U.S.-based energy giant Chevron Corp. has been approved by the Indonesian government to develop gas reserves in five deep-water fields off East Kalimantan at a projected total cost of US$6.97 billion.

"The government has approved the POD (plan of development) and the company may now start operations," director general for oil and gas at the Energy and Mineral Resources Ministry Evita H. Legowo said Thursday.

Energy and Mineral Resources Minister Purnomo Yusgiantoro signed the approval on Aug 29, a media statement from the ministry shows.

Three of the fields — Gandang, Gendalo, and Maha — lie in a concession of Chevron Ganal Ltd., while the remaining two — Ranggas and Gehem — lie in a concession of Chevron Rapak Ltd.

According to Bloomberg, the entire venture may pump a maximum of close to one billion cubic feet of gas a day, or equivalent to 13 percent of Indonesia's current output.

"This will be the country's first deep-sea drilling project," said Edy Hermantoro, upstream director at the ministry, adding that parts of the field lay in concession areas operated separately by Chevron and Rome-based Eni Spa.

Therefore, the POD in the area will integrate and involve both companies, he said.

Edy said Chevron and Eni may spend $6.97 billion on the project, of which $2.19 billion may be spent on developing wells and the rest on the construction of a floating processing unit and other facilities, Bloomberg reported.

The project will increase gas supply to a liquefied natural gas (LNG) plant in Bontang in East Kalimantan Province, which will export 75 percent of its production and sell the rest domestically, Edy said.

Chevron's corporate communications manager, Santi Manuhutu, said the company had not officially received a letter of approval.

"Chevron is waiting for the official government approval of the deepwater gas project," she said in a statement sent via e-mail.

The amount of time needed to develop the fields will be dependent on government approvals, market conditions and the achievement of key project milestones, she added.

Chevron holds an 80 percent operated interest in Gehem and Gendalo fields, she said.