[Kabar-indonesia] 16 oil/gas/mining reports: RI Can Weather High Oil Price: VP [+U.S. Undone?]

[JoyoNews at aol.com]

Note: also see the previously sent: 9 Biofuel Reports: RI Tests Palm Oil 
[+Ethanol May Hurt World's Poor; NYT]; Newmont applauds Indonesian 
judge's order to retest waters; and AFR & SMH: Oil's Not Well for 
Santos's Java Reservoir

16 reports:

- Indonesia says economy can weather
    high oil price
- Latest energy price surge may 
  undo U.S. economy
- Thermal coal producers likely to achieve 
  good price outcome - Goldman Sachs
- Utility to start up Java transmission line
    in August
- Indonesia launches China-financed
     power projects
- U.S. buys first Indonesian LSWR
    cargo in 2006
- Indonesia to import 10.5 mln bbls Aug
    oil products
- Indonesia govt may increase fuel 
  subsidy spending after fresh oil price spike
- China's CITIC Res buys into Indonesian
    oilfield
- Indonesia's Dumai refinery runs at 70 pct
    capacity
- Sound Oil re-admitted to AIM after 
  completed Mitra reverse takeover
- Asia Crude-Indonesia offers Aug Duri in
    spot tender
- Indonesia seeks 600,000 bbls August
    oil products
- Asia Crude-Indonesia offers end-July
    condensate
- Upstream: Brantas mud misery
- Petromindo Headlines, Friday, July 14, 2006:

Indonesia says economy can weather high oil price

JAKARTA, July 14 (Reuters) - Indonesia can weather the impact of a
surge in global oil prices on its budget and economy, Vice President
Jusuf Kalla said on Friday.

The country is Asia-Pacific's only OPEC member, but was a net importer
of oil in June for the second month in a row after production
continued to fall from its mostly ageing oil fields.

"The impact of oil prices on the budget is not big, in fact, we still
have a surplus," Kalla told reporters.

U.S. crude oil futures hit a record high above $78 on Friday, rallying
for a fourth session on concerns over Nigerian supply and esclating
tension in the Middle East.

High world oil prices also push up the cost of still hefty fuel
subsidies in Southeast Asia's largest economy.

Indonesia raised domestic fuel prices sharply last October after a
mini-financial crisis shook the economy and put the rupiah under
strong pressure.

"Although fuel subsidies may increase to 70 to 80 trillion rupiah
($7.69 billion-$8.79 billion), revenue will also increase from higher
global crude oil prices", he said.

"Whatever the subsidy will be, it can still be covered by revenue," he
said, adding the economy could cope with oil prices of $80-$100.

The finance ministry has proposed to parliament lowering the state
budget deficit this year to 1.2 percent of gross domestic product
(GDP) from a previous forecast of 1.3-1.4 percent due in part due to
slow fiscal spending.

-------------------------------------------

Latest energy price surge may U.S. undo economy

By Sarah Edmonds

WASHINGTON, July 14 (Reuters) - The latest surge in energy prices may prove 
the undoing for a U.S. economy already pressured by a housing slowdown and 
accelerating inflation.

Some economists are even tossing around the 'R' word, saying a recession is 
possible if the unrest in the Middle East escalates and further gooses the 
price of oil.

"Could geopolitical events suddenly turn a soft landing into a recession? 
Absolutely," the London-based Economic Outlook Group wrote in a research report 
on the U.S. economy.

This week has seen U.S. crude oil prices <CLc1> hit repeated records above 
$75 a barrel, on Friday touching $78.40 on an eroding geopolitical landscape.

The conflict between Israel and Hamas and Hizbollah guerrillas only added to 
tensions that included Iran's nuclear standoff with the West, fears over 
Nigeria's oil supply after militant attacks, heavy fund buying and falling U.S. 
crude supplies.

Oil prices have doubled since 2004 and oil futures contracts promise little 
relief ahead, soaring above $80.

