Pertamina asked to soon sign deal on Cepu oil block

Chief Economic Minister Aburizal Bakrie said that the government had asked Pertamina to soon sign an agreement with ExxonMobil to jointly operate the Cepu oil block in East Java, Reuters reported on Tuesday.

Speaking to reporters on Tuesday, Aburizal said that the government had rejected to give a privilege to the state owned oil gas company to act as the sole operator of the oil block which is estimated to hold more than 500 million barrels of oil.

?The government wants Pertamina and ExxonMobil to jointly operate the Cepu oil block,? he said.

The Cepu oil block, located in Bojonegoro regency in East Java, is currently operated by ExxonMobil under a technical assistance contract with Pertamina, which would end in 2010. Under the latest deal, ExxonMobil is allowed to operate the oil block for another 20 years in cooperation with the state owned oil and gas company.

Under the deal agreed recently, Pertamina will have 45 percent interest in the oil block, ExxonMobil the other 45 percent, and the remaining 10 percent will be given to local government-owned company (BUMD).

Pertamina said early this week that Pertamina would provide financial aid to help the appointed BUMD to finance its equity participation. With this approach, Pertamina will control 55 percent of the oil block, giving it a power to act as its operator.

Meanwhile Rizal Mallarangeng, the spokesman for the government?s negotiation team for the Cepu oil block, said that in addition to rejecting Pertamina?s demand to act as the operator of the oil block, the government had also rejected the company?s demand to get 60 percent from the government?s production share from the Cepu oil Block.

Other source said that the government would soon replace the president director of Pertamina, Widya Pertama to end the prolonged dispute over the negotiation for the operation of the Cepu oil block with ExxonMobil.

?Widya Purnama will be replaced at the end of this week or early next week,? said Martiono Hadianto, the chief commissioner of Pertamina.

Martiono earlier said that the government had ordered Pertamina to sign a final deal with ExxonMobil in September so that the development of the oil block could be commenced. The government hopes the oil block could begin operation in 2008. (*)