Pertamina delays $1b loan plan to develop Cepu project

State-owned oil and gas firm PT Pertamina delayed a plan to raise US$1 billion to develop Cepu block in Central and East Java because of the turmoil in the credit markets, the company director said.

?The current conditions offered by banks were unreasonable,? Finance Director Frederick Siahaan said on Thursday as quoted by Bisnis Indonesia. ?Not only are they asking for higher interest rates, they want us to guarantee crude sales.'?

In June 2008, Pertamina said it was close to deal to raise $1 billion to finance the development of Cepu block. "I am optimistic the deal could reach in late September or early October. The financing will be provided by local and foreign banks," but refused to name the banks, he said on June 27.

He said the $1 billion amount was the portion of investment required from Pertamina to develop the huge oil field together with its equal partner American oil and gas giant ExxonMobil Corp.

Pertamina, Exxon had appointed BNP Paribas as advisor to raise financing to develop the block.

Pertamina and ExxonMobil have each 45 percent stake in the field, with the remaining shares owned by the local governments. The field is expected to start production in 2009 with initial production of 5,000-10,000 BPD. (*)