Govt gives green light for Cepu block<\/p>\n
Urip Hudiono, The Jakarta Post, Jakarta<\/p>\n
The government signed a contract on Saturday with state oil and
\ngas firm PT Pertamina and U.S.-based energy giant ExxonMobil to
\ndevelop the oil-rich Cepu block in another significant step
\ntoward ending the four-year dispute surrounding the block.<\/p>\n
The contract -- between the government's upstream oil and gas
\nregulator BP Migas, a separate Pertamina unit set up to manage
\nthe block, Pertamina EP Cepu, and ExxonMobil subsidiaries Mobil
\nCepu Ltd. and Ampolex Cepu Pte. Ltd. -- will enable the firms to
\nstart oil exploitation in the block, which it is estimated will
\nproduce 170,000 barrels per day (bpd) at its peak.<\/p>\n
It entitles the companies to undertake exploration and oil
\nproduction for a period of 30 years in the Banyu Urip, Cendana,
\nJambaran, Alas Dara and Kemuning oil fields -- each covering some
\n919 square kilometers -- in the block.<\/p>\n
The contract was signed by the head of BP Migas, Kardaya
\nWarnika, Pertamina president Widya Purnama, representing PT
\nPertamina EP Cepu, and Mobil Cepu president Steve Greenlee,
\nrepresentating Mobil Cepu and Ampolex Cepu.<\/p>\n
BP Migas also signed separate contracts with Pertamina for
\n142,170 square kilometers in its previous concessions, and with
\nits upstream exploration and production subsidiary, PT Pertamina
\nEP, for 138,610 square kilometers in these areas, in line with
\nthe new oil and gas law, which gives back regulatory authority
\nfrom Pertamina to the government.<\/p>\n
Minister of Energy and Mineral Resources Purnomo Yusgiantoro,
\nwho witnessed the signing, said he expected that the agreement
\nwould boost Indonesia's declining oil production.<\/p>\n
\"We hope the Cepu block will add more than 150,000 barrels to
\nour daily oil production,\" he said.<\/p>\n
\"The agreement is also expected to provide further legal
\ncertainty for investors in this country.\"<\/p>\n
Despite the signing of the contract, Pertamina and ExxonMobil
\nstill need to discuss the terms of their joint operating
\nagreement (JOA) on sharing the oil produced in the block.<\/p>\n
\"After this, Pertamina and Exxon will sit down together and
\ndiscuss the JOA,\" Widya said, without giving any timeline.
\nHowever, he said that Pertamina wanted to move ahead as soon as
\npossible.<\/p>\n
The government is racing to increase the country's oil
\nproduction. A decline in production over recent years, coupled
\nwith rising consumption and a recent surge in oil prices, is
\nputting Indonesia's fiscal sustainability on the line as its fuel
\nsubsidy spending increases.<\/p>\n
At present, the country's crude and condensate production
\nstands at slightly above one million barrels per day (bpd), down
\nfrom the 1.6 million bpd recorded in the mid 1990s.<\/p>\n
The Cepu block, located on the border between Central Java and
\nEast Java provinces, is expected to help stem a production
\ndecline that has averaged more than 5 percent annually in the past
\nfive years.<\/p>\n
Pertamina had earlier signed an agreement on Sept. 10 agreeing
\nto a participating interest of 50 percent in the Cepu block,
\nequal to Exxon's. Both Pertamina and Exxon will then allocate 5
\npercent each to the relevant local administrations.<\/p>\n
Previously, a memorandum of understanding (MOU) to develop the
\nCepu block was signed on June 25 in the first concrete step
\ntoward ending a four-year dispute between Pertamina and
\nExxonMobil over the block.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/govt-gives-green-light-for-cepu-block-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}