Exxon, Pertamina told to settle dispute<\/p>\n
Bloomberg, Jakarta<\/p>\n
President Susilo Bambang Yudhoyono ordered state oil and gas
\ncompany PT Pertamina and Exxon Mobil Corp. to settle a dispute
\nthat has stalled development of the nation's biggest untapped oil
\nfield for more than three years.<\/p>\n
Exxon and Pertamina on Wednesday resumed talks about the Cepu
\nfield and had until May 20 to reach an agreement under a deadline
\nset by Coordinating Minister for the Economy Aburizal Bakrie,
\nRizal Mallarangeng, a spokesman for the negotiating parties, told
\nreporters on Wednesday.<\/p>\n
\"This is a direct order from President Susilo to settle this
\nmatter as soon as possible,\" Mallarangeng said.<\/p>\n
Cepu in Central Java will add about 18 percent to Indonesia's
\ncurrent oil output, helping to stem a production decline that
\naveraged more than 5 percent annually in the past five years.
\nFalling output may end Indonesia's status as a net oil exporter,
\nforcing it to quit the Organization of Petroleum Exporting
\nCountries (OPEC).<\/p>\n
Indonesia has failed since early 2002 to meet its OPEC output
\nquota, currently at 1.425 million barrels a day.<\/p>\n
\"An agreement is for the benefit of the nation because we have
\nto stay a net crude oil exporter,\" Mallarangeng said. \"It's also
\nimportant to improve our investment climate and to make Pertamina
\na bigger company.\"<\/p>\n
Exxon met Pertamina's negotiating team on Wednesday and
\nremains interested in developing Cepu, Exxon spokeswoman Deva
\nRachman said, without giving details.<\/p>\n
Exxon has stalled development of Cepu, which may hold about
\n500 million barrels of oil, since 2001 because Pertamina wants to
\ncut Exxon's stake before extending a project license. The field
\ncould produce 170,000 barrels a day.<\/p>\n
In 2001, the House of Representatives enacted a law to bring
\nan end to the type of so-called technical assistance contract
\nthat gave Exxon a license until 2010 to develop Cepu, with 35
\npercent of any oil produced. Under an agreement with the
\ngovernment, Pertamina would get 40 percent of any oil produced
\nafter 2010. Exxon's request for a 20-year extension of its
\nlicense and half of Pertamina's share, or 20 percent, after 2010
\nwas refused in 2003.<\/p>\n
The companies later reached an initial agreement for the
\nextension to be granted in exchange for Exxon paying $85 million,
\nfinancing 90 percent of the cost to develop the field during the
\nfirst year, giving up its right to two neighboring fields and
\nincluding Pertamina in several overseas operations.<\/p>\n
Pertamina's initial agreement with Exxon was retracted in
\nAugust last year, when the government appointed new directors at
\nthe state oil company.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/exxon-pertamina-told-to-settle-dispute-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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