Exxon only offers US$40 million for Pertamina?s 50% stake in Cepu field

ExxonMobil Indonesia has offered only US$40 million for the compensation of Pertamina?s 50 percent interest in Cepu oil field, or only 10 percent of the US$400 million demanded by the state owned oil and gas company, Minister of Energy and Mineral Resources Purnomo Yusgiantoro said as reported Bisnis Indonesia reported on Monday.

Purnomo said that the compensation was part of the conditions required by Pertamina for the extension of ExxonMobil?s contract over the 1,670 sq kilometer-oil concession which is located in Cepu, Central Java.

The minister said the negotiation was still going on although ExxonMobil?s bid was still far below Pertamina?s demand. "There is no problem with the negotiation although ExxonMobil offers only US$40 million as the compensation of the 50 percent interest in the oil field," he said.

Pertamina?s director for upstream operation, Iin Arifin Takhyan, acknowledged that ExxonMobil offered only US$40 million for the part of the interest in the oil field because the oil company claimed to have spent a lot of money for the development of the oil field.

Controversies related to the operation of the Cepu oil block came into the spotlight after ExxonMobil demanded the government to extend the contract for another 20 years earlier from the initial schedule.

Pertamina has also said that it would reject the extension of the contract unless the company is given extra cash as the compensation for the 50 percent of the interest in the Cepu oil field, which was formerly controlled by Humpuss.

Humpuss, which was owned by former president Soeharto?s youngest son Hutomo Mandala Putra alias Tommy, sold 49 percent ownership in the oil block to Ampolex Ltd in 1997 and the other 51 percent in to ExxonMobil?s subsidiary Mobil Cepu Ltd in 2000 following the fall of the former authoritarian leader after more 30 years in power. Ampolex later sold its ownership to Mobil Cepu making the latter as the only owner of the oil block.

ExxonMobil proposed the government to extend the contract, which would end in 2010, after it made a successful finding in the oil field in April, last year.

Purnomo said that the rights to operate the oil field would be solely owned by Pertamina when the contract ends. "It is up to Pertamina whether it will operate the oil field alone or to cooperate with other companies through a joint venture," the minister added. (*)