Cepu contract may be signed this week<\/p>\n
Rendi A. Witular and Blontank Poer, The Jakarta Post, Jakarta,
\nSurakarta, Central Java<\/p>\n
The government has indicated that a contract to develop the
\nuntapped oil-rich Cepu block will be signed later this week by
\nstate oil and gas firm PT Pertamina, U.S.-based energy giant
\nExxonMobil Corp. and the government.<\/p>\n
With the signing of the contract, ExxonMobil and Pertamina
\nwill be able to start oil exploitation in the areas, which is
\nestimated will produce 170,000 barrels per day (bpd) at its peak,
\nState Secretary Yusril Ihza Mahendra said on Wednesday.<\/p>\n
\"Within this week, we expect to sign a working contract to
\ndevelop the Cepu field since all the necessary legal documents
\nhave been completed,\" he said after a teleconference with
\nPresident Susilo Bambang Yudhoyono.<\/p>\n
The production sharing contract to develop the block will be
\nsigned by the government and a joint venture between ExxonMobil's
\nIndonesian arm and Pertamina, later to be called Pertamina Cepu.<\/p>\n
Before the contract signing, a memorandum of understanding
\n(MOU) to develop the Cepu block, located on the border of the
\nprovinces of Central Java and East Java, was signed on June 25
\nand ended a four-year dispute between Pertamina and ExxonMobil.
\nPertamina was represented by a team appointed by the government
\nduring the negotiations.<\/p>\n
The government expects that the development of the field would
\nhelp stem a decline in the country's oil production in recent
\nyears due to slow growth in oil exploration and exploitation amid
\na scarcity of investment. At present, the country's crude and
\ncondensate production stands at slightly above one million
\nbarrels per day (bpd), down from the 1.6 million bpd in the mid
\n1990s.<\/p>\n
Despite the nearly closed deal, Bojonegoro regent Muhammad
\nSantoso said he would ask that the government maintain the
\nregency's participating interest in the project and resist any
\npolicy which would abolish this participation.<\/p>\n
He said he had written a letter to the President demanding
\nthat the 10 percent interest for local administrations, which had
\nalready been decided in the negotiations and written into the
\nMOU, should be executed immediately.<\/p>\n
\"I will meet the President after he completes his overseas
\ntrip to question him about the recently issued government
\nregulation that amends a previous one on the upstream oil and gas
\nsector and on our rights over the share in the block,\" he told
\nThe Jakarta Post.<\/p>\n
As the block is situated on the border of two provinces, both
\nthese administrations plus the Bojonegoro regency are entitled to
\na share in the project.<\/p>\n
Susilo signed Government Regulation No. 34\/2005 on Sept. 10 to
\nclear away certain obstacles for the development of the Cepu
\nblock, including the management of the 10 percent interest for
\nlocal administrations.<\/p>\n
Under the regulation, the government would temporarily take
\nover the management of the local share in the block in order to
\nprevent disputes between the local administrations.<\/p>\n
ExxonMobil and Pertamina would take participating interests of
\n50 percent each, and then each allocate 5 percent to the relevant
\nlocal administrations.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/cepu-contract-may-be-signed-this-week-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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