Martiono leads govt's negotiation team in Cepu oil block dispute

Martiono, the chief commissioner of state owned oil and gas company Pertamina, has been appointed as the head of the government's negotiation team to settle the current dispute over the development of the Cepu oil block with ExxonMobil Indonesia, Investor Daily reported on Saturday.

Acting as the secretary of the 11-member negotiation team is Lin Che Wei, the special assistant of the state minister of state enterprises, while the team members include Pertamina's commissioners M. Abduh and Umar Said, the director general of oil and gas Iin Takhyan, the director general of state budgetary Achmad Royadi, the assistant of the coordinating minister of economy Iksan and economic observer Rizal Malarangeng as the team's spokesman.

Rizal said that the team was given a month to settle the dispute between Pertamina and ExxonMobil Indonesia over the future development of the Cepu oil block.

He said that he hoped the result of the negotiation could pave the way for the continuation of the development of the Cepu oil block. The development, which will cost at least US$2.6 billion, would be able to increase the country's crude oil production to 1.04 million barrels per day from about one million barrels per day at present.

The technical assistance contract held by ExxonMobil to operate the Cepu oil field will terminate in 2010. But the oil giant demanded an earlier extension of the contract for another 20 years to give a certainty to its investment in the oil block.

Pertamina has demanded Exxon Mobil to pay cash compensation and higher production share for the earlier extension of the contract. But ExxonMobil refused the amount of the compensation payment demanded by Pertamina.

ExxonMobil is upbeat that the Cepu oil block will be able to produce up to 170,000 barrels of crude oil per day, if it is allowed to continue the development of the oil block. (*)