Cepu contract may be signed this week

The government has indicated that a contract to develop the untapped oil-rich Cepu block will be signed later this week by state oil and gas firm PT Pertamina, U.S.-based energy giant ExxonMobil Corp. and the government, The Jakarta Post newspaper reported in its Thursday edition.

With the signing of the contract, Exxonmobil and Pertamina will be able to start oil exploitation in the areas, which is estimated will produce 170,000 barrels per day (bpd ) at its peak, State Secretary Yusril Ihza Mahendra said on Wednesday.

"Within this week, we expect to sign a working contract to develop the Cepu field since all the necessary legal documents have been completed ," he said after a teleconference with President Susilo Bambang Yudhoyono.

The production sharing contract to develop the block will be signed by the government and a joint venture between ExxonMobil's Indonesian arm and Pertamina, later to be called Pertamina Cepu.

Before the contract signing, a memorandum of understanding to develop the Cepu Block, located on the border of the provinces of Central Java and East Java, was signed on June 25 and ended a four-year dispute between Pertamina and Exxon Mobil. Pertamina was represented by a team appointed by the government during the negotiations.(*)