Indonesia says may extend Husky Energy gas block contract

JAKARTA, June 16 (Reuters) - Indonesia is considering extending a contract for a natural gas block in East Java operated by Husky Energy Inc (HSE.TO), a senior mines and energy ministry official said on Tuesday.

The contract for Husky and China's CNOOC (0883.HK), joint developers of the Madura BD field in Indonesia's Madura Strait, is due to expire in 2010. The field has an estimated 515 billion cubic feet of natural gas and production is slated to begin in 2012.

"Several companies have proposed extending their contracts, including Husky, and we will look carefully at whether we will extend or not," Evita Legowo, director general of oil and gas at the ministry, told reporters.

Husky signed a gas supply agreement in 2007 with Indonesia's gas distributor PT Perusahaan Gas Negara (PGAS.JK) to supply 126 trillion British Thermal units (BTU). The gas is due to come from offshore Madura Strait, starting in 2012 for a period of 15-20 years.

Legowo also said the government is studying a proposal from a unit of France's Total (TOTF.PA) to extend a contract for the Mahakam block in Kalimantan, on Borneo island, which is due to expire in 2017.

"We are looking at the new terms and conditions for extending the Mahakam block, including possible participation of state oil firm Pertamina in the block," Legowo said, adding that Pertamina was interested in participating in both the Madura and Mahakam blocks.

Total and Japan's Inpex (1605.T) each hold a 50 percent of stake in the Mahakam block, which supplies most of the gas for Indonesia's Bontang liquefied natural gas plant.

Indonesia has struggled to develop its rich energy resources, turning into a net importer of crude oil in recent years. To stem the steady decline in production, it has been offering new exploration rights and financial incentives for oil and gas fields. (Reporting by Muklis Ali; Editing by Sara Webb)