Negotiation over Cepu oil block will be concluded soon

Coordinating Minister for Economy Aburizal Bakrie said that he was optimistic that the negotiation between the government and ExxonMobil Indonesia over the future of the Cepu oil block could be completed within the next two weeks, Koran Tempo reported on Saturday.

Aburizal said that the negotiation had touched the critical issues related to the production sharing scheme and the working interest in the Cepu oil block. "The talks have progressed very well and we hope the negotiation could be concluded within the next two weeks," he added.

The result of the negotiation could pave the way for the continuation of the development of the Cepu oil block which is located in East Java. 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. (*)