Pertamina, Exxon allocate $279 million to develop Cepu Block

State-owned oil and gas company PT Pertamina and Mobil Cepu Limited (MCL), a subsidiary of US oil firm ExxonMobil Corp. have allocated US$279 million for the development of Banyu Urip field in Cepu Block, East Java this year, Investor Daily reported Thursday.

The amount will be used for drilling at 12 oil fields with a target of initial production in 2009.

Pertamina's deputy president director Iin Arifin Takhyan said the $279 million was incorporated in the Cepu Block's work program and budget, which was approved by the Upstream Oil and Gas Regulatory Body BPMIGAS.

?We will share with MCL of $135 million each,? Iin said in Jakarta on Wednesday.

According to Iin, Pertamina will take a portion of $500 million loan received from local as well as foreign banks to fund Banyu Urip project. Besides this, Pertamina will also take some money from the 2006 cash call amount, which is around $50 million. Because, this cash call amount was not completely used.

Iin said it would be a difficult task for both Pertamina and MCL to fulfill the government's ambition to begin production before 2009 due to problems in finding rig equipment.

BPMIGAS deputy chief Trijana Kartoatmodjo earlier said that the production at Banyu Urip field may be delayed by at least one quarter until first quarter of 2009 from the previous target of last quarter in 2008. This was, he said, due to social and equipment problems. (*)