Indonesia's state-owned oil and gas company Pertamina will likely sign a joint venture agreement with its Malaysian and Vietnamese counterparts later this month to jointly explore and develop hydrocarbon resources, local press said Monday.

Pertamina and Malaysia's Petronas and PetroVietnam recently have finalized negotiations on joint exploration in Randu Gunting block in East Java, which is estimated to contain 600 million barrels of oil and 1.7 trillion cubic feet of gas, reported English daily The Jakarta Post.

The three parties will establish a joint venture company, called the PCPP Joint Operating Company, to operate the block, it said.

Pertamina will have a 40 percent interest in the joint venture firm, while Petronas and PetroVietnam hold a 30 percent stake each, it said, quoting Pertamina president director Ari Sumarno.

In early 2002, Pertamina, Petronas and PetroVietnam signed a Tripartite Cooperation Arrangement to jointly explore oil and gas in their respective countries as part of an economic cooperation under the 10-member Association of Southeast Asian Nations.

As part of the tripartite deals, the three companies had agreed to jointly develop oil blocks in Malaysia and Vietnam.

An agreement signed in 2002 set up the development of Block 10 and 11.1 in offshore Vietnam and in June 2003, they signed another agreement to develop hydrocarbon resources in Block SK305 in offshore Sarawak, Malaysia and the Randu block in Indonesia.

The negotiation to carry out a joint exploration in Indonesia had been stalled because of the Malaysian and Vietnamese companies' opposition to the production sharing scheme (PSC) applied by Indonesia.

The Indonesian government wants to apply its regular split of 85 percent and 15 percent in favor of the government in the development of the Randu Gunting block.

This policy has been opposed by PetroVietnam and Petronas because the PSC scheme applied in their ventures in Malaysia and Vietnam would allow them to get 40 percent of the oil production.

According to a source, both Petronas and PetroVietnam have agreed to the 85-15 production split scheme, and the deal is expected to be signed later this month.