Pertamina awaits new form of contract to resume Cepu negotiations

State owned oil and gas company Pertamina has insisted that it would continue the negotiations on the future of the Cepu oil field with ExxonMobil Oil only after the government issues a new cooperation format for the operation of the field, Suara Pembaruan reported on Thursday.

Pertamina?s president director Baihaki Hakim said in Jakarta on Thursday that the new cooperation scheme was needed because the current technical assistance contract adopted in the operation of the Cepu field could no longer be used to comply with the oil and gas law.

?The technical assistance contract can no longer be used under the new oil and gas law. This is way we insists to wait until the government issues a new contract form before we decide to resume the negotiations,? he said.

As earlier reported, top executive of ExxonMobil had sent a letter to President Megawati to report Pertamina?s decision to stop the negotiations. Exxon demanded the government to force Pertamina to continue the negotiation process so that the operation of the Cepu oil field could be resumed in line with the contract which would end in 2010.

Asked about the ExxonMobil demand, Minister of Energy and Mineral Resources Purnomo Yusgiantoro said that it was difficult to accommodate the demand because the technical assistance contract, under the new law, could no longer be used.

Under the existing technical assistance contract, the government has a 65 percent interest in the Cepu oil block, Pertamina (10 percent) and Exxon (25 percent). Exxon said that the operation of the oil block is not economically viable unless the company is given assurance to operate the oil block for another 20 years. (*)