Central, East Java provinces disputing the ownership of Cepu oil block

Central and East Java provinces are disputing the ownership of the 10 percent participation interest in the Cepu oil field to be allocated by the central government to the provincial authority, Investor Daily reported on Wednesday.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro said in Jakarta on Tuesday that there was a dispute between Central and East Java provinces on the rights to get the 10 percent participation interest in the Cepu block.

The government has not yet decided which of the two provinces to be given the right to get the 10 percent participation interest because some parts of the oil block are located in East Java and the other parts in Central Java, the minister said.

The government is negotiating the extension of ExxonMobil Indonesia's production sharing contract to operate the oil block. Sources said that there are three options of production sharing split being discussed. The ratio of the production split being discussed are 70:30, 80:20 and 75:25 in favor of the government.

Pertamina as the owner of the oil block will receive 45 percent of the production share to be given to the operator, ExxonMobil will receive the other 45 percent, and the province where the block is located will receive the remaining 10 percent. (*)