President to have final say on Cepu operator: Official

The much-anticipated decision on who will control the operation of the oil-and-gas-rich Cepu block will have to await Thursday?s return of President Susilo Bambang Yudhoyono from his regional tour, a state official said, as reported by The Jakarta Post reported on Thursday.

The decision - a choice between state oil and gas firm PT Pertamina and U.S. energy giant ExxonMobil Corp.- needs consultation with the President, the deputy for energy, mining and strategic industry at the Office of the State Minister for State Enterprises, Roes Aryawidjaja, said Wednesday.

?We will report on the negotiation progress with (related) ministers this week,? Roes said after a meeting with state enterprises minister Sugiharto who, with energy minister Purnomo Yusgiantoro and coordinating minister for the economy Boediono, will ultimately decide on the operator.

Roes heads a government sponsored team to mediate negotiations between Pertamina and ExxonMobil, which have been stalled by the issue of who will control day-to-day operations.

The government will take into account each company?s readiness, capability, ability to transfer technology, global reputation in the oil industry and worldwide procurement of goods and services, he added.

?There will be a beauty contest,? he said. ?The government is keen to establish a joint operatorship but has not decided on the form to implement the policy.?

Roes, Sugiharto and Purnomo held a discussion with vice president Jusuf Kalla on Wednesday afternoon. The President is expected to land here at 5 p.m. Thursday after visiting Myanmar, Brunei Darussalam and Cambodia.

The two companies failed to reach agreement by an end of February deadline about operating Cepu, which s estimated to have peak daily production of 170,000 barrel of crude.

Pertamina proposed a rotating operatorship every five years - an idea rejected by Purnomo and Roes. ExxonMobil wants a joint operating structure, where its local unit Mobil Cepu Ltd. would be appointed operator and Pertamina?s officials invited key management positions.

The saga of Cepu straddles the border of central and East Java, has moved far beyond economic realms. Several House members and other organizations urged government to support Pertamina, arguing a domestic company would provide profits through low-cost operations and prevent the ?occupation? of the count foreign business entity. (*)