Exxon says making progress on Indonesian dispute: Report

Exxon Mobil Corp., the world?s largest publicly traded oil company, is making progress on talks with the Indonesian government to end a four-year stalemate over the development of large oilfield, a top executive was quoted by Reuters as saying on Wednesday.

The dispute is centered around the Cepu block, where Indonesian state oil firm Pertamina decided last year it would not extend a contract for Exxon Mobil to operate the Banyu Urip field after it expires in 2010.

?Talks are active and ongoing,? Exxon Mobil President Rex Tillerson told reporters following the company?s annual meeting in Dallas. ?We?re making progress; we have good constructive engagement with them.?

The main sticking points have been over how much Exxon Mobil has spent on the project and how production will be split. Typically the government takes 85 percent, with the rest kept by the oil contractor.

?We have resumed active discussions with them in the last few weeks,? Tillerson said. ?We?re hopeful we can find a way to come to agreement around a set of terms that would allow us to develop the very significant oil resources in the country.?

The dispute has delayed development of the field in East Java, which Exxon has previously said could hold more than 250 million barrels of oil.

Exxon Mobil has said it had spent $450 million on the block -- a sticking point in negotiations over the contract extension -- although there has been no commercial output.

Jakarta estimates the field could hold up to 500 million barrels of oil which could produce a much-needed 100,000 barrels per day boost for Indonesia, equivalent to about 10 percent of current output. (*)