JAKARTA - The Indonesian unit of Total has proposed spending $2 billion in 2010 to upgrade its Mahakam block in East Kalimantan, an official at the country's energy watchdog, BPMIGAS, said on Wednesday.

BPMIGAS has not approved it yet, because BPMIGAS will study the spending by Total in 2010, said the official, who declined to be named.

The official said Total Indonesia wanted to maintain its natural gas production at 2.5 billion cubic feet per day.

A Total official declined to comment on spending plans for 2010.

However, in a statement to parliament on Wednesday Total said it estimated it would spend about $2.05 billion in 2009.

There are development projects in south Mahakam which will begin next year, the statement said.

Total said it produced 2.5 billion cubic feet per day of natural gas in 2009 compared with 2.6 billion cubic feet per day in 2008.

The company also said it produced 97,200 barrels per day (bpd) of condensate and oil in 2009, compared with 96,000 bpd in 2008.

Total and Japan's Inpex (1605.T) each hold a 50 percent share in the Mahakam gas block, which supplies most of the gas for Indonesia's Bontang liquefied natural gas (LNG) plant.

Total, one of the bigger investors in Indonesia's oil-and-gas sector, has urged the government to extend its operating contract on the block, located in Kalimantan on Borneo.

The contract expires in 2017 and negotiations on an extension began in 2008. State oil firm Pertamina has said it interested in participating in the Mahakam block.

Indonesia, the world third-biggest LNG exporter after Qatar and Malaysia, signed a 15-year agreement to supply 125,000 tonnes of LNG per year to Tohoku Electric Power Co (9506.T) on Wednesday.

(Reporting by Muklis Ali; Editing by Ed Davies)

Japan Energy