Pertamina disappointed over the way ExxonMobil negotiates

State oil and gas firm Pertamina said Tuesday it remained committed to continue negotiations with U.S. giant ExxonMobil Corp. on Cepu oil and gas block contract in Central Java, but expressed disappointment over the latter?s business ethics.

?Pertamina remains open for further negotiations about Cepu. However, ExxonMobil should understand that this is a business-to-business negotiation; it could be slow, it could be fast, one party cannot dictate terms to another. It requires patience, ? said spokesman Ridwan Nyak Baik. ?It?s unethical for ExxonMobil to write their grievances to President Megawati Soekarnoputri, that would mean ExxonMobil putting political pressure to business-to-business negotiation.?

?Actually, Pertamina has every power to cut the contract and manage the block alone after 2010, but we do not do that because we have good faith. Even President Megawati had authorized Pertamina to make decision it thinks best for the country and Pertamina, including not to extend the Cepu contract,? added Ridwan.

Pertamina and ExxonMobil had been involved in lengthy negotiations over the extension of the block, which would expire in 2010.ExxonMobil had requested for another 20 years extension and Pertamina had asked for 50 percent interest in the block plus US$ 400 million in cash compensation. If not extended the block must be returned to Pertamina

The two parties reportedly had agreed on a 50-50 joint venture as compensation for a 20-year contract extension but not on cash compensation as ExxonMobil is only willing to pay $45 million.

Disappointed with their slow negotiations, ExxonMobil sent a letter to Megawati, complaining that Pertamina had been slowing down negotiation over Cepu block.

ExxonMobil had discovered recoverable oil reserves in excess of 250 million barrels and around 7 trillion cubic feet of natural gas in the Cepu block. (godang)