Pertamina-ExxonMobil partnership in Cepu block faces impediment
Thursday, May 27 2004 - 02:59 AM WIB
State owned oil and gas company PT Pertamina’s plan to cooperate with ExxonMobil in operating the Cepu oil block has been hampered by technical procedures related to the signing of the oil block extension contract and the oil production split, Koran Tempo reported on Thursday.
Roes Aryawijaya, a commissioner at Pertamina, said that Pertamina could not meet ExxonMobil’s demand to be one of the signatories for the extension of the Cepu oil block because it would be against the existing law.
Another obstacle, according to Roes, is those related to the production split scheme between Pertamina and ExxonMobil from the oil production in the oil block. “We have asked the appointment of an independent consultant to study a fair production split scheme that is fair to both companies,” he said.
Pertamina wants the production split to be set at the current ratio of 85 percent against 15 percent in favor of the state oil and gas company, while ExxonMobil demands a split ratio of 50 percent against 50 percent.
The contract held by ExxonMobil to operate the Cepu oil field will terminate in 2010. But the oil giant demanded the earlier extension of the contract for the certainty of its investment in the oil field for another 20 years.
The oil field was formerly operated by former president Soeharto’s youngest son Hutomo Mandala Putra alias Tommy under a technical assistance cooperation agreement with Pertamina. Humpuss, however, sold its 49 percent interest in the oil block to Ampolex Ltd in 1997 and the other 51 percent to ExxonMobil’s subsidiary Mobil Cepu Ltd in 2000 following the fall of the former authoritarian leader after more than 30 years in power. Ampolex later sold its ownership to Mobil Cepu making the latter as the sole owner of the oil block.
Pertamina’s president Ariffi Nawawi had earlier said tat the state owned oil and gas company has in principle reached an agreement with ExxonMobil to form a joint venture to the develop the oil and gas bloc situated in the border areas of Central Java and East Java, which is believed to contain more than a half billion barrels or crude oil and trillions pf cubic feet of natural gas. (*)