Govt opposes Pertamina's requests over Cepu<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
State oil and gas company PT Pertamina's requests to replace
\nExxonMobil as the operator of the as-yet untapped oil-rich Cepu
\nblock, and for a bigger split of the output has met strong
\nopposition from the government -- the company's sole shareholder.<\/p>\n
Spokesman for the government's negotiating team on Cepu, Rizal
\nMallarangeng, said on Tuesday the company should respect the
\nsanctity of the memorandum of understanding (MOU) signed between
\nExxon and the negotiating team in June.<\/p>\n
\"Besides, the decision (in the MOU) was consulted in the
\nrecent shareholders meeting and that should be respected by the
\ndirectors.\"<\/p>\n
The firm's president director Widya Purnama said on Monday
\nthat the company would hold 55 percent of the voting rights --
\ncomprising 45 percent of its participating interest and 10
\npercent of the shares given to local administrations -- due to
\nits exclusive right as a state company.<\/p>\n
Widya also said Pertamina requested a contractor's split of 40
\npercent of oil produced in Cepu.<\/p>\n
Under the signed MOU, stakeholders -- Pertamina, Exxon and
\nlocal regency administrations -- will get 15 percent of all
\noutput and the government 85 percent if oil prices averaged over
\nUS$45 in a year.<\/p>\n
If the price of oil falls below $35 it would be a 30-70 split.<\/p>\n
Law No. 8\/1971 on the state oil and gas company stipulates
\nthat Pertamina and the government would comply with such a split.<\/p>\n
The previous law, however, became obsolete with the enactment
\nof Law No. 22\/2001 on oil and gas, which stipulates that
\nPertamina's contracts will maintain the terms applied until such
\ntime as they expire.<\/p>\n
The MOU to develop the Cepu block, located on the border of
\nEast Java and Central Java, was signed on June 25 and ended a
\nfour-year dispute between Pertamina, which was represented by the
\ngovernment team throughout the negotiation, and the U.S.-based
\noil giant.<\/p>\n
The production sharing contract to develop the block will be
\nsigned by the government and a joint venture composed of
\nsubsidiaries of ExxonMobil and Pertamina, later to be called
\nPertamina Cepu.<\/p>\n
Cepu is expected to produce 170,000 barrels of crude oil per
\nday when it reaches peak production, about 18 percent of
\nIndonesia's current output.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/govt-opposes-pertaminas-requests-over-cepu-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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