Kalla says govt may decide operator of Cepu oilfield

Indonesia's government will decide whether Exxon Mobil Corp. or state firm Pertamina should be operator of the $2 billion Cepu oil block if the two keep bickering over the issue, the vice president said on Saturday as quoted by news agency.

Deadlocked talks have cast a cloud over one of Exxon's 10 biggest undeveloped oil finds and Indonesia's best hope for stemming declining output.

"Certainly the government would like to speed this up. At the moment, it's down to technical issues between Exxon and Pertamina, it's about who should be the chief operator," Jusuf Kalla said in interview.

"Both have their own arguments but in due time the government will decide who is the best operator."

Asked if that meant the government would step in and decide, he said: "Yes, if the two of them cannot decide."

Cepu is expected to ultimately produce up to 180,000 barrels per day (bpd), boosting Indonesia's production by 20 percent.

Pertamina threatened on Friday to begin development on its own, appearing to raise the stakes in the row.

Pertamina's chief has been pushing for the state firm and Exxon to share operatorship on a rotating basis. Exxon has said it was the rightful operator of Cepu on Java island under an accord signed earlier this year.

Chief economics minister Aburizal Bakrie has threatened to wrest Cepu from Exxon and Pertamina if they failed to resolve by the year-end who would operate a project the government had hoped to hold up as a banner foreign deal.

The two sides have an equal 45 percent stake in Cepu, the OPEC-member's biggest oil discovery in decades. The remaining 10 percent is held by a regional government.(*)