Contract for Cepu oil block operation to be signed today

After a long process of negotiations, the government will finally sign the new contract for the development of the Cepu oil block today with its operators Pertamina and ExxonMobil Indonesia.

In addition to the contract for the operation of the Cepu oil block, the government will also at the same time sign the other two contract agreements with Pertamina EP and Pertamina Persero.

"We hope the signing of the contract on the operation of the Cepu oil block can be carried out according to schedule so that we could end the long negotiation process related to the development of the oil block," said Director General of Oil and Gas at the Ministry of Energy and Mineral Resources, Iin Arifin Takhyan.

The Cepu cooperation contract will provide the basic working agreement on the development of the Cepu oil block which will be jointly operated by Pertamina EP Cepu and a subsidiary of ExonMobil Corporation, Mobil Cepu Limited.

While the other two contracts would cover operational guidelines for the operation of Pertamina's oil and gas concessions in the country. Peramina EP will oversee Pertamina's concession areas outside Cepu oil block which will be under the direct supervision of new subsidiary Pertamina EP Cepu. Pertamina Persero, in the other hand, will oversee operations of specific oil and gas concession areas.

ExxonMobil formerly operated the Cepu oil block under technical assistance contract with Pertamina. The contract would end in 2010 but the oil giant demanded the earlier extension of the contract for the certainty of its investment in the oil field for another 20 years.

Under the new agreement, Pertamina and ExxonMobil will have participating interest of 45 percent in the Cepu oil block, each. The other 10 percent will be allocated to the local government which oversees the territory where the oil block is located. (dino)