Cepu block operator will get incentives to speed up production

BP Migas, the government's regulatory body for oil and gas upstream operation, is considering to give more incentives to the operator of the Cepu block in East Java in order to speed up production activities.

Chairman of BP Migas, Kardaya Warnika, said in Jakarta Tuesday that the proposal to provide the incentives would be soon submitted to Minister of Energy and Mineral Resources.

He said that the incentives would exempt the Cepu block operator from the Domestic Market Obligation (DMO). The Cepu block operator would be required to meet the DMO requirement only after it operated its own oil receiving facilities.

The operator of Cepu has recently agreed to speed up production activities although the company has not yet built its own oil receiving facilities. For this purpose, the company has agreed to share the oil receiving facilities owned by PetroChina to store and process the oil production, which is expected to begin by the end of 2008 with initial production is expected to reach 10,000 barrels per day.

ExxonMobil and Pertamina will have 45 percent working interest each in Cepu block with the remaining 10 percent will be distributed to East Java and Central Java regional governments. (godang)