Medco?s Exspan comments on: ?Exspan's contract on Banyuasin oil block extended for another 20 years?

I only want to clarify a small thing on the news below.

As agreed, Exspan will farm-out to Pertamina for 20 percent interest. Pertamina in turn will appoint Bumi Sriwijaya Resources (PD Migas) to get a certain percentage of the interest from Pertamina as part of the Indonesian Participation scheme as stipulated in the PSC. In other words Exspan is not allowed to directly appoint Indonesian Participation to other party, only Pertamina can do that. The meeting was led by Pertamina whilst Exspan was invited.

Edi Bambang Setyobudi

Exspan?s contract on Banyuasin oil block extended for another 20 years

Thursday, August 29, 2002 - 10:33AM GMT+7

The government has agreed to extend the contract of PT Exspan Nusantara on the Rimau oil block in Musi Banyuasin regency, South Sumatra which expired on April 23, 2002 to another 20 years, Republika daily reported on Thursday.

Under the new contract, Exspan is, however, required to give 20 percent of its interest in the oil block, which has oil reserves of 188.2 million barrels to the provincial administration-owned company PD Migas and state-owned oil company Pertamina.

Rasyid Mangunkusumo, a member of the board of commissioners of PT Exspan said that the 20 percent share ownership that would be given to the local company and Pertamina had been approved by the Ministry of Energy and Mineral Resources.

"I have asked to immediately establish a special team to divide the 20 percent interest to PD Migas and Pertamina," Rasyid said after a meeting with top local officials including South Sumatra Governor Rosihan Arsyad and representatives from Pertamina. The meeting was held to discuss the split of the 20 percent interest in the oil block.

Rasyid hoped that with the involvement of the local company, the local people would have a sense of belonging to Exspan?s operations and help improve the security of the company?s facilities which have often been "disturbed".

"I hope the Governor will be able to explain the local people that the oil block and its facilities are also owned by the local people," he said. (*)