Cepu giant oilfield may not flow oil in 2003

US oil giant ExxonMobil Inc. said on Tuesday it would likely delay development of Cepu giant oilfield in Central Java until it had reached agreement with state oil and gas company Pertamina on the latter's equity participation in the block's operatorship and extension of the block's contract.

"It is very unlikely Cepu oilfield will flow first oil in 2003 because development activities are delayed awaiting negotiation results with Pertamina," said Deva Rachman, ExxonMobil Oil Indonesia's spokesperson.

Deva said from technical point of view, it would take one to two years to develop the field into production.

Deva said ExxonMobil had also halted exploration activities in the block.

First oil from the giant oilfield is originally scheduled to be flowed in early 2003 at initial rate of 50,000 barrels per day, ramping up to 150,000 BPD the following year.

ExxonMobil acquired Cepu oil block under technical assistance contract from Humpuss Patragas which was controlled by Hutomo Manada Putra, the youngest son of former dictator Soeharto in 1999, and had discovered oil reserves in excess of 250 million barrels from one exploration well alone. The company had thus far drilled 5 wells in the field. ExxonMobil also admitted that significant amount of gas had also been discovered in the field. There are also reports that said potential oil reserve in Cepu TAC area could reach up to 1.5 billion barrels.

ExxonMobil had been asking for extension of the block's contract which would end in 2010 to justify huge investment to develop the block, but Pertamina had demanded for greater equity participation in return for contract extension. Under the TAC arrangement, Pertamina is entitled to acquire 10 percent of equity participation.

The negotiation had been going on for more than a year but no immediate resolution is seen. Earlier reports said Pertamina had insisted on asking between 35 to 50 percent in return for contract extension and asking for greater production bonus.

Meanwhile, chief of oil and gas executive body (BP-Migas) Rachmat Soedibjo said the board of commissioners of Pertamina will assemble on Wednesday to decide Pertamina's final stance over Cepu oilfield.(alex/godang)