VP?s visit may be show of support for U.S. giant
Monday, February 20 2006 - 02:06 AM WIB
During a discussion with ExxonMobil Indonesia president Peter J. Coleman and Pertamina vice president director Mustiko Saleh, Kalla underlined the points of contention of the dispute as well as the requirements needed to become the operator.
?The Cepu operator should have cutting-edge technology, strong financial resources and efficient operation. Since the issue of operatorship is not that significant, I hope you can reach a deal sooner than later,? Kalla told the two executives.
The state firm comes up short on these requirements , with advanced oil exploration technology and lower financial resources than ExxonMobil, who began operations in the late 19th century.
It also estimates its 2005 net profit at Rp 11.3 trillion (US$1.22 billion), or about 36 times lower than the likely figure of ExxonMobil.
Pertamina?s only advantage would be providing low-cost operations in developing the field, and Kalla did urge ExxonMobil to bench mark its proposed costs against Pertamina?s Sukowati oil project in East Java.
?We understand that cost is concern, but we will apply our best technology in the project,? Coleman told Kalla, adding that the company would be disappointed if the government and Pertamina departed from the Memorandum of Understanding (MOU).
Exxon has offered Pertamina ?key? management positions on a committee that will supervise Mobil Cepu Ltd., a unit established by Exxon to develop Cepu. But the offer was turned down by Pertamina.
The MOU, signed in June by the companies and the government-sanctioned negotiating team, granted ExxonMobil the right to be the sole operator of the block for the entire duration of the 30-year contract.
Pertamina and ExxonMobil have been locked in a battle over who is entitled to be the operator of the block and run day-to-day operations of the US$2.6 billion project, which is considered crucial to boost the country?s declining oil output.
The Cepu block, located on the border between Central Java and East Java, is expected to produce 170,000 barrels of crude oil per day during peak production, about 18 percent of Indonesia?s current output.
The companies have equal 45 percent holdings in the block, with the remainder divided between the regional administrations of Central and East Java.
During the visit, Kalla also insisted Pertamina and ExxonMobil come up with a deal within a week.
?Should there be no deal, the government will take over the case and decide the settlement. As the 100 percent owner of Pertamina, the government has the right to take any decision in the public?s interest,? Kalla said later in a press conference.
While not stating that ExxonMobil would become the operator, Kalla requested the company ensure equal involvement of Pertamina officials in the project, as well as providing a transfer of technology scheme to the company.
Meanwhile, Energy and Mineral Resources Purnomo Yusgiantoro claimed ExxonMobil had agreed to a proposal that it would become the ?chief operating officer? (COO) for the field and allow Pertamina the position of ?chief executive officer? (CEO).
?ExxonMobil has agreed to become the COO in developing the field. I cannot provide details of the scheme yet, but for sure, it will not be in a form of a joint venture company. It will be more or less like a joint operating body,? he said. (*)