Contract gives ExxonMobil Cepu until 2010<\/p>\n
Leony Aurora, The Jakarta Post, Bandung<\/p>\n
The government cannot take over the oil-rich Cepu block from
\nstate oil and gas company PT Pertamina and U.S. energy giant
\nExxonMobil even if the companies continue to deadlock in their
\nnegotiations on the issue of operatorship.<\/p>\n
A clause in the production sharing contract (PSC) signed
\nbetween the contractors and the government on Oct. 17 stipulates
\nthat the block will be returned to the state if there has been no
\ndevelopment during a specified period of time -- five or six
\nyears -- chairman of the Upstream Oil and Gas Regulatory Agency
\n(BP Migas) Kardaya Warnika said on Thursday.<\/p>\n
"If the deadline passes and the area has yet to be developed,
\nthe contract will be automatically terminated," he said on the
\nsidelines of a symposium titled "To raise oil and gas output"
\nheld by the Association of Indonesian Oil Engineering Experts
\n(IATMI) here.<\/p>\n
"The work area will then return to government hands," he
\nadded.<\/p>\n
The development of the block has been further delayed
\nfollowing a prolonged argument between Pertamina and Exxon on who
\nwill become the operator of Cepu.<\/p>\n
Pertamina has requested joint operatorship, and that the two
\nparties take alternating roles as the controller every five
\nyears. Pertamina's president director Widya Purnama said on Nov.
\n11 that he would go to the President with the problem.<\/p>\n
ExxonMobil remains firm that according to a memorandum of
\nunderstanding (MOU) signed with a government-sponsored
\nnegotiating team in June, the Texas-based firm has been appointed
\nas the operator of the block.<\/p>\n
Coordinating Minister for the Economy Aburizal Bakrie said on
\nTuesday that the government would take over the block, located on
\nthe border of Central Java and East Java, if the companies failed
\nto resolve their operatorship dispute.<\/p>\n
Minister of Energy and Mineral Resources Purnomo Yusgiantoro,
\nwho opened the three-day event, said the government had suggested
\nthat Pertamina and ExxonMobil form a joint operatorship.<\/p>\n
"We have many examples (of such a cooperation)," he said. "Why
\ncan't they do that?"<\/p>\n
Kardaya cited the cooperation between Pertamina and Bumi Siak
\nPusako as an example of a successful joint operatorship.
\nAlternating controlling roles, as suggested by Pertamina, he
\nadded, would be difficult to implement.<\/p>\n
"If, let's say, ExxonMobil has made a long-term plan, will
\nPertamina also conform to that?" he said.<\/p>\n
Indonesia is pinning high hopes on production from Cepu, the
\ncountry's biggest untapped oil reserve, to lift its current
\nproduction from 1.075 million barrels per day (bpd) on average
\nthroughout this year.<\/p>\n
In his presentation during the symposium, Kardaya said the
\nproduction target of 1.3 million bpd in 2009 would be impossible
\nto reach without output from the Cepu block, estimated to be
\n170,000 bpd at peak level.<\/p>\n
ExxonMobil and Pertamina signed a PSC with the government on
\nSept. 17 to develop the US$2.6 billion block.<\/p>\n
According to the agreement, the contractors -- comprising
\nPertamina and ExxonMobil with 45 percent each, and local
\nadministrations with the other 10 percent -- will get either 15
\npercent or 30 percent of output depending on whether oil prices
\naverage over $45 in one year or, below $35 in one year
\nrespectively.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/contract-gives-exxonmobil-cepu-until-2010-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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