ExxonMobil agrees to give 50% of Cepu oil field to Pertamina
Tuesday, November 5 2002 - 04:32 AM WIB
With such arrangement both ExxonMobil and Pertamina will have 50 percent interest in the 1,670 sq kilometer oil field. It means that the two companies will equally share the 35 percent of the net-oil production to be produced from the oil field. The other 65 percent will go to the government.
The agreement was unveiled by Pertamina?s president Baihaki Hakim after meeting with the budgetary commission of the House of Representatives (DPR).
Baihaki, however, said that ExxonMobil still refused to pay compensation worth US$400 million demanded by Pertamina. "ExxonMobil still considers that the fair compensation is about US$40 million.
In addition to the 50 percent working interest, Pertamina has demanded ExxonMobil to pay a cash compensation of US$400 million for the earlier extension of the contract to operate the oil field, which according to ExxonMobil, has oil reserves of about 500 million barrels.
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.
According to the initial schedule, the technical assistance contract held by ExxonMobil to operate the oil block would end on 2010. But the oil giant demanded the earlier extension of the contract for the certainty of its investment in the oil field, which 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 30 years in power. Ampolex later sold its ownership to Mobil Cepu making the latter as the sole owner of the oil block.(*)