Malaysia hopes to settle quickly a territory dispute with neighbouring Brunei so both countries can begin oil exploration in the area soon, a senior minister said today.

"We want to resolve it as soon as possible. We like to sort it out so that Brunei can carry out their activities and Malaysia can carry out its activities," Syed Hamid Albar, foreign minister told reporters.

The contested area represents about half of Brunei's entire offshore territory and is vital to its plans to diversify its oil-dependent economy.

Finding a solution

The tiny enclave surrounded by Sarawak on Borneo island is the fourth largest producer of natural gas in the world and third largest oil producer in Southeast Asia after Indonesia and Malaysia.

Syed Hamid said officials of both countries were currently engaged in finding a solution to the problem.

"We have started to discuss with them at the official and at the leaders level," he said at the sidelines of the ruling Umno annual meeting.

Syed Hamid defended the action of Malaysian gunboats chasing away a drilling team from French oil company Total, saying that it was intended to protect the country's territory.

"We are just protecting areas that we consider as our maritime area. As long as the overlapping claim is not resolved there will be this misunderstanding," he said.

Other possibilities

French oil company Total said on Monday it had suspended exploration work in an oil block off Borneo island due to a territorial dispute between Malaysia and Brunei.

Total, leader of a consortium which last year won a Brunei tender for one of two huge offshore blocks, said it was "surprised" that Malaysia had entered territorial claims on the area.

Syed Hamid said a Malaysian exploration team had been chased away from the disputed area by Brunei military.

Asked if Malaysia and Brunei would consider joint-development in the area, he said: "We will look at all possibilities."

Syed Hamid said Malaysia hoped a "satisfactory resolution" could be reached since the relationship between the two countries "is very close."

Brunei last year awarded one block to Total and its partners US Amerada Hess and Australian BHP Billiton, and the other to Anglo-Dutch giant Royal Dutch/Shell group, involving Mitsubishi and ConocoPhillips.

Since early this year, however, the deepwater blocks have also been claimed by Malaysia whose state-owned oil firm Petronas awarded identical acreage to US Murphy Oil and its own subsidiary, Petronas Carigali, the publication of the Energy Intelligence Group said. - AFP