While today's prices are lofty, many economists point out they are still a 
far cry from the inflation-adjusted $87.65 average of 1980 following the 1979 
Iranian revolution.

Bush administration officials expressed hopes the economy would stay on an 
upward path despite the energy surge and its impact on inflation and spending.

"We have found that the U.S. economy has been surprisingly resilient, 
surprisingly able to manage the increase in prices that we have already seen," U.S. 
Energy Secretary Samuel Bodman said at a news conference with Canadian 
government energy officials. "I am hopeful that it will continue to do so."

A PERFECT ECONOMIC STORM

Still, even before this latest run-up, the economy had started to suffer the 
effects of costlier gasoline, which hits spending power just as tapped-out 
consumers are losing the benefit of cheap credit and easy home equity extraction.

According to U.S. Commerce Department data released on Friday, June retail 
sales fell 0.1 percent, the first decline since February. The result confounded 
Wall Street, which had looked for a 0.4 percent gain.

Meanwhile, the University of Michigan's first reading on consumer sentiment 
in July fell to 83.0 from June's final 84.9 reading, said sources who saw the 
subscription-only report. Economists had expected a reading of 85.5.

Joel Naroff, president and chief economist of Naroff Economic Advisors in 
Washington, said the economy will suffer acutely from the energy surge, although 
he doesn't yet see a bona fide contraction emerging.

However, he said energy prices come at a difficult time with consumer savings 
running on empty, interest rates rising and businesses contending with rising 
wages and pricey energy.

"We're moving toward that perfect storm, especially with this latest rise in 
energy," Naroff said.

"I don't think it's yet a recipe for recession, though I will say $100 a 
barrel, $4 a gallon of gasoline -- there's only so much you can cut," he said.

Demand for gasoline remains strong despite pump prices averaging nearly $3 a 
gallon nationally, indicating U.S. consumers are either unwilling or unable to 
change their driving habits. But that means consumers have less to spend away 
from the gas station. 

Naroff said the dual threat of higher prices and slower growth poses a 
dilemma for the Federal Reserve, which has raised interest rates 17 straight times 
to curb inflation.

He believes officials will first attack inflation and then reverse course and 
cut rates "as rapidly and as strongly as they possibly can" to address the 
threat to growth.

"I have the possibility of a cut as early as December. But more than likely 
January," Naroff said.

Some economists are more optimistic.

In a research note, Global Insight chief economist Nariman Behravesh wrote 
that while he expected consumer spending growth to slow to 2 percent this 
quarter from 5.1 percent in the first, it should rebound to 2.8 percent in the 
second half.

"However, with oil prices hitting record highs and rates expected to rise at 
least a little more, the risks for consumer confidence and spending are on the 
downside," he added.

(Additional reporting by Chris Baltimore and Alister Bull 
in Washington and Lucia Mutikani in New York)

------------------------------------------

Utility to start up Java transmission line in August

JAKARTA, July 14 (Bloomberg): PT Perusahaan Listrik Negara,
Indonesia's state power utility, plans to start running a new
extra-high-voltage transmission line in Java next month to increase
power security in the country's most populous island.

The new 500-kilovolt transmission line, running through the south of
the island, will complement the north transmission line, Herman Darnel
Ibrahim, vice president of transmission and distribution at Listrik
Negara, said.

The north transmission line is currently the only backbone power line
running across Java. A second extra-high voltage transmission line
would have prevented a 1 to 2-hour blackout in Java and Bali in August
last year after a glitch in the northline started a chain of events
that shut down two power plants on the island.

"We'll be able to optimize the big coal-fired power plants in East
Java" with the south transmission line coming into operation, Ibrahim
said by telephone. The north line cannot accommodate all of the
electricity generated by these plants,forcing the utility to channel
some through 150-kilovolt power lines, which cover smaller areas.

Listrik Negara also needs the south transmission line to accommodate
2,660 megawatts of additional capacity this year from two coal-fired
plants and one gas-fire d station.

The utility had to postpone the scheduled completion of the
transmission line several times in the last two years because of land
acquisition problems.

