Govt offers win-win solution to end dispute over Cepu oil block
Monday, February 20 2006 - 03:02 AM WIB
Senior analyst in the oil industry Kurtubi said Sunday that the win-win solution should benefit both Pertamina and ExxonMobil which previously insisted to operate the oil bock under their respective flag.
Both companies should accept the win-win solution so that the operation of the oil block would no longer be delayed, he added. But he warned that without transparency, the joint operating committee would not be able to work effectively.
Minister of Energy and Mineral Resources Purnomo Yusgiantoro said that the win-win solution offered by the government would be the last chance to allow both Pertamina and ExxonMobil to decide themselves on how the oil block should be operated. But if, within a month,the two companies still failed to settle the problem,the government would take over the case.
Purnomo said that the join operating committee would comprise of chief executive officer (CEO) and chief operating officer (COO). "Pertamina can take the CEO position, while ExxonMobil the COO position. The position can be changed for certain period of time so that there is fairness in the management of the committee," he said.
The government awarded last year the new contract for the development of the Cepu oil block to Pertamina and ExxonMobil Indonesia. Under the new agreement,Pertamina and ExxonMobil will have participating interest of 45 percent in the Cepu oil block, each.
The other 10 percent will be allocated to the local government which oversees the territory where the oil block is located. But both oil giants want to become the operator of the massive oil block.
ExxonMobil formerly operated the Cepu oil block under technical assistance contract with Pertamina. The contract should have ended in 2010 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. (*)