Kalla suggests joint-firm scheme to end Cepu impasse
Saturday, February 25 2006 - 01:20 AM WIB
?There is a misperception here over the operatorship debacle. Neither Pertamina nor ExxonMobil will be the sole operator. A new company, with an equal share from both companies, will act as the operator,? Kalla said.
He added that the only problem was deciding which party would act as the ?general manager? of the joint venture. ExxonMobile insists it should hold the position, given its huge financial investment and the technical knowledge it possesses to develop the field.
?Since the project will be very expensive, and requires advanced technology, ExxonMobil wants to hold the post,? he said.
Kalla reiterated the government would intervene and issue a final decision on the Cepu block next week, if Pertamina and ExxonMobil failed to settle their five-month-long dispute over the operatorship of the field.
The government has told the companies to reach a settlement soon to allow development of the block to begin, which is crucial to increasing the country?s declining oil production.
State Minister for State Enterprises Sugiharto and Energy and Mineral Resources Minister Purnomo Yusgiantoro have been appointed by President Susilo Bambang Yudhoyono to issue a final decision in the issue.
Pertamina and ExxonMobil have been locked in a battle over who will operate the block and run the day-to-day operations of the US$2.6 billion project since the two signed a production sharing contract in September 2005. Each owns a 45 percent stake in the block, with the remaining 10 percent split among the provincial administrations of East Java and Central Java, and the regency administrations of Bojonegoro and Blora.
The oil block, located along the border between Bojonegoro, East Java, Blora, Central Java, is expected to produce 170,000 barrels of crude oil per day during peak production, or about 18 percent of the country?s current output.
Meanwhile, U.S. Ambassador to Indonesia B. Lynn Pascoe hoped the dispute could be resolved immediately, saying Indonesia would suffer huge losses if the oil resources could not be fully utilized.
?We think the losses to the people and the state of Indonesia would be huge. But the final resolution is really between Pertamina, ExxonMobil and the (Indonesian) government. This is a business issue they are trying to resolve, said Pascoe at the presidential palace in Jakarta.
A spokesman for ExxonMobil Maman Budiman said the establishment of a new joint venture company would take substantial time and prolonged discussions.
?What we propose is a joint venture structure, where ExxonMobil is appointed as operator and Pertamina officials merge into the management,? he said.
The Irving, Texas-based company remained firm that the operator of the block should be its wholly owned subsidiary Mobil Cepu Ltd., which ran the block up to the time the dispute with Pertamina started.
Maman said ExxonMobil would study the government?s proposal before deciding whether to accept it.
?If it does not steer away from the preliminary agreement, it?s OK,? he said, referring to a memorandum of understanding signed with a government negotiating team last year, which stated ExxonMobil would be the sole operator of the block.(*)