Indonesia, which has frequent blackouts, needs to spend about $27
billion on new plants and power lines by 2012 to avoid electricity
shortages, according to the World Bank.

--------------------------------------

Thermal coal producers likely to achieve 
good price outcome - Goldman Sachs

SYDNEY, July 13 (XFN-ASIA) - Thermal coal producers are likely to
achieve a good outcome when contract prices are finally settled,
Goldman Sachs JBWere analysts said in a research note.

They said recent contract settlements between London-listed Xstrata
Plc and Japanese utilities at 52.50 usd a metric ton for the current
fiscal year to March 31 were only slightly below the 2005/06 contract
price range of 52-54 usd a ton.

The Goldman Sachs analysts noted the outcome was well above buyers'
expectations at the start of the negotiation process.

Xstrata mines thermal coal in Australia and South Africa with its
Australian production largely exported to north Asian markets.

Other Australian thermal coal producers include Rio Tinto, its listed
Australian subsidiary, Coal and Allied Industries Ltd, BHP Billiton,
Centennial Coal Ltd and Excel Coal which is being acquired by US-based
Peabody Energy Corp in a 1.83 bln aud deal announced last week.

Goldman Sachs said the Xstrata settlement should set the benchmark for
the other Australian thermal coal suppliers.

The analysts said they have raised thermal coal price assumptions for
the Japanese 2008 and 2009 fiscal years by about 10 pct after a
detailed review of Pacific Basin thermal coal market dynamics.

'We remain bullish on the demand outlook - rapid growth in coal-fired

electricity generation throughout Asia has potential to lift regional demand 
for

imported coal by at least 20 mln tons per year for the next three
years,' they said.

'However, in our opinion, supply of thermal coal is relatively
unconstrained (in comparison with base metals) and we envisage strong
growth in export availability over the next few years.'

The Goldman Sachs analysts noted there has been significant investment
in new coal mine and transport infrastructure, notably in China,
Australia, Indonesia and Colombia, which should result in considerable
additions to supply over the next few years.

'China, in particular, is now well positioned to act as a swing
supplier to the international thermal coal market, having invested
heavily in coal transportation de-bottlenecking and port capacity
expansions,' they said.

'In our opinion this effectively caps thermal coal spot prices in the
mid-50 usd a ton range.'

Nevertheless, the Goldman Sachs analysts said, in the prevailing tight
market for energy and 'cost push' pressure from rising mining and
development costs, there is a mild positive risk to their price view.

They said factors which could push prices higher include stronger than
expected growth in demand for imported coal, notably from India and
China, further delays to Australian mine and port expansions and
unforeseen disruptions to Indonesian coal shipments.

-------------------------------------

Indonesia launches China-financed power projects

JAKARTA, July 14 (Xinhua) -- The Indonesian government has launched
the construction of two power plants in North Sumatra financed by
several export financing institutions from China, a report said
Friday.

The first power project is the 2x115 MW Labuhan Angin coal- fired
power plant, located in Central Tapanuli regency. The construction
cost is estimated at more than 201 million U.S. dollars.

PT Cimex, a joint venture between local firms and Chinese companies,
has been selected as the contractor of the project, which is expected
to be completed in 2008, reported The Jakarta Post newspaper.

The second project is the 2x90 MW Asahan I hydro power plant in Toba
Samosir regency. Financing for the project will come from the state
budget and a Chinese investor.

China-based Huan Gian Engineering Corporation and Indonesia's PT Basra
Daya Sentranusa will act as the developer of the 250 million dollars
project, which is slated for completion in 2009.

The two power plants were part of the mega projects launched Thursday
by President Susilo Bambang Yudhoyono.

The mega projects also include an electricity interconnection
facility, and a fisheries and agribusiness project, which are expected
to help turn the province into a center of manufacturing, services and
agribusiness activities.

"The central government is supporting the construction of economic
infrastructure facilities in North Sumatra, with the hope that the
province can become the main driver of economic activities in
Sumatra," Susilo said during his visit to the provincial capital of
Medan.

