No U.S. intervention in the Cepu oil block deal:Minister

State Minister of State Owned Enterprises Sugiharto dismissed rumors of U.S. government intervention in the extension of ExxonMobil's contract to manage and operate the Cepu oil bock in East Java, Media Indonesia reported on Tuesday.

Speaking at a hearing with the Commission VI of the House of Representatives (DPR) on Tuesday, the minister said that the extension of ExxonMobil's contract was purely for the sake of the government's efforts to boost the country's oil production.

"We took part in the negotiation with Washington. None of the Cepu oil issues had been raised at government-to-government discussion. It is purely business to business deal," he said, adding that the government had accelerated the negotiation process with ExxonMobil because the development of the oil block would help increase the country's oil production by about 25 percent.

Meanwhile, the chairman of BP Migas, the government's agency in charge of oil and gas exploration and production, Kardaya Warnika, said that the development of the Cepu oil block would not wait for the signing of the cooperation contract ( KKS) between BP Migas and Pertamina.

"Cepu oil block will not be part of the seven concession areas which will be operated under KKS with Pertamina," he said. He said that the Cepu oil block would be treated differenty.

Under the new oil and gas law, all the rights held by Pertamina to manage oil and gas blocks will be removed. However, those which are still under the control of Pertamina will be operated in cooperation with BP Migas under the so called KKS contract.

The government is finalizing the negotiations on the extension of ExxonMobil's contract in the Cepu oil field. The American company will likely receive 45 percent of the oil production from the Cepu oil block, Pertamina another 45 percent and the East Java provincial administration another 10 percent.

At present, ExxonMobil operates the oil block under a technical contract agreement with Pertamina which legally owns the right of the oil block. ExxonMobil demands an extension of the contract for another 20 years although its present contract will expires in 2010. Pertamina has opposed the extension of the contract and plans to develop the oil block with its own resource. (*)