Exxon agrees proposal to raise Pertamina stake in Cepu block

ExxonMobil Indonesia has, in principle, agreed with the proposal to raise the percentage of state owned oil and gas company Pertamina?s stake in the Cepu oil block if the company?s contract to develop the oil block is extended, Koran Tempo reported on Friday.

Pertamina?s director for upstream operation, Arifin Takhyan, said in Jakarta on Thursday that Exxon had also expressed its agreement to provide more cash if its contract on the Cepu oil block is renewed.

"We are now still negotiating (the new term) with Exxon, hopefully the final decision could be made soon," he was quoted as saying by the daily.

Under the technical assistance contract given to Exxon to manage and operate the Cepu oil block, the government has a 65 percent interest in the Cepu oil block, Pertamina (10 percent) and Exxon (25 percent).

He said that Pertamina proposed to have at least 17.5 percent of the non-government?s ownership, and Exxon another 17.5 percent.

The Cepu oil block is expected to start operation by 2003, with capacity of 50,000 barrels per day. The production will be increased to 200,000 barrels per day. The oil block, which is directly operated by Exxon?s subsidiary Mobil Cepu Ltd, has proven oil reserves of about 250 million barrels. (*)