--------------------------------------------------------------

U.S. buys first Indonesian LSWR cargo in 2006

NEW YORK, July 14 (Reuters) - The United States will receive its first
Indonesian low-sulfur waxy residue (LSWR) cargo of 2006 in August,
shipping sources and traders said on Friday.

The Panamax-sized Sanko Commander was booked by Westport to load
60,000 tonnes of LSWR at Dumai in Indonesia on July 18.

The cargo was slated for delivery to the U.S. Gulf Coast. Rate details
for the tanker fixture were sketchy.

Straight-run LSWR could be used as feedstocks or for cracking purposes
and power generation, and mixed-cracked LSWR could be used for
blending.

The major buyer of Indonesian LSWR, which has a sulfur content of 0.03
percent, is Japan.

"LSWR cargoes do sail to the United States sometimes in winter when
the arbitrage economics work," a U.S. trader said.

"It has been a long time since LSWR was brought to the United States,
mainly because of high freight rates."

Another trader said that the freight rate from Indonesia to the U.S.
West Coast was offered at a lump sum of $2 million, but the rate would
be higher for U.S. Gulf Coast delivery via the Panama Canal.

In Indonesia, state-run oil company Pertamina is considering offering
an additional 200,000 barrels of LSWR for July loading due to problems
at its Dumai refinery.

July allocation of 1.85 million barrels was 24 percent lower than the
previous month.

--------------------------------------------------------------

Indonesia to import 10.5 mln bbls Aug oil products

JAKARTA, July 14 (Reuters) - Indonesia imported 11.5 million barrels
of oil products for July and estimates it will import a slightly lower
10.5 million barrels in August on higher domestic refinery output,
state firm Pertamina said on Friday.

Of the total August requirements, Indonesia may import 6-7 million
barrels of diesel and 2.8 million barrels of gasoline in August,
Pertamina's marketing director, Achmad Faisal, told reporters.

"This is lower because the Dumai refinery is already back to
production and domestic consumption is stable," Faisal said.

Another official said Indonesian oil product stocks stood at about 23
days worth of consumption.

Indonesian state oil firm Pertamina is running its 120,000 barrels per
day Dumai refinery at 70 percent capacity, with all units online after
85,000 barrel-per-day (bpd) vacuum unit, 8,000-bpd and 6,000-bpd
platformers have restarted, Pertamina's processing director said.


The plant reduced capacity in June and early July, leading to higher
July oil product imports.

An industry source said in late June that Pertamina's total July
import volume would be 12.71 million barrels -- the highest since
October last year, but marginally lower than last year's 2005 average
volume of 12.86 million barrels.

Of the total July imports, Pertamina bought year-high volumes of 3.6
million barrels of gasoline and 1.31 million barrels of fuel oil, the
source said. Diesel imports totalled 7.8 million barrels, up slightly
from 7.75 million barrels in June.

The markets have expected total import volumes for August to be steady
compared with July levels, at 12-13 million barrels, due to refinery
outages and recovering gasoline demand as consumers have grown used to
the hike in retail prices last year.

Pertamina earlier this week issued a tender that closes next Monday to
buy one cargo each of fuel oil, diesel and gasoline, all for August
delivery. [ID:nSP198035]

---------------------------------------------------------------

Indonesia govt may increase fuel subsidy spending after fresh oil price spike

JAKARTA, July 14 (XFN-ASIA) - The government stands ready to increase
its spending for fuel subsidy following a fresh spike in the oil
price, Energy and Mineral Resources Minister Purnomo Yusgiantoro said.

'In principle, no matter how big the subsidy is, it will be paid by
the government,' Yusgiantoro told reporters.

The subsidy is paid to state oil and gas firm PT Pertamina for selling
fuel products below their commercial prices.

Pertamina has estimated that nationwide fuel consumption may hit 41.16
mln kiloliters this year or approximately 99 pct of the full-year
quota set by the government for the sale of subsidized fuel.

But the latest oil price spike could swell the size of the subsidy.

