There will not be any legal impact on Pertamina because of Cepu contract: Roes
Friday, August 27 2004 - 02:08 AM WIB
State-owned oil and gas company PT Pertamina?s commissioner Roes Aryawijaya insisted that there will not be any legal consequence for Pertamina if it declines to extend the contract of ExxonMobil in operating the Cepu oil and gas block, the Koran Tempo newspaper reported in its Friday edition.
?So far, we are still in the negotiating phase. There is no agreement signed yet,? Roes, who is also the deputy to the state minister for state enterprises, said on Thursday in Jakarta.
Pertamina said on Wednesday it would not extend its contract with U.S.-based ExxonMobil Oil Indonesia Inc to operate the Cepu oil and gas block when it expires in 2010.
Pertamina's president Widya Purnama said it was more profitable for Pertamina to operate the block itself rather than with a partner.
Widya did not explain the reason for the decision.
The decision is seen as a setback in the lengthy negotiation between the two companies on the future of Cepu block, which has proven oil reserves of 600 million barrels and trillions of cubic feet of natural gas.
According to Roes, all the commissioners will support Pertamina?s decision.
The previous management under Ariffi Nawawi worked hard to clinch a deal with the American firm, which culminated in the signing of an initial agreement in March. Under the agreement, the government will receive 60 percent of the block's oil and gas production and the remainder will go to Pertamina and ExxonMobil.
The Cepu block, located between Central and East Java, is owned by Pertamina. It handed the block over to PT Humpuss Patragas under a technical assistance contract (TAC) in the early 1990s. The firm was controlled by Hutomo "Tommy" Mandala Putra, the youngest son of former president Soeharto.
Under the TAC, Humpus was obliged to give Pertamina a portion of the block's output equal in volume to Pertamina's last production at the block. At the time of the handover to Humpuss, the block only produced a few thousands of barrels of oil per day.
In 1999, Humpuss sold its entire stake in the block to ExxonMobil Cepu.
Upon finding huge oil and gas reserves, ExxonMobil asked for an early extension of the TAC until 2030. (*)