SBY wants Cepu draft contract finalized soon

President Susilo Bambang Yudhoyono said he expects the draft contract between state oil company PT Pertamina and ExxonMobil Oil Indonesia Inc finished within the next one or two weeks, agency reported Wednesday.

"I think within one or two weeks we must be entering the draft contract," Yudhoyono said.

"For the government, the sooner the oil fields start operating, the better, including Cepu," he said.

In June, the government decided to let Pertamina and ExxonMobil jointly develop the Cepu block, hoping to speed up the block's production in order to ease expensive oil imports.

Under the June agreement, the negotiating parties were expected to sign two contracts within 90 days.

The first contract is a joint operation agreement between ExxonMobil and Pertamina, and the second a production sharing contract between the government and Cepu's contractors.

The contractors include Pertamina and ExxonMobil.

Yudhoyono said that while the contract between Pertamina and ExxonMobil is a private business transaction, the government must ensure that the outcome takes national interest into account.

"We want everything to be done right and correctly," he said.

Located in East and Central Java, the Cepu block is expected to start producing oil in 2008 with an estimated output of 160,000-180,000 barrels per day.

Although a member of the Organization of Petroleum Countries (OPEC), Indonesia has been a net oil importer thus far this year.

Raising oil output will help the government cut its fuel subsidy spending, which is seen almost doubling to 138.6 trillion rupiah this year from its initial target of 76.5 trln due to soaring world oil prices.(*)