Pertamina sets conditions for talks with ExxonMobil

State oil and gas company Pertamina is willing to resume talks with ExxonMobil on an extension of the latter?s contract on the Cepu block as long as the American energy giant is willing to give more concessions to the state firm.

Pertamina?s commissioner Roes Aryawijaya, who is also a deputy to the state minister of state enterprises, said Pertamina?s management was willing to resume talks with ExxonMobil as long as the latter agree to make ?more favorable? terms and conditions for the contract extension.

?As long as ExxonMobil is not wiling to change the terms and conditions (for the contract extension), we shall stick with our decision not to extend ExxonMobil?s contract on the block,? Roes said on Wednesday. He, however, did not specify the ?more favorable? terms and conditions.

ExxonMobil signed a head of agreement (HOA) with the previous management of Pertamina for a joint venture to develop the Cepu block located in the border area of Central Java and East Java, where the American firm had found huge oil and gas resources. However, the new management of Pertamina, under the leadership of Widya Purnama, rejected the HOA and decided not to extend ExxonMobil?s contract once it expires in 2010. The block was owned by Pertamina, before it was taken over former President Soeharto?s son Hutomo Mandala Putra, who later sold its exploration and production contract to ExxonMobil.

Hari Kustoro, exploration and production director of Pertamina, said Pertamina?s management had thus far yet to receive an instruction from the government to resume negotiations with ExxonMobil.

He however confirmed that Pertamina was willing to return to the negotiation table with ExxonMobil as long as ExxonMobil was willing to make terms and conditions for the contract extension more favorable to Pertamina.

?The HOA that has been signed by ExxonMobil and (the former management of) Pertamina is not yet binding as it has yet to be initialed by both parties,? Hari said.

Sources said the Cepu block was among the topics discussed during a ?high-level? talk between the United States and Indonesian governments on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit in Santiago, Chile. Both U.S. President George W. Bush and Indonesian President Susilo Bambang Yudhoyono attended the summit.

During the meeting, both governments agreed to resolve the dispute over the Cepu block, the sources said. (Godang/Alex).