Indonesia may extend a contract with Cnooc Ltd, China's largest offshore oil producer, and Husky Energy Inc to produce natural gas in a field off the coast of East Java province.

The contract, which would expire in 2012, may be extended for 20 years, R. Priyono, chairman of Indonesian oil and gas regulator BPMigas, said in Jakarta yesterday.

Indonesia expects the explorers to spend US$642 million to develop the area and produce gas, the energy ministry said in a statement yesterday, without providing a time frame. An extension to the contract will help Cnooc and Husky improve their returns from the investments.

Cnooc will pay US$125 million for a 50-percent interest in the Madura Straits area, about 40 kilometers north of East Java province, Calgary-based Husky said on April 17.

The first production from Madura BD is expected in 2011, Husky said on February 4.

The government and Indonesian companies were signing eight agreements with their Chinese partners valued at 35 trillion rupiah (US$3.2 billion) yesterday, the energy ministry said in the statement.

The agreements include a contract for China National Technical Import & Export Corp to build a 660-megawatt power plant in Cilacap on Java island. The plant may cost US$829 million.

(Shanghai Daily December 23, 2008)