ExxonMobil offers joint operation scheme to operate Cepu block

ExxonMobil has offered state owned oil and gas company Pertamina a joint operation scheme in a bid to break the deadlock on the two companies' negotiations on the operation of the Cepu oil block in East Java, Neraca reported on Wednesday.

ExxonMobil Indonesia's spokesperson Deva Rachman said during a visit in Bojonegoro on Tuesday that under the proposed joint operation scheme, the two companies would establish a management committee to make important decision such as related to budget and supervision.

"Both Pertamina will have equal representation in the committee," she said, adding that day to day activities would be carried out by a company which would be established under Mobil Cepu Limited, a subsidiary of ExxonMobil in charge directly in operating the Cepu oil block.

Deva said although the company directly operating the oil block would be under Mobil Cepu Limited, it would also employ Pertamina's workers in all the management levels.

The government signed recently the new contract for the development of the Cepu oil block with its operators Pertamina and ExxonMobil Indonesia after prolonged negotiations.

Both oil giants however want to become the operator of the massive oil block. Under the new agreement, Pertamina and ExxonMobil will have participating interest of 45 percent in the Cepu oil block, each. The other 10 percent will be

allocated to the local government which oversees the territory where the oil block is located.

ExxonMobil formerly operated the Cepu oil block under technical assistance contract with Pertamina. The contract should have ended 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. (*)