ExxonMobil?s request for Cepu contract extension understandable: Purnomo
Monday, February 17 2003 - 09:46 AM WIB
?The project requires large investment funds. Personally, I can understand why they have not been able to carry out so many activities at the project site,? Purnomo said in a hearing with a House commission in charge of energy and mineral resources, environment, and science and technology.
The minister said President Megawati Soekarnoputri would make final decision on whether or not to extend ExxonMobil?s Cepu TAC.
The President?s decision is needed after ExxonMobil and state oil and gas firm Pertamina failed to agree on the US firm?s request for contract extension for another 20 years.
Under the TAC, ExxonMobil is allowed to operate Cepu oil block, which is owned by Pertamina. The contract of Cepu block will end in 2010.
Initially, ExxonMobil planned to start producing oil in Cepu Block this year, at around 150,000 barrels a day. But, the company later asked the government to extend its contract, arguing that without contract extension it would not be able to recover its massive investment.
Pertamina insisted that the Cepu contract could be extended only if ExxonMobil give it extra cash of US$400 million as compensation for 50 percent interest in the Cepu block, which the latter refused to do.
ExxonMobil reportedly offered compensation of $40 million only. (godang)