Pertamina may extend ExxonMobil Cepu contract

State-owned oil-and-gas company Pertamina said Friday it may agree to extend a contract with U.S. oil giant ExxonMobil beyond 2010 to develop the Cepu oil and gas block in Java.

Pertamina chief commissioner Martiono Hadianto said no deal had been made but ongoing negotiations might lead to a contract extension or a new contract.

"So, there is no need to wait until 2010. This is toappreciate what Exxon has been doing so far," Martiono said as quoted by AFP.

"But there are a few things that we have yet to agree on," he added. ?The variables include the (production) split, domestic market obligations, who will be the operators, who will have the right to sell the oil, as well as about spending by Exxon.?

Located on the borders of East and Central Java provinces, the Cepu block is owned by Pertamina but operated by ExxonMobil Indonesia under a technical assistance contract, set to expire in 2010.

The two companies have been negotiating to reach an agreement to find a resolution over their differences that has stalled development of the Cepu field for more than three years, according to Bloomberg.

Exxon has stalled development of Cepu, which may hold about 600 million barrels of oil, since 2001 because Pertamina wants to cut Exxon's stake before extending a project license.

President Susilo Bambang Yudhoyono, who wants to develop the nation's reserves to stem falling output, on April 12 ordered the two companies to reach an agreement by Friday.

"The two parties are optimistic that an agreement can be reached in the near future. Several problems that have stalled these negotiations for more than three years have almost be agreed upon," said Rizal Mallarangeng, head of the negotiating team for Pertamina. "We just need a few more days to match ourformula and numbers to reach a real agreement." (godang)