SBY tells Pertamina to share Cepu with Exxon

President Susilo Bambang Yudhoyono ordered state oil company PT Pertamina to share the operations of the Cepu oilfield with Exxon Mobil Corp., said Pertamina's president, Widya Purnama as quoted by Bloomberg.

"My President just gave me instructions to jointly operate between Pertamina and Exxon," Purnama said in Manila on Wednesday. "First, Pertamina for five years, then Exxon for the second five years. Exxon wants 30 years."

A dispute between Exxon and Pertamina over which company will operate the country's largest untapped oilfield has stalled development for four years. Declining output and soaring demand have turned Indonesia into a net oil importer, threatening itsmembership of the Organization of Petroleum Exporting Countries and undermining confidence in the nation's currency.

The government wants Pertamina and Exxon, the world's biggest publicly traded oil company, to set up a joint operating unit that enables them to make decisions and rotate control of cash flow and field operations every six months, Vice President JusufKalla said on Nov. 28.

The Indonesian government and Exxon in June signed an initial agreement known as a memorandum of understanding, which stated that Exxon would be the sole operator. On Sept. 17, Exxon and Pertamina signed an agreement with the state oil and gas regulator, BP Migas, giving the companies a 30-year license todevelop Cepu, without stating who would be operator.

"We would like joint operatorship with Exxon," Purnama said. "Exxon, they don't want to join with me. They want to handle for 30 years," he said.

Pertamina last month said it had presented an option to rotate the operatorship every five years. Exxon rejected the proposal, Pertamina said.

In a bid to resolve the dispute, the government on Aug. 11 said it would replace Pertamina's directors including President Widya Purnama, who has rejected the government-brokered agreement to end the dispute. (*)