ExxonMobil denies has exceeded authority on Cepu giant oilfield
Tuesday, February 18 2003 - 07:41 AM WIB
?We strongly disagree with statements reported by various media outlets on February 14 suggesting that Contractor may have exceeded its authority under the Cepu Technical Assistance Contract (TAC). In the Cepu TAC Contract, Pertamina explicitly grants to the Contractor, pursuant to Law 8/1971, the exclusive right to conduct petroleum operations within the Contract Area. As part of this exclusive right the Cepu TAC Contract expressly gives the Contractor the right to explore, develop and produce oil and gas discovered in the Contract Area. In addition, the Cepu TAC Contract is neither the only TAC including exploration rights nor under which exploration activities have been conducted,? said Deva Rachman, ExxonMobil spokesperson in Indonesia in a statement.
Deva said ExxonMobil had invested over $400 million dollars acquiring, exploring and planning for the development of the Cepu TAC Contract Area.
?These efforts have led to significant discoveries of oil and gas. Based upon the risks taken, money invested and discoveries made, the Contractor has requested an extension of its contract in order to enable it to develop these discoveries. The Cepu TAC Contract provides that if Contractor requests an extension of its contract to explore or develop, then "sympathetic consideration" will be given to such a request,? Deva added.
ExxonMobil had earlier announced reserve discovered in Cepu amounted to at least 250 million barrels of recoverable oil, while government estimates the field to contain 500 million barrels of oil and natural gas in excess of 6 trillion cubic feet.
?ExxonMobil is willing to invest additional amounts, exceeding two and one-half billion dollars, to develop the discoveries. The development of these discoveries and future exploration activity that will result from the contract extension will provide both Pertamina and the Government of Indonesia with substantial revenues from the vast majority of the profits received over the life of the contract."
ExxonMobil operates Cepu block through its wholly-owned subsidiary Mobil Cepu Limited (MCL) and Amppolex (Cepu) Pty. Ltd, which has 100 percent working interest in Cepu TAC.
"In addition, production from Cepu will have a positive impact on local communities and other industries. Such factors justify an extension to allow MCL and Ampolex the additional time needed in order for them to recover their substantial investments. The ExxonMobil family of companies has been part of Indonesia's oil and gas industry for over 100 years. They are committed to participate in the development of Indonesia's considerable natural resources for many years to come,? said Deva.
Exxon Mobil had been trying to get 20 years extension after its contract in Cepu will expire in 2010, but some element in the government is proposing to turn down the contract extension and ask state oil and gas company Pertamina to operate the block when the contract expires. (alex)