The foreign ministers of Indonesian and Malaysian met In Jakarta to try to resolve a territorial dispute over an off-shore oil field claimed by both countries in the Sulawesi Sea.
Malaysian Foreign Minister Syed Hamid Albar met his Indonesian counterpart Hassan Wirayuda in Jakarta on the sidelines of a regional conference.
In a joint statement by the Ministers for Foreign Affairs of Indonesia and Malaysia, read by Indonesia's Foreign Ministry spokesman Marty Natalegawa, the two countries agreed to solve their dispute peacefully.
"The president of Indonesia and the prime minister of Malaysia have decided to use peaceful means in addressing the problem relating to maritime boundary of the two countries, particularly in the Sulawesi Sea," said Marty Natalegawa.
The dispute centers on an oil field off the east coast of Borneo claimed by both countries. In a 2002 ruling, the International Court of Justice in The Hague awarded the islands to Malaysia, but that has not settled the matter.
Last month Malaysia granted oil exploration rights to Royal Dutch Shell. War ships have come in close contact several times since Malaysia granted the concession to Shell, but in a move to ease tensions, Indonesia withdrew most of its ships from the disputed waters before the foreign ministers' meeting.
Indonesia's foreign ministry spokesman says both countries have agreed to take the necessary steps to resolve their differences peacefully.
"Both governments agreed to take necessary steps to ease the growing tension that has developed during the last several days," he said. "During the meeting, the two foreign ministers exchanged views pertaining to the basic position of the respective countries."
Indonesia and Malaysia agreed a team of experts from each country will meet in Indonesia later this month to discuss alternatives and will continue to meet on a regular basis.
The dispute has furthered frayed relations between the two countries that were strained by Malaysia's recent expulsion of hundreds of thousands of illegal Indonesian workers.