Cepu deal raises foreign investment hopes
Wednesday, March 15 2006 - 12:55 AM WIB
Pertamina is expected to sign a joint operating accord with ExxonMobil for the block on Wednesday, that will see the local subsidiary of the US oil giant take the lead in Cepu's management.
"I see this as a business-to-business deal that is beneficial to both sides," said Kurtubi, an oil and gas analyst with the Center for Petroleum and Energy Economic Studies.
"This decision has ended a long-dragging deadlock and will clearly carry a positive impact on the investment climate here, especially in the oil and gas sector."
Pertamina had been in a stand-off with ExxonMobil over who would operate Cepu, Indonesia's biggest oil discovery in decades, with the dispute closely followed by foreign investors.
Kurtubi said the deal would provide certainty for investors and for future production levels.
Under the deal that ended six months of stalled negotiations, ExxonMobil unit Mobil Cepu will operate the block while a committee consisting of ExxonMobil and Pertamina officials will supervise its operation.
"Most important is that the Cepu block can produce as soon as possible. we should not loose the momentum," said Agusman Effendy who chairs the parliamentary commission dealing with the energy sector.
He said the agreement sent a positive signal to investors, foreign and domestic alike, that the government was serious in bringing transparency into the oil and gas sector.
Effendy said Cepu output would boost the country's production by between 18 and 20 percent and add a meaningful increase to Pertamina's production levels.
Effendy's deputy, Achmad Farial Husein said "whoever is at the helm actually does not matter because the control is still in the government's hands, in this case BP Migas" the government's watchdog agency for the oil and gas sector.
He called on all parties to stop bickering over the Cepu decision adding it was more important for the field to begin operations as soon as possible which would then boost the country's foreign exchange reserves and lessen a mounting dependency on oil imports.
Kurtubi, Effendy and Hussein all moved to allay such concerns, pointing out that Pertamina could exercise control over the management through its position as deputy general manager of the Cepu project.
Under the deal, 85 percent of output will go to the state, ExxonMobil and Pertamina will each get 6.75 percent and the local administration 1.5 percent. (*)