Megawati leaves Cepu oil block negotiation to Pertamina
Thursday, March 6 2003 - 03:35 AM WIB
?The president wants Pertamina to continue negotiation with ExxonMobil and to achieve ?maximum benefit? for the country. The president would not intervene in the negotiation and give full authority to Pertamina to decide on the matter,? Purnomo told reporters.
Purnomo said Megawati?s decision to was conveyed by minister state secretary Bambang Kesowo in Pertamina?s board of commissioners meeting recently. Pertamina?s board of commissioners consists of minister of energy and mineral resources, state planning agency head, secretary of state, minister of finance and minister of state enterprises.
The board of commissioners was undecided over ExxonMobil?s proposal to extend Cepu contract and left it to the president to decide.
Pertamina and ExxonMobil had been involved in lengthy negotiation over ExxonMobil?s request to extend Cepu TAC. Pertamina asked for 50 percent interest in the block and cash bonus of around US$ 400 million as compensation for 20 years contract extension. ExxonMobil agreed to the 50:50 joint venture proposal but refused to pay for the bonus. ExxonMobil?s contract on the block will expire in 2010.
ExxonMobil had discovered recoverable oil of 600 million barrels and significant amount of gas in Cepu block, but will not proceed to develop the field unless contract is extended.
?ExxonMobil is willing to invest additional amounts, exceeding two and one-half billion dollars, to develop the discoveries. The development of these discoveries and future exploration activity that will result from the contract extension will provide both Pertamina and the Government of Indonesia with substantial revenues from the vast majority of the profits received over the life of the contract," said ExxonMobil Indonesian spokesperson Deva Rachman recently.
If the contract was extended, ExxonMobil could develop the field into production in 2 years? time and provides government with income of around U$ 2 million per day and over the life of the contract the government will receive about US $7.6 billion. Otherwise, the development of the field will have to wait until the contract lapses in 2010.
Acting Pertamina upstream director when contacted by Petromindo.Com said that Pertamina was ready to resume negotiation, but refusing to give specific detail.
ExxonMobil operates Cepu block through its wholly-owned subsidiary Mobil Cepu Limited (MCL) and Ampolex (Cepu) Pty. Ltd, which has 100 percent working interest in Cepu TAC. (godang)