Pertamina BoC likely okay ExxonMobil?s Cepu contract extension

The board of commissioners of state oil and gas company Pertamina would likely agree to the request of US oil giant ExxonMobil Inc. to extend the contract of Cepu giant oil block which will expire in 2010 but the agreement would come with the contract type change, an industry source told Petromindo.Com.

?The Board of Commissioners meeting yesterday has decided to grant contract extension of Cepu oil block, but the contract type would be changed from Technical Assistance Contract (TAC) into Production Sharing Contract (PSC) after 2010,? the source said. The source, however, did not say the length of contract extension.

The source said that the board also recommended that Pertamina and ExxonMobil continue negotiating about the latter?s equity participation in the block.

ExxonMobil, which had discovered oil in excess of 250 million barrels in Cepu block, acquired the block under the technical assistance contract, which gives contractor 35 percent of net oil revenue. Under the production sharing contract system, contractor would only get 15 percent split of net oil revenue.

ExxonMobil and Pertamina had been involved in prolonged negotiation over Cepu's contract extension and Pertamina?s equity participation in the block, causing the first oil flow plan in early 2003 delayed. Pertamina had been insisting to get 35 to 50 percent equity participation in Cepu in exchange of contract extension, while ExxonMobil reportedly agreed only at around 20 percent maximum. (godang)