Central and East Java to discuss ownership in Cepu oil block
Saturday, July 9 2005 - 01:31 AM WIB
Central Java Governor Mardiyanto said in Semarang on Friday that according to the autonomy law, the provincial administration has the rights to have a 10 percent interest in an oil block located in the province, in addition to the 15 percent share from the government's 85 percent production split from the oil block.
He said four of the six oil fields in the Cepu oil block are located in East Java while the other two are located in Central Java. "We therefore need to talk with the East Java government on how to share the ownership in the oil block," he added.
Mardiyanto said that the two provincial administrations would have to provide hundreds of million of U.S. dollar as equity participation in the oil block. "Central Java will team up with private companies to exercise the rights. Several companies including Petronas of Malaysia have shown interest to cooperate with Central Java province," he added.
Meanwhile the East Java provincial administration would likely appoint the East Java provincial administration owned company PT Petrogas Wira Jatim to represent the local government in the Cepu oil block.
"We would need to provide equity of at least US$300 million to use the rights to have 10 percent interest in the oil block," Tutut Tri Herawati, a senior official at the East Java provincial office.
The government and ExxonMobil Indonesia have reached an initial agreement on the extension of the American oil giant's contract over the oil block.
Under the agreement, ExxonMobil will have 45 percent interest in the oil bock, Pertamina another 45 percent and the local government the remaining 10 percent. It will cost at least US$3 billion to develop the oil block.
The technical assistance contract held by ExxonMobil to operate the Cepu oil field will terminate 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. (*)