Pertamina promises to help local government-owned firms in Cepu block deal

State owned oil and gas company Pertamina has promised to provide financial aid to help firms owned by regional governments to obtain the 10 percent interest in the Cepu oil block in East Java, the company said in a press release on Tuesday.

Company spokesman Abadi Poernomo said in the press release that Pertamina would be ready to provide technical and financial aid to help the regional government-owned firms to finance the its equity participation in the oil block.

"The financial aid will be provided under a business-to-business deal, like those given to Riau in the development of the Coastal Plain Pekanbaru (CPP) oil block," he said in the press release.

The Cepu oil bock, which is currently operated by ExxonMobil under technical assistance contract, is wholly owned by Pertamina. However, under the latest agreement between the governnment and ExxonMobil, Pertamina should transfer 45 percent of the ownership of the oil block to Exxon Mobil, and 10 percent to companies owned by the local governments which control the area where the oil block is located.

Abadi said that the shareholders of Pertamina had agreed to form a joint venture with the firm to be established by the regional government so that it could control 55 percent ownership in the oil block.

As the Cepu oil block is located within the teritories of Bojonegoro and Tuban regencies, part of East Java, and Blora regency in Central Java, there should be a clarity as to which regencies deserve to take part in the development of the oil block, he said.

According to the regulation, the 10 percent interest is given to the area where the oil block is located. (*)