ExxonMobil