The government has reportedly asked parliament for an 8.4 trln rupiah
hike in the fuel subsidy from the previously planned 54.3 trln as it
has revised up its average oil price assumption for this year to 62
usd per barrel from 57 usd.

The Indonesian crude price (ICP) is around 3.00 usd below the global
crude price.

Global oil prices surged to a record high of above 78 usd a barrel
Thursday amid escalating violence in the Middle East and the threat of
supply disruptions there and beyond.

---------------------------------------------------------------

China's CITIC Res buys into Indonesian oilfield

By Donny Kwok and Wendy Lim

HONG KONG, July 13 (Reuters) - CITIC Resources Holdings Ltd. will buy
a 51 percent interest in a small Indonesian oilfield for almost US$100
million, the Beijing-backed firm's first-ever overseas oil asset
acquisition.

CITIC Resources, a plywood-maker turned supplier of commodities and
natural resources to China, said on Thursday it planned to buy the
participating interest from a unit of Kuwait Petroleum Corp. for
US$97.4 million.

That sent its shares 3.9 percent higher in the morning to HK$1.34,
beating the benchmark index's <.HSI> 0.45 percent slip.

CITIC Resources Vice Chairman Shou Xuancheng said the company will now
seek further buying opportunities in Southeast Asia.

"We are being very prudent, even as we buy assets in a high-oil
environment," Shou told reporters.

"We will only consider fields that are in operation and have growth
potential," said Shou, who worked in the country's top oil producer,
China National Petroleum Corp., for about three decades before joining
the listed firm.

"There is a very, very small chance for oil prices to fall sharply as
we saw 10 years ago."

The company had a long-term oil price assumption of US$40-50 per
barrel, he said, versus a current level of above US$70.

Despite the stock's rally after the announcement, market players
regarded the firm's investment as small and CITIC Resources itself is
not covered by major investment banks.

CITIC Resources declined to give details on production costs or output 
targets.

"We lack details on the investment. This could be an initial
investment for the company," said Ho Chi-wai, a vice president at
Prudential Brokerage Ltd.

The Hong Kong-listed company said it would buy the participating
interest in the Seram Non-Bula Block on Seram Island in Indonesia from
KUFPEC (Indonesia) Ltd.

CITIC Resources said it would fund the purchase through internal
resources and existing facilities.

The Seram Non-Bula Block's principal oilfield, Oseil Field, has been
estimated to contain gross oil reserves of about 39 million barrels as
of December 2005, including 7 million barrels of proven reserves.

The field produced an average of about 4,300 barrels per day in the
first six months of 2006.

Vice Chairman Shou said the firm expected output to grow and peak in
two to three years, but declined to elaborate.

The company hopes to complete its deal in the fourth quarter, although
it would need Indonesian regulatory approval, and expects to book
contributions in the same period.

Under a production sharing deal, the contractor has been granted the
right to explore, develop and produce oil from the Seram Non-Bula
Block up to 2019.

-----------------------------------------------------------------

Indonesia's Dumai refinery runs at 70 pct capacity

JAKARTA, July 14 (Reuters) - Indonesian state oil firm Pertamina is
running its 120,000 barrels per day Dumai refinery at 70 percent
capacity with all units online, an official said on Friday.

The plant reduced capacity in June and early July, leading to higher
July oil product imports.

-----------------------------------------------------------------

Sound Oil re-admitted to AIM after completed Mitra reverse takeover

LONDON, July 13 (AFX) - Sound Oil PLC, the upstream oil and gas
company, said its shares have been re-admitted to trading on AIM after
it completed the acquisition of Mitra, an unquoted gas exploration and
development company with interests in Indonesia, in a reverse
takeover.

Mitra holds a 34 pct stake in the Bangkanai Block onshore central
Kalimantan and a 20 pct interest in the Citarum Block onshore central
Java.

Sound Oil raised 11.7 mln stg before expenses at an issue price of
7.25 pence per share in a placing of new ordinary shares.

