Cepu deal being studied by ministry<\/p>\n
Leony Aurora, The Jakarta Post, Jakarta<\/p>\n
Despite the principal agreement reached by the government-
\nsponsored team on the offshore Cepu oil block, the Ministry of
\nEnergy and Mineral Resources still must evaluate the new contract
\nafter it is submitted by state oil and gas firm Pertamina.<\/p>\n
Minister of Energy and Mineral Resources Purnomo Yusgiantoro
\nsaid his office, which approves all activities in the mining
\nsector, was waiting to see what the new contract looked like.<\/p>\n
"We will check whether (the contract) complies with prevailing
\nlegislation and if it benefits the state," said Purnomo on the
\nsidelines of an energy seminar here on Wednesday.<\/p>\n
As Pertamina holds the concession rights to the block for the
\nowner, its deal with U.S. energy giant ExxonMobil was conducted
\nbusiness-to-business, he said.<\/p>\n
At the corporate level, the deal must comply with bureaucratic
\nprocedures, such as whether it requires shareholder approval or
\nthe approval of the board of directors, the minister said.<\/p>\n
"We have to follow the rules," said Purnomo.<\/p>\n
Pertamina is scheduled to hold a general shareholders meeting
\non Thursday.<\/p>\n
After four years of dispute, Pertamina and Exxon signed a
\nmemorandum of understanding last week on the development of the
\nCepu block, located along the maritime border between East Java
\nand Central Java.<\/p>\n
Exxon's contract for the block, which was to have expired in
\n2010, will be extended for 30 years in exchange for a lower share
\nof the oil output.<\/p>\n
The agreement, however, was signed not by the board of
\ndirectors, but by Pertamina president commissioner Martiono
\nHadianto, who led the government-sponsored negotiating team.<\/p>\n
The development of the Cepu block is deemed crucial for
\nincreasing Indonesia's oil output, which has been declining by
\nabout 5 percent annually.<\/p>\n
At present, the country's crude and condensate production
\nstands at slightly above one million barrels per day (bpd), down
\nfrom some 1.6 million bpd in the mid-1990s. Cepu is thought to be
\nable to produce about 170,000 bpd.<\/p>\n
"I want Cepu to produce soon so it can increase our oil
\nproduction," said Purnomo.<\/p>\n
Negotiating teams from Pertamina and Exxon have agreed to an
\nadjusted production split and participating interests in the
\nblock.<\/p>\n
Contractors will get 15 percent of output and the government
\nwill receive 85 percent if oil prices average over US$45 a barrel
\nfor a year. If oil prices fall to below $35 a barrel, the
\ncontractors will receive 30 percent of output and the government
\n70 percent.<\/p>\n
Pertamina will hold 45 percent of participating interest in
\nthe block, Exxon 45 and local regencies, as stipulated by law,
\nthe other 10 percent.<\/p>\n
Under such a scheme, Exxon would receive between 6.75 percent
\nand 13.5 percent of all output, down from 35 percent of
\nproduction as stipulated in the old contract.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/cepu-deal-being-studied-by-ministry-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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