Sugiharto to helm Exxon, Pertamina talks

The government has appointed State Minister for State Enterprises Sugiharto to helm talks between state oil company PT Pertamina and Exxon Mobil Corp to resolve a dispute about who should operate the country's biggest untapped Cepu oil field, Bloomberg reported.

?The president (Bambang Susilo Yudhoyono) wants a settlement between Exxon and Pertamina concluded in a week,? Vice-President Jusuf Kalla told reporters during a visit to the field.

The dispute has stalled development of the field for more than four years. Pertamina and Exxon missed a Dec. 31 deadline to submit a plan to the state regulator on how they proposed to develop the project.

?We don?t want this to be prolonged,? Kalla said. ?The sooner the issue is resolved, the better for the interests of the country.?

The government wants to increase its crude oil shipments to help raise export earnings and narrow the country's budget deficit. The field may contain as much as 500 million barrels of oil and could add about 18 percent to national production, according to government estimates.

The government should intervene because Pertamina is able to offer lower costs, Pertamina's vice-president-director Mustiko Saleh told reporters on Saturday.

?The talks with Exxon are still on,? Saleh said. ?We are focusing on three matters, operator-ship, sunk costs and compensation.?

Sunk cost refers to the amount Pertamina has invested in the last year, he said, without giving details.

Kardaya Warnika, chairman of BPMigas, the oil and gas regulator, told reporters in Jakarta on Feb. 15 that he will summon both parties to demand a submission of a plan for the oilfield as the government wants work to begin this year so oil can flow starting 2008.

BPMigas on Sept. 13 signed an agreement to give a 30-year license to the two companies to develop Cepu, leaving them to decide who might operate the project. (*)