President to decide the allocation of 10% interest in Cepu oil block

President Bambang Susilo Yudhoyono will use his rights to decide the allocation of 10 percent participating interest in the Cepu oil block which is currently disputed by a number of regencies in East and Central Java, Bisnis Indonesia reported on Tuesday.

"The President has decided to use his rights in allocating the 10 percent interest in the Cepu oil block in order to prevent possible conflicts," State Secretary Yusril Ihza said, adding that the President would soon meet the local governments before making a final decision.

Under the latest agreement, ExxonMobil will have 45 percent interest in the oil bock, Pertamina another 45 percent. The remaining 10 percent will be allocated to the local government which controls the territory where the block field is located.

Bojonegoro regency claimed that it has the rights to get the 10 percent interest in the Cepu oil field, but the Central Java government said it should share the 10 percent interest because two of the six oil fields in the Cepu oil block are located in one of Central Java's regencies.

Yusril said that the President would make a fair decision to ensure that exploration activities at the Cepu oil block could soon be commenced. "The most important thing is that the government will be a full control in the Cepu oil block," he added.

Yusril also said that the President had signed on Sept. 10 government regulation No. 34/2005 to replace the government regulation No; 35/2004 on the country's oil and gas upstream industry. The new regulation is also issued to support the extension of ExxonMobil's contracts in the Cepu oil block.(*)