Bojonegero insists to get 10 percent stake in Cepu

The Bojonegoro regency insist to get a 10 percent stake in the Cepu oil and gas block that will be co-developed by state oil and gas company Pertamina and American energy giant ExxonMobil, Tempo daily said on Saturday.

The regency?s council said the regency had the right to get the 10 percent stake since the block was located in the area.

Council speaker warned of a ?class action? against any party that tries to block the regency?s efforts to get the share.

?The Heads of Agreement signed on June 25 (by ExxonMobil and the Indonesian government) stipulates that Bojonegoro will get a 10 percent stake in Cepu,? he said.

The statement came in response to Pertamina?s recent statement that the regency might not get a 10 percent stake in the block given the fact the block is located in three regencies, that is Bojonegoro, Tuban and Blora. Bojonegoro and Tuban are parts of East Java province, while Blora is located in Central Java.

Under the existing regulations, local governments have the right to get some stake in the companies that develop oil and gas reserves in their respective areas.

Under the June 25 agreement, each of ExxonMobil and Pertamina will get a 45 percent stake in the block.

Feeling assured that the regency would get a 10 percent stake in the block, PT Asri Dharma Sejahtera, a firm owned by Bojonegoro regency, had agreed to form a joint venture with PT Surya Energi Raya, owned by media tycoon Surya Paloh to control the stake. It s reported that under the agreement, Surya Energi will provide finances to buy the whole stake and, in return, will get 75 percent of the joint venture?s revenue.

Pertamina recently said given the fact the firm is the legal owner of the block, it had ?the prerogative right? to distribute the shares among the local governments that deserve the shares. It noted that aside from Bojonegoro, Tuban and Blora regencies and East Java and Central Java provinces have the full right to get some of the stake. Pertamina would also like to ?control? the regional governments? stake so that it could become the majority shareholder in the block, which will make it the operator of the block.

The state firm?s statement has angered several governmental officials who thought Pertamina?s president director Widya Purnama was maneuvering to undermine the June 25 agreement. Some of them have called for Widya's replacement.

Economic tabloid Kontan, in its latest edition, cited rumors that Widya had gained supports from a son in law of Vice President Yusuf Kalla in his efforts to make Pertamina regain control of the block.

The block is believed to contain hundreds of millions of oil and trillions of cubic feet of gas. (*)