BPMIGAS threatens to sue ExxonMobil over Cepu block

Oil and gas upstream regulator BPMIGAS has threatened to take ExxonMobil Oil Indonesia (EMOI)to the international arbitration for an alleged breach of contract in its operation in Cepu block, East Java.

BPMIGAS? spokesman Sulistya Hastuti said in Jakarta on Wednesday that EMOI through its subsidiary Mobil Cepu Limited had failed begin oil production in the block according to agreed schedules.

The start of the production was initially scheduled in January, this year, but it was later delayed until July due to a problem related to the delay in the construction of a pipeline for the oil delivery. Exxon again delayed the production until August, this year, he said.

Sulistya said that a team comprising of BPMIGAS officials and some members of the House of Representative (DPR) would conduct a field trip to the oil block in early September to find out the real problem.

If EMOI is found to have breached the contract or failed to meet its commitment, the government might file a legal suit against the company with the international arbitration, he said.

EMOI spokesman, Maman Budiman, said last week that the company had tried its best to meet the production schedule, ?The company is still testing production facilities at wells and pipelines. We hope early production could reach between 2,000 and 5,000 bpd. In October, the production is expected to reach 16,000 bpd,? he said. (godang)