ExxonMobil pledges to invest US$2.6 billion in Cepu
Thursday, February 17 2005 - 03:05 AM WIB
The commitment was made by ExxonMobil Oil Indonesia at a hearing with the Commission VII of the House of representatives (DPR) in Jakarta on Wednesday.
"If Pertamina extends the contract, ExxonMobil will increase their investment in the oil block by about US$2.6 billion," said the chairman of the Commission VII, Agusman Effendi.
According to Agusman, ExxonMobil would also provide a compensation to Pertamina, if the latter agrees for the extension of the contract over the Cepu oil block for another 20 years. But he did not elaborate.
He said that ExxonMobil was upbeat that Cepu oil block would be able to produce up to 170,000 barrels of crude oil per day. With such production level, the government can earn US$4 million a day from its 60 percent share in the production.
The technical assistance contract held by ExxonMobil to operate the Cepu oil field will terminate in 2010. But the oil giant demanded an earlier extension of the contract for the certainty of its investment in the oil field for another 20 years.
Pertamina's former president Baihaki Hakim, demanded ExxonMobil to pay a cash of about US$400 million as 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 package.(*)