Audit on ExxonMobil's investment in Cepu almost completed

An audit to determine the amount of ExxonMobil Indonesia's investment in the Cepu oil field that could be recovered by the oil company (cost recovery) has almost been completed, Koran Tempo reported on Wednesday.

ExxonMobil's Vice President for Planning, Commercial and Public Affairs, Maman Budiman said in Jakarta on Tuesday that the government's audit agency BPK had covered about US$250 million of investment made by the company.

The audit agency was now auditing the remaining investment totaling about US$64 million or about Rp 576 billion, he said, adding that the oil giant would agree with whatever the result of BPK's audit.

The audit was made as part of the oil giant's request for earlier extension of its contract in the oil field. The technical assistance contract held by ExxonMobil to operate the Cepu oil field is due in 2010. But the oil giant demanded an earlier extension of the contract for another 20 years to give a certainty to its investment in the oil block.

Maman said that the audit would not include the funds used by ExxonMobil to acquire the oil block. The oil giant had demanded the government to return all of its investments estimated to reach about US$400 million, if the company was not allowed to extend its contract.

Pertamina has demanded ExxonMobil to pay cash compensation and higher production share for the earlier extension of the contract. But ExxonMobil refused the amount of the compensation payment demanded by Pertamina.

ExxonMobil, Pertamina and the government are still negotiating over the contract's extention.

ExxonMobil is upbeat that the Cepu oil block will be able to produce up to 170,000 barrels of crude oil per day, if it is allowed to continue the development of the oil block. (*)