Sound Oil said its cash resources, as increased to over 20 mln stg by
the net proceeds of the placing, will be used principally for the
development of Mitra's gas interests in Indonesia.

Chairman and chief executive Gerry Orbell said that within a few
months the group will have started drilling the first of four high
impact exploration wells on its licences in Java and Kalimantan.

In addition he said the group shall be developing the Kerendan gas
field in Kalimantan which it expects to give a 20 year cash flow
starting 2008.

---------------------------------------------------------------

Asia Crude-Indonesia offers Aug Duri in spot tender

SINGAPORE, July 13 (Reuters) - Indonesia's oil and gas regulator
BPMIGAS has issued a rare spot tender to sell around 200,000 barrels
of heavy sweet Duri crude for loading in August, a source at BPMIGAS
said on Thursday.

The tender closes on Friday. The spot tender was issued after
Pertamina was unable to consume all its domestic requirements, the
source said.

"There is excess production because in July Pertamina refineries did
not use all their requirements," the source said.

Refinery outages, and a shortage of vessels, may explain why Pertamina
could not lift all its volumes.

But heavy sweet crudes have been struggling to find takers on the back
of weak demand for fuel oil.

BPMIGAS may be in a position to offer larger volumes of Duri crude but
given the lack of demand, the company was hoping that domestic
refineries would be able to absorb remaining volumes for August
loading, the source said.

Indonesia last sold through term tender around 200,000 barrels a month
of heavy sweet Duri crude for March-August loadings at a firm
$2.25-a-barrel premium to the grade's Indonesia Crude Price (ICP) to
European trader Vitol.

But differentials have collapsed to around parity to the Duri ICP as
fuel oil weakened.

----------------------------------------------------------------

Indonesia seeks 600,000 bbls August oil products

By Yaw Yan Chong

SINGAPORE, July 13 (Reuters) - Indonesia has issued a tender seeking
one cargo each of fuel oil, diesel and gasoline, all for August
delivery, industry sources said on Thursday.

State-owned Pertamina is seeking 200,000 barrels of 140-centistoke
(cst) fuel oil, of 3.5 percent sulphur, for Aug. 11-13 delivery on a
free-on-board (FOB) Singapore basis.

The refiner is also seeking 200,000 barrels of 0.5 percent sulphur
diesel for Aug. 19-21 delivery to Pulau Sambu, on a cost-and-freight
(C&F) basis.

Pertamina seeks 200,000 barrels of 88-cotane gasoline for Aug. 16-18
delivery, FOB Singapore.

The tender closes on July 17 and will remain valid for two days.

"The tender volumes may appear to be low but I believe their total
August volumes will not be less than what they bought for July," a
Singapore-based Asian trader said.

"Most of their purchases will be from the spot market and mostly via
their affiliates like Petral. I would expect their gasoline import
volumes to be in excess of 3 million barrels."

The refiner only bought one 88-octane gasoline cargo via tender for
July despite buying year-high volumes of 3.6 million barrels for the
month.

Pertamina did not issue tenders for the other products but also bought
year-high volumes for fuel oil at 1.31 million barrels.

Diesel imports totalled 7.8 million barrels for July, up slightly from
7.75 million barrels in June.

The total July import volume, at 12.71 million barrels, is the highest
since October last year, but marginally lower than last year's 2005
average volume of 12.86 million barrels.

The total import volumes for August are expected to be steady to July
levels, at 12-13 million barrels, due to refinery outages and
recovering gasoline demand.

Pertamina President and CEO Ari Soemarno had said earlier that
gasoline demand was recovering as consumers have got used to the hike
in retail prices last year.

-----------------------------------------------------------------

Asia Crude-Indonesia offers end-July condensate

SINGAPORE, July 13 (Reuters) - Indonesia's oil and gas regulator
BPMIGAS has issued a tender to sell around 200,000 barrels of Bontang
Return Condensate (BRC) for end-July loading, a source at BPMIGAS said
on Thursday.

The tender closes on Friday.

The spot tender was issued after production of BRC condensate has increased.

"We have increased LNG production and we have more condensate," the source 
said.

BPMIGAS previously sold BRC for March to August loadings at a strong
39-cent premium to the grade's Indonesia Crude Price (ICP) to European
trader Galaxy, the source added.

----------------------------------------------------------------

Upstream
July 14, 2006

Brantas mud misery

Amanda Battersby

Locals fear for future as seepage continues and cause of leak remains a 
mystery

Mud is continuing to flow to the surface in East Java, Indonesia,
almost seven weeks after a well control incident at Energi Mega
Persada's (EMP) Banjar Panji-1 onshore wildcat.

A massive clean-up operation is under way but the cause of the
incident remains a mystery and the 8000 or so displaced people from
four villages are demanding answers and compensation from the well's
operator, EMP subsidiary Lapindo Brantas.

Police in the provincial capital of Surabaya have questioned Lapindo's
management and officials from drilling contactor Medici Citra Nusa,
and criminal charges could still be brought depending on the eventual
outcome of the investigation.

Possible criminal charges could include negligence and environmental breaches.

Santos, a partner in the Brantas production sharing contract, has
cautioned against speculating about the cause of the mud leak, which
has all but inundated four villages near Surabaya.

"We wish to clarify that investigations into the cause of the incident
by the PSC operator Lapindo Brantas and Indonesia's upstream regulator
BP Migas are ongoing. There have been no final conclusions from these
investigations," Santos said.

The Australian company also warned against speculation as to the
extent and cost of the damage caused by the mud, pointing out that the
continuing mud and water flows were making it difficult to assess this
accurately.

"Many people have fallen sick. It is mostly their breathing and eyes
that area affected," one local resident told Upstream, adding that
most people walking near to the mud-swamped areas use scarves to cover
their mouths.

The smell of hydrogen sulphide is still strong in the area.

Lapindo is paying a reported 300,000 rupiah ($32) per month to those
affected by the sludge but several locals to whom Upstream spoke said
they feared that they would not be adequately compensated for rice
fields that might remain toxic for years. One man pointed out that the
factory where he had worked before the well control incident was now
partially submerged and he was concerned that workers would be laid
off in coming weeks before the clean-up operation could be completed.

Mud and water has been seeping to the surface since the 29 May
incident at the Banjar Panji-1 well on the Brantas block and more than
120 hectares of land has been covered. The onshore gas wildcat was
drilled by the TMMJ land rig to a sub-surface depth of 9297 feet.

Many of the thousands of people affected by the mud have taken
temporary refuge at the new market in Porong, while some have taken
the initiative of setting up small drinks and snacks stalls near to
the road bridge over the Gempol to Surabaya toll road, which has
become the main vantage point for spectators and journalists.

The road - a lifeline for many businesses - partially reopened late last week.

Partners in the Brantas PSC are operator Lapindo Brantas (50%), Medco
Energi (32%) and Santos (18%).

The Banjar Panji-1 incident investigation team comprises officials
from BP Migas, the Environmental Ministry and local government.

----------------------------------------

Petromindo Headlines, Friday, July 14, 2006:

Oil/Gas: 

- Nullarbor closes deal to acquire interest 
  in S. Sumatra exploration block
- Pertamina, Nullarbor in biodiesel venture
- Pertamina to cut August fuel import
- Regional LNG: India to ink Australian 
  LNG import deal in Sep
- Sound Oil re-admitted to AIM following 
  completion of Indonesian acquisition
- Santos downgrades Jeruk resource 

Mining: 

- Prufrock Partners to invest in C. Kalimantan 
  Masuparia gold prospect
- Marubeni opens PQ for W. Kalimantan 
  alumina project EPC
- Closing of Bumi's divestment of KPC 
  and Arutmin shares delayed
 
Power: 
 
- Govt launches mega project in N. Sumatra
- Power supply from hydropower plants 
  decline by 50 percent
 
------------------------------------------
Joyo Indonesia News Service
------------------------------------------