Pertamina backers rally round the flag

Drawing on nationalism and an argument of potentially higher revenue from choosing a local company, a coalition of lawmakers and economic observers is banding together against U.S. energy giant ExxonMobil Corp.?s bid to operate the Cepu oil and gas block, The Jakarta Post newspaper reported in its Friday edition.

With its support squarely behind state oil and gas firm PT Pertamina, The people?s Movement to Save Cepu Block sent a letter on the issue to President Susilo Bambang Yudhoyono, Marwan Batubara, a member of the Regional Representative Council and coalition coordinator, said Thursday.

?The government should consider the nation?s pride and sovereignty in deciding the Cepu dispute,? the coalition said in the letter.

The government has given ExxonMobil and Pertamina until next week to settle its four- year dispute and decide on the operatorship issue, or else it will make the decision.

The coalition includes five council members, five members of the House of Representatives, Pertamina?s labor union, economic observers, such as Sri Edi Swasono and Fadhil Hasan, as well as student and alumni organizations of prominent universities.

It claimed that ExxonMobil would have the chance to mark up development costs of the oil-and-gas-rich block, which is estimated to add 18 percent to the country?s current oil production in its peak period.

House member Dradjad Wibowo said Pertamina would ensure lower costs and attendant greater income for the government by running Cepu, located on the border between Central and Java provinces.

?We admit that ExxonMobil is more capable (of handling the project),? said Dradjad, a noted economist. ?But the issue is how we use the natural resources to support self-development and add revenues for the state budget.?

The government would be able to work out the legal consequences if it decides to steer away from a Memorandum of Understanding signed with ExxonMobil in June last year, he added.

?Cepu was sold to ExxonMobil at a time of rampant corruption,? said Dradjad.

ExxonMobil completed the acquisition of shares in Cepu from Humpuss Patragas, Pertamina?s previous partner ? owned by former president Soeharto?s youngest son Hutomo Mandala Putra ? under a Technical Assistance Contract scheme in 1999.

Dradjad said Pertamina?s technology and managerial abilities could be heightened by inviting participation of technical partners, including ExxonMobil. The state firm also would be able to finance the project through a bond issuance using Cepu?s output as underlying assets, he said. (*)