ExxonMobil warned for delaying production activities in Cepu block

State owned oil and gas company Pertamina said that it had warned ExxonMobil Indonesia for several times for delaying production activities at the Cepu oil block in East Java, Koran Tempo reported on Saturday.

"We have reprimanded ExxonMobil for many times for not fulfilling the technical contract," the vice president of Pertamina, Mustiko Saleh said in Jakarta on Thursday. He added that under the existing technical contract, ExxonMobil should fulfill all of its commitment stated in the contract.

ExxonMobil has found a major oil reserve in the oil block 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. The existing technical assistance contract held by ExxonMobil to operate the Cepu oil field will terminate in 2010.

Mustiko acknowledged that ExxonMobil had indicated a strong commitment to increase the investment in the Cepu field but no realization had been made. "If ExxonMobil is reluctant to carry out production activities, we will be ready to take over the oil field," he added.

Earlier reports said that Pertamina had demanded a large amount of cash and higher working interest as the compensation for the early extension of the contract. But ExxonMobil cannot meet the demand. Negotiations are underway to determine the future of ExxonMobil's operation in the Cepu oil field. (*)