Purnomo expects Pertamina can conclude negotiation with ExxonMobil soon
Monday, December 13 2004 - 01:10 AM WIB
He explained that the agreement between Pertamina and the local subsidiary of the U.S.-based oil giant was crucial for the immediate development of the Cepu block, which in turn is expected to be able to lift the country's declining oil output and contribute revenue to the cash-strapped government.
“If Cepu begins its production, we can reduce our oil and gas imports," Purnomo said on the sidelines of a signing ceremony of 46 new oil and gas contracts.
Earlier, Aburizal Bakrie, Coordinating Minister for the Economy, had ordered Pertamina to resume talks with ExxonMobil which had been stalled since June after the state company decided not to extend the existing contract of ExxonMobil over the Ceput block.
Resolving the Pertamina-ExxonMobil investment dispute is also seen as crucial to help revive foreign investors confidence in the economy particularly in the country's oil and gas sector, which has seen investment activities declining over the past couple of years due to various uncertainties.
In an interview with the Financial Times, Bakrie said the new government wanted to resolve Cepu and other disputes involving international companies in a show of its commitment to improving Indonesia's investment climate.
The new deal with ExxonMobil, Bakrie said, would be built around an agreement discussed in June in which the U.S. group promised to pay $125m to Pertamina in exchange for a 20-year extension of the current exploration contract, which expires in 2010. That agreement stalled when Pertamina's government-controlled supervisory board refused to sign on. A new management appointed in August also rebuffed Exxon.
Bakrie said Pertamina would now have to work with ExxonMobil, although he wanted to see a greater role in production for Pertamina in any new deal.
ExxonMobil has said it would invest more than $2 billion in the Cepu field.(*)