East and Central Java provinces sign Cepu agreement

The provincial administration of East Java and Central Java are scheduled to sign an agreement in Semarang today on their participating interest in the Cepu oil block, Investor Daily reported Thursday.

Soetjhyono Suyitno, a senior official at the East Java provincial administration, said Wednesday that the agreement would be based on the results of the meeting between the two provinces' governors with President Susilo Bambang Yudhoyono in December, last year.

He said that under the initial agreement made during the meeting, the East Java provincial administration will have 6.7 percent of the 10 percent interest to be allocated to the local governments. The other 3.7 percent will go to the Central Java administration.

According to him, Bojonegoro regency where most parts of the Cepu block are located will have 40 percent of the 6.7 percent interest or about 3 percent of the 10 percent.

He said that the provincial administration of East Java also planned to established a company to manage the province's participating interest in the Cepu oil block .

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

It is not certain yet, however, when the exploration will be commenced as both oil giants insists to become the operator of the massive oil block. (*)