Pertamina, Exxon reach initial deal on Cepu<\/p>\n
Fitri Wulandari, The Jakarta Post , Jakarta<\/p>\n
State oil company Pertamina has reached a preliminary
\nagreement with U.S.-based ExxonMobil Oil on the extension of a
\ncontract to operate the Cepu oil and gas block, a Pertamina
\nofficial said on Thursday.<\/p>\n
Pertamina Upstream Director Bambang Nugroho said Pertamina and
\nExxonMobil Oil Indonesia had negotiated that they would work
\nunder a Special Working Contract.<\/p>\n
Under the scheme, the government would receive 60 percent and
\nthe remainder would go to Pertamina, which would split its share
\nwith ExxonMobil.<\/p>\n
However, Bambang declined to give details on ExxonMobil's
\nsplit.<\/p>\n
\"We have completed points in the head of agreement (HoA),
\nwhich is awaiting approval from the (Pertamina) board of
\ncommissioners and the shareholders,\" Bambang told reporters after
\na hearing with House of Representatives Commission VIII that
\noversees energy affairs.<\/p>\n
Bambang said the board of commissioner and shareholders would
\ngive its approval on the split as well as the extension of
\nExxonMobil's technical assistance contract (TAC) on the block,
\nwhich expires in 2010.<\/p>\n
ExxonMobil declined to comment on the matter.<\/p>\n
\"ExxonMobil hopes to have an equitable agreement in the near
\nfuture, but we don't have an announcement at the moment,\"
\nExxonMobil spokeswoman Deva Rachman told The Jakarta Post.<\/p>\n
Pertamina and ExxonMobil have been locked in a prolonged
\ndispute over the operation of the Cepu block located in the
\nborder area between Central and East Java, which is estimated to
\nhave two billion barrels of potential oil reserves of and 11
\ntrillion cubic feet (TCF) of potential gas reserves.<\/p>\n
In the early 1990s, Pertamina handed the block over to PT
\nHumpuss Patragas under a TAC. Humpuss is owned by Hutomo \"Tommy\"
\nMandala Putra, the youngest son of former president Soeharto.<\/p>\n
In 1999, Humpuss sold its entire stake in the block to
\nExxonMobil Cepu. ExxonMobil asked for an extension of the current
\nTAC until 2030 after finding huge oil and gas reserves in the
\narea.<\/p>\n
Pertamina has opposed the demand.<\/p>\n
Under the current TAC, ExxonMobil is only obliged to provide
\nPertamina with a Cepu block output equal in volume to that last
\nproduced by the state company. At the time of the handover to
\nHumpuss, the block only produced a few thousands of barrels of
\noil per day.<\/p>\n
Minister of Energy and Mineral Resources Purnomo Yusgiantoro
\nsaid he had received a report on the completion of the
\nnegotiation and the split production scheme for the Cepu block.<\/p>\n
However, he said the ministry was still studying the report.<\/p>\n
\"The split should be profitable for the state,\" Purnomo said.<\/p>\n
While declining to give details on the contract, Bambang said
\nthe agreement would provide Pertamina returns of up to 44 percent
\nof the net operation value.<\/p>\n
As a partner to the scheme, Pertamina must share the
\ninvestment costs ExxonMobil has already put in the block.
\nExxonMobil claimed to have spent US$400 million, but Pertamina
\ndoubted the figure.<\/p>\n
Bambang said an audit was in progress to ascertain the amount
\nof investment.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/pertamina-exxon-reach-initial-deal-on-cepu-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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