Pertamina, ExxonMobil hit stumbling block over Cepu: Report

State oil and gas company Pertamina and American energy giant ExxonMobil Corp. are facing a new obstacle in their negotiation to jointly operate the Cepu oil and gas block as the government pressured the state firm to find another potential partner to develop the block, Neraca daily reported on Wednesday.

The paper quoted a source as saying on Tuesday that a senior official at the State Ministry of State Enterprises had urged Pertamina to put an end to the current negotiation with ExxonMobil and start talks with a new investor, who was ?less complicated? than the American giant.

The source said the ministry?s official did not feel happy with ExxonMobil due to several reasons, including trivial matters, such as the absence of ExxonMobil?s officials during the recent signing of the deal between Pertamina and the government to define the status of all Pertamina?s upstream operation in the country.

The source warned that any move by Pertamina to end negotiations with ExxonMobil and find a new partner for the development of Cepu block could result in a long and painful legal battle like the one pitting the state firm against American independent power producer Karaha Bodas.

The source said Pertamina was still interested to continue its negotiations with ExxonMobil as the negotiations had been in place for years and thus far brought some results.

The source admitted however that there are not yet ?any positive signs? in the negotiation that could make both parties ?totally happy?.

Pertamina?s president Ariffi Nawawi announced early this month that Pertamina and ExxonMobil had in principle reached an agreement to form a joint venture to develop the block, situated in the border areas of Central Java and East Java, which is believed to contain more than a half billon barrels of crude oil and trillions of cubic feet of natural gas. (*)