Pertamina still given ample room to conclude talks with ExxonMobil over Cepu Block

Government board of commissioners for state oil and gas firm Pertamina (DKPP) will continue giving ample room for that company to reach final agreement with U.S. oil giant ExxonMobil Corp. over an oil block in Cepu, Central Java, DKPP secretary Mizar Rahman said on Tuesday.

?We will just let business to business talks proceed between the two parties,? Mizar told reporters.

DKPP is chaired by Minister of Energy and Mineral Resources Purnomo Yusgiantoro with several cabinet minister being its members. It has a final say on Pertamina?s strategic decisions.

Pertamina early this month announced its decision not to extend technical assistance contract (TAC) of Exxonmobil for Cepu Oil Block after it expires in 2010. Pertamina said however it was open to the possibility of forming a joint venture with ExxonMobil to operate and manage the block.

Before the announcement, Pertamina and ExxonMobil had been involved in protracted negotiations, with the latter maintaining that its Cepu TAC be extended by 20 years so it could at least regained what it had invested and would invest in the project.

In the negotiations, Pertamina offered to give priority to ExxoMobil to participate in a joint venture company, which would operate and manage the Cepu block, only if it paid compensation to Pertamina. Pertamina hinted that it was willing to offer ExxonMobil 50 percent of the joint venture.

ExxonMobil, through its unit Mobil Cepu Ltd, presently holds 100 percent interest in Cepu Block. ExxonMobil announced in 2001 that the block had oil reserve of at least 250 million barrels, down from the 450 million barrels disclosed later by state oil and gas center LEMIGAS.

Pertamina and the government had faced mounting pressures from politicians that the Cepu block be taken over by Pertamina or any other Indonesian investors. (godang)