Exxon's contract over Cepu field may not be extended
Wednesday, July 21 2004 - 02:45 AM WIB
The source said that no agreement had been made over the extension of the Cepu field contract. "If the negotiation remains deadlocked, the contract of ExxonMobil could be ended," the unnamed source said.
When asked to confirm the issue, State Minister of State Owned Enterprises Laksamana Sukardi admitted that the negotiation was underway. But he said that there was a possibility that the extension proposal was turned down.
He also hinted that if the extension was turned down, the position of ExxonMobil could be replaced by other multinational company such as PetroChina. "If it offers more attractive proposal, why not," he added.
The technical assistance contract held by ExxonMobil to operate the Cepu oil field will expire 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.
The oil field was formerly owned by former president Soeharto's youngest son Hutomo Mandala Putra alias Tommy. Humpuss 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 than 30 years in power. Ampolex later sold its ownership to Mobil Cepu making the latter as the sole owner of the oil field.
Pertamina's former president Baihaki Hakim, demanded ExxonMobil to pay a cash of about US$400 million as the compensation for the earlier extension of the contract. But ExxonMobil only agreed to pay about US$40 million. Pertamina also demanded an increase in its interest in the Cepu oil field to 17 percent from the current 10 percent as part of the compensation.
The Cepu oil field, according to ExxonMobil's finding, contains 735 million barrels of crude oil and 5.9 billion cubic of gas. (*)