Work will be carried out at a deposit north of the province's capital of Surabaya.
Sintezmorneftegaz will become the first Russian company to extract crude in Indonesia. The parties hope the contract on oil extraction under production sharing terms will pave the way for broad cooperation between Russia and Indonesia in this field.
"I hope we'll see a real rush by Russian companies into the country in the future," Indonesian Minister of Energy and Mineral Resources Purnomo Yusgiantoro said.
In turn, Sintezmorneftegaz CEO Yuri Fedorovsky said the company had made a major step. "We hope we have received a promising block and will start work on its exploration this year."
The parties declined however to disclose estimates for the block's reserves.
The program developed by Sintezmorneftegaz for the block's development envisages environmental studies, seismic and exploratory drilling work in the next three years.
According to the Oil & Gas Journal, Indonesia's proven oil reserves alone amounted to 4.3 billion barrels in January 2007.
