Kadin hopes Cepu block oil production could start in next two years

Indonesia?s Chamber of Commerce and Industry (Kadin) said Monday oil production from Cepu block could be commenced in the next two years, if negotiation between state-owned oil and gas firm PT Pertamina and American energy giant ExxonMobil Corp started soon.

?The government through Directorate General of Oil and Gas, or BPMIGAS (upstream authority) should be willing to facilitate the negotiation,? Kadin?s deputy chief for energy and resources Dito Ganinduto said in a statement on Monday.

Kadin said the huge oil and gas reserves discovered in Cepu block could help to lift the country's declining oil output in the near future.

The Cepu block is located in the border area of Central Java and East Java. The block belongs to Pertamina and was operated by the state firm until early 1990s, when it transferred the operation to the youngest son of former President Soeharto, Hutomo Mandala Putra. ExxonMobil took over the operation of the block in late 1990s and, after some explorations, found huge oil and gas reserves there.

ExxonMobil?s contract on the block is due in 2010 and the firm wants to extend the contract to make sure it will get return on investment. If Pertamina is to develop the block by itself, it will only able to do so after ExxonMobil?s contract expires in 2010.

Earlier state minister of state enterprises Sugiharto said the government will form a task force, comprising officials from the ministry and Pertamina, to negotiate on the extension of the Cepu contract. (godang)