Cepu block may not be able to start production in 2008: ExxonMobil

American energy giant ExxonMobil said it could not guarantee that the Cepu block in Central and East Java wiill start production in 2008 as expected by the government as it needed some time to carry out the tenders of the rig-provision and procurement contracts.

ExxonMobil Indonesia general manager Peter J. Coleman said on Thursday that the company could not determine the project development phases until after the government approved and returned the plan of development (POD) of the block.

The POD has been submitted to Minister of Energy and Mineral Resources Purnomo Yusgiantoro for approval after it was approved by oil and gas upstream authority BP Migas on June 5. Purnomo has asked the operators of the Cepu block ? ExxonMobil and state oil and gas company PT Pertamina -- to start production in 2008. The block is expected to produce 160,000 barrels per day.

ExxonMobil Indonesia?s vice president of external affairs Maman Budiman said the cooperation committee of the Cepu block would keep trying to meet the production target. ExxonMobil is continuing coordination with the ministry and BP Migas on measures to speed up the development of the block.

Maman said ExxonMobil had identified the rigs needed for the development of the block. Yet, it could not tender the provision of the rigs until after the government returned the block?s POD.

?We are looking for three rigs. Once we get one, we can start drilling at the Banyu Urip field,? he said.

Meanwhile, Pertamina?s exploration and production director Hestu Bagyo said that ExxonMobil and Pertamina were still in a tough negotiation to fill out all positions in the joint venture to develop the Cepu block.

?The toughness of the negotiation is reasonable as the positions will be pivotal in the next 20 years. There is a plan to take the negotiation to ExxonMobil?s headquarters in Houston, Texas,? he said.

Cepu is Indonesia's largest oil discovery in the past 30 years. Located in East and Central Java, Cepu's five fields hold estimated reserves of 600 mln barrels of oil and 1.7 trln cubic feet of gas.

ExxonMobil has a 45 percent stake in the Cepu field; while Pertamina also owns 45 percent and the remaining 10 percent is held by the local governments overseeing the area where the field is located. (godang)