Eric Watkins
Senior Correspondent
LOS ANGELES, Feb. 13 – Indonesia's State Minister for State Enterprises Sugiharto expects delays in production from the Cepu Block in Central Java due to continued disagreement between PT Pertamina and ExxonMobil Oil Indonesia Inc.
Sugiharto said the government had expected production to start in late 2007 or early 2008. The companies disagree over operatorship (OGJ, Jan. 23, 2006, Newsletter).
Pertamina and ExxonMobil have been in talks about a joint operation agreement after the government decided in June 2005 to award them a contract to develop Cepu jointly. The contract was to have been signed last September.
Pertamina wants to share operatorship on a 5-year rotating basis, while ExxonMobil believes it should be sole operator of the block for the entire 30 years of the contract period.
ExxonMobil reiterated its stance on Feb 13. by insisting that it has the right to operate the Cepu block by itself through a subsidiary, Mobil Cepu Ltd.
"We are still asking that the operator is our subsidiary," said Maman Budiman, vice-president of public affairs at ExxonMobil Oil Indonesia.
Budiman said ExxonMobil has offered Pertamina the right to name the staff of Mobil Cepu "at all levels."
Budiman said ExxonMobil has proposed to form a steering committee of executives from the oil major and Pertamina, as well as local governments.
Under the planned contract, Pertamina and ExxonMobil will each receive 45% of the share of the revenue allotted to contractors, while local governments have a 10% stake.
The Cepu Block is estimated to be capable of producing 160,000-180,000 b/d of crude oil from reserves put at 600 million bbl.
The government is under pressure to step up production of Indonesia's oil fields due to shortfalls in the national economy.
Indonesian Finance Minister Sri Mulyani Indrawati last week blamed state-owned PT Pertamina for contributing to the country's fiscal malaise by failing to meet planned targets (OGJ, Feb. 13, 2006, Newsletter).
Contact Eric Watkins at [email protected].
