ExxonMobil says US$450 million expenditure on Cepu valid

US oil major ExxonMobil said that thus far it had spent US$ 4560 million to acquire, explore and to plan for development of Cepu giant oilfield in the border of Central and Java provinces and said all of its expenditures are supported by legitimate documentation and are subject to audit.

?A substantial portion (of the expenditure) has already been validated through the normal Indonesian audit process conducted under oil and gas cooperation contracts. The remaining costs will be subject to similar review. It is our expectation that additional costs submitted for cost recovery will be validated through the normal process," said ExxonMobil Oil Indonesia spokesperson Deva Rachman on Wednesday.

Deva admitted that the expenditure included acquisition cost, which, according to pertamina?s version amounted to around US$ 150 million.

ExxonMobil was responding to earlier media reports that said preliminary finding of state audit agency BPKP thus far only verify some portion of the expenditure to be claimable for cost recovery. However the audit was not yet final since it was conducted only on overhead expenditure.

ExxonMobil and Pertamina are involved in tough negotiation to jointly manage the giant oilfield. Pertamina had indicated that the negotiation might be concluded in 50:50 joint venture, but said that ExxonMobil?s expenditures must be verified as it felt some of the components were relatively too high.

ExxonMobil acquired Cepu block from company controlled by son of former dictator Soeharto in 1999 and in 2001 announced major discovery with recoverable reserves more than 250 million barrels and significant amount of gas.

The blocks?s contract would expire in 2010 and Pertamina would only willing to extend the block?s contract for another 20 years for 50 percent interest in the block and cash bonus. (alex/godang)