Exxon, Pertamina told to explain failure in developing oilfield: Report

Exxon Mobil Corp. and Indonesia's state oil company will be summoned to explain their failure to file a development plan for the country's biggest untapped oil field, the national regulator said as quoted by Bloomberg.

BPMigas, the oil and gas regulator, will meet PT Pertamina and Exxon later this week to seek the submission of a plan for the Cepu oilfield, BPMigas chairman Kardaya Warnika told reporters in Jakarta today. The companies had failed to meet a Dec. 31deadline.

"If there's no working proposal, there will be no work done nor production on Cepu," Kardaya said. "They have to start doing some work on the field this year. That's what we want."

The dispute between Exxon and Pertamina over which company will operate the Cepu field has stalled its development for more than four years. Indonesia wants to develop the field and increase its crude oil shipments, which will help raise export earnings and narrow the country's budget deficit.

The field may contain as much as 500 million barrels of oil and could add about 18 percent to Indonesia's production, according to government estimates.

Pertamina wanted to share control of Cepu with Exxon, Widya Purnama, the head of Pertamina, said on Dec. 5.

Exxon has offered Pertamina "key" management positions in a committee that will supervise Mobil Cepu Ltd., a unit established by Exxon to develop Cepu, Peter J. Coleman, president director ofExxon's Indonesian unit said on Dec. 9.

BPMigas on Sept. 13 signed an agreement with Exxon and Pertamina, giving a 30-year license for the two companies to develop Cepu. The agreement didn't state who the operator of the project is and left it to the two companies to decide.

Kardaya declined to say whether the regulator would punish the two companies for the delay in developing Cepu. (*)