Oil: Hunt for Sunken Treasure

The invading explorers from nine different countries man an odd armada that ranges the long shoreline of Indonesia. Their expanding expeditions have already spent well over $100 million, and the cost rises steadily. The gamble, they figure, is worth the price. So the big rigs throb day and night as crewmen drill deep into the continental shelf. They are all racing to tap the same treasure—an undersea source of oil that is far from the dangerous uncertainties of the Middle East and close to the great Japanese market. To make it even more attractive, the oil is "sweet crude," relatively free from pollution-producing sulfur.

Geologists suspect that the undersea oilfields stretch in twin crescents from the coasts of Burma and Thailand along the Indonesian Archipelago to as far south as Australia. If drilling proves them right, the results can not only spur development of the whole region, but will also surely alter the balance of global oil politics. Southeast Asia, along with Alaska's North Slope and the Siberian field that the Soviets revealed last month, could give world oil users great new sources of supply.

Fencing with Foreigners. Those sources would be especially welcome. Elsewhere, the world's oilfields are pocked with trouble. Libya is threatening to issue a decree raising royalties. The Shah of Iran is fencing with foreign oilmen in an attempt to increase his government's take. Bolivian development stopped with the nationalization last October of Gulf Oil Corp. Nigerian production suffered during the long war over secessionist Biafra. By comparison, Indonesia seems relatively calm.

The archipelago has been producing oil from land-based wells since 1893; last year the flow was 850,000 bbl. a day, compared to about 9,000,000 bbl. daily output in the U.S. The offshore rush began to heat up last year, when a combine of Atlantic Richfield and IIAPCO (a subsidiary of San Francisco-based Natomas Co.) made a find of potentially commercial size in the Java Sea. Soon after, Japex Indonesia Ltd., a Japanese government-controlled company, discovered oil in the Malacca Strait. Japex's results have yet to measure up to early expectations, but the Atlantic Richfield-IIAPCO group has lately hit some promising sources.

The potential has attracted dozens of companies. Union Oil Co. of California is drilling off Sumatra; Cities Service brought a rig in from Beaumont, Tex., to bore beneath the Java Sea. Others scheduled to begin exploration wells this year include Continental Oil, Phillips Petroleum, and possibly Italy's state-controlled AGIP. Last month a number of new offshore exploration contracts were signed. British Petroleum agreed to invest $8,500,000 in the first eight years of a 30-year contract. Gulf & Western Industries, the Manhattan-based conglomerate that has never been in the oil-drilling business, also signed a pact to explore. Dr. Wendell Phillips, a skillful promoter, won the only contract awarded to an individual in Indonesia; he paid a $500,000 fee and agreed to spend $17.5 million exploring onshore and offshore in West Irian.