Govt wants fast-track program for Cepu block
Thursday, March 16 2006 - 01:51 AM WIB
?We can apply a fast-track program for Cepu, like we did with the Natuna and Caltex oil fields, which have been proven to accelerate production,? he said following the signing of the joint operation agreement between Pertamina and the American oil giant.
The minister said the government would provide supporting policies for the accelerated program to smoothen the procurement of the equipment for the oil block?s development.
Pertamina and ExxonMobil Corp. officially signed Wednesday an agreement to jointly operate the Cepu oil block, which is expected to generate US$3.3 billion in annual revenue. Pertamina is currently considering various schemes to finance its share in the $2.6 billion project.
?This is the maximum result of Pertamina?s efforts to start production from Cepu as soon as possible, for the sake of national interests to increase our oil and gas supply, and increase government revenue,? Pertamina president Ari H. Soemarno said after witnessing the signing.
?With this, we are expecting production of 165,000 barrels a day from Cepu, bringing in $3.3 billion in annual revenues, most of which will be for Indonesia.?
ExxonMobil Oil Indonesia president and general manager Peter L. Coleman, describing it as ?the country?s largest oil reserve discovery in the past three decades?, was optimistic about the partnership.
?Cepu will be a world-class project involving advanced technology huge investments and drawing from the pool of skills and experience from the two parties, who, I am glad to say, have today agreed to work together for everyone?s benefit,? he said.
The signing of the agreement marks the end of a protracted four-year dispute over the oil-and-gas-rich block, located on the borders of Central and East Java and estimated to hold some 500 million barrels in oil reserves.
Under the agreement, Pertamina, represented by its subsidiary PT Pertamina EP Cepu and ExxonMobil, through Mobil Cep? Ltd. and Ampolex (Cepu) Pte. Ltd., will form Cepu Organization to develop the block under a production-sharing contract with the government until 2035.
ExxonMobil will hold the posts of general manager - long the sticking point between the companies - operating manager and deputy planning manager of the block?s main Banyu Urip oil field, while Pertamina was allotted deputy general manager, deputy operating manager and planning manager.
Pertamina and ExxonMobil will run a joint operation committee overseeing the organizations with the authority to decide on operational plans, working programs and budgeting. The committee also will be on the management lineup at the other fields - Alas Dara or Kemuning, Alas Tua Cendana, Jambaran and Sukowati - which have yet to be decided.
Production from Cepu is expected to commence at between 25,000 to 40,000 barrels a day, with full output reaching 165,000 barrels a day, or about 20 percent of the country?s total daily production.
Although Pertamina and ExxonMobil each holds a 45 percent stake in the project, with local governments in the two provinces controlling the remainder, the government is entitled to 85 percent of its revenue. Pertamina and ExxonMobil each receive 6.75 percent and the local governments 1.5 percent. (*)