki, Finland, last Monday - promised a new era of stability and security after a three-decade pro-independence insurgency in Indonesia's northwestern province.

The peace deal would encourage foreign and domestic investment in sectors, including energy, and could power an oil-fueled economic development boom in the tsunami-hit region.

He said ExxonMobil was likely to expand its oil and gas activities. But ExxonMobil Oil Indonesia, whose Aceh operations include an LNG gas liquefaction facility and a half, non-operating stake in Block A in the northern part of the province, has declined to comment.

The end of hostilities between Indonesian military and pro-Independence Free Aceh Movement forces has already prompted Indonesia's Medco Energi International to consider investing in Aceh. Chief executive Hilmi Panigoro recently said Medco was interested in bidding for Exxon’s 50% stake in Block A.

Kalla said an economic boom driven by oil and gas investment would help jump-start the province still recovering from the earthquake and tsunami that killed 131,000 people and destroyed infrastructure last December.

More oil and gas from Aceh would also reduce the Indonesian government's reliance on foreign oil imports. Indonesia, Asia's sole OPEC member, will this year become a net oil importer for the first time.