Pertamina ready to fund Cepu block
Tuesday, October 14 2003 - 03:25 AM WIB
?Pertamina will not only acquire 50 percent stake (in Cepu) but also manage the block, which will require a total investment of US$1.3 billion, along with ExxonMobil Indonesia,? Pertamina?s upstream director Eteng A. Salam said in Jakarta.
The funding for the 50 percent stake in the block, according to Eteng, will not cause a burden on Pertamina.
Pertamina will not pay in lump sum but pay only in installments for the 50 percent stake in Cepu, which is located in an area bordering Central and East Java provinces, he said.
The total investment figure of $1.3 billion for the block has emerged from the calculation of ExxonMobil, he said.
?Pertamina will also audit the total value of the oilfield. Hopefully, we will find later a mutually acceptable figure for the operation of the oilfield,? Ateng said.
Meanwhile, Pertamina?s president Ariffi Nawawi said the negotiations between Pertamina and the U.S. oil giant ExxonMobil regarding Cepu would be completed by the end of the year.
?We hope that the negotiations will be completed this year so that the Cepu block can start its operations in 2004 and produce oil which benefits the country,? Ariffi said.
ExxonMobil acquired Cepu block from a company controlled by former dictator Soeharto?s family in 1999. After two years, ExxonMobil announced major discovery with recoverable reserves more than 250 million barrels and significant amount of gas, but some studies said the recoverable reserve could be as big as 500 million barrels plus 6 trillion cubic feet of gas.
Under the technical assistance contract, Exxon Mobil is allowed to operate Cepu, which is owned by Pertamina. The contract of Cepu block will end in 2010. Exxon Mobil had intended to extend the block?s contract, but Pertamina asked for huge sum of cash compensation and 50 percent equity participation in return of contract extension, which Exxon Mobil had repeatedly rejected. (*)