Negotiation over Cepu oil block contract faces deadlock risk

Talks between the state-owned oil and gas firm Pertamina and Exxon Cepu Ltd. over the extension of the latter?s Technial Assistance Contract (TAC) in operating the Cepu oil block may come to a deadlock, according to a source.

The source told Petromindo.com that both sides continue to stick to their demands.

Exxon Cepu Ltd., is a unit of ExxonMobil Oil Indonesia.

The Cepu oil block is expected to start producing around 50,000 barrels of oil per day in 2003, and later to increase to 200,000 bpd. The oil potential in the block is estimated at 250 million barrel. The block is also believed to contain gas reserves.

Exxon has been in talks with Pertamina for months to extend TAC contract before its expiry period in 2010.

But Pertamina insisted a revision of the TAC first: raising its working interest to 35 percent from 10 percent under the original contract. Pertamina has also been reportedly to demand a cash bonus as well.

ExxonMobil has thus far declined to give the 35 percent interest to Pertamina.(Godang)