By Andreas Ismar 
 

JAKARTA, Indonesia--Indonesia's PT Indika Energy (INDY.JK) said Thursday that it has signed an agreement to acquire a 10% interest in an oil block in Indonesia's Papua province that is operated by Total S.A. (TOT).

The Indonesian government in 2011 awarded Total 100% participating interest and operatorship in the Southwest Bird's Head block, located in the offshore Salawati Basin, roughly 2,800 kilometers northeast of Jakarta.

"This purchase will strengthen further our energy platform; it will leverage Indika Energy's indepth understanding of the l market context and create synergies with our activities in Papua," Indika President Arsjad Rasjid said in a statement.

Both companies, which didn't disclose the transaction value, said that the deal is subject to approval by Indonesian authorities.

They also said that drilling in the first exploration well in the concession, which covers 7,176 square kilometers, will start before the end of April.

Elisabeth Proust, the head of Total's Indonesia operation, said in a separate statement that the deal "is a first step for developing a wider cooperation between Total and Indika Energy and demonstrates Total's ability to team-up with quality local partners to explore and develop Indonesian oil & gas resources."

Total, among the biggest gas producers in Indonesia, earlier this week criticized Bank Indonesia's policy on companies sending their earnings back to their home countries, saying its status as production-sharing contract holder means it takes on significantly greater financial risks than non-PSC holders and the Indonesian central bank should give it an exemption.

Write to Andreas Ismar at andreasismar.sandiwan@dowjones.com

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