Government finally approves POD for Cepu block

The government has finally approved the plan of development (POD) of the Cepu block, paving the way for Pertamina EP Cepu and Mobil Cepu Ltd to begin exploration activities at the country's largest untapped oil reserves, Investor Daily reported Thursday.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro said in Jakarta on Wednesday that the POD had been signed after being reviewed by oil and gas exploration and production regulator BP Migas and Director General of Oil and Gas.

"With the approval, the development of the Cepu oil block can be begun in 2008," he ws quoted as saying.

Hestu Bagyo, the director of Pertamina's subsidiary Pertamina EP Cepu, said that the company would provide about US$400 million of the total investment needed to develop the oil block.

"About 30 percent of the total funds would come from an internal resources, while the other 70 percent would come from lenders," he said. "I don't think we will have a problem to seek the funding for the Cepu oil block development," he added.

Cepu is Indonesia's largest oil discovery in the past 30 years. Located in East and Central Java, Cepu's five fields hold an estimated reserves of 600 million barrels of oil and 1.7 trillion cubic feet of gas.

ExxonMobil has a 45 percent stake in the Cepu field; while Pertamina also owns 45 percent and the remaining 10 percent is held by the local governments overseeing the area where the field is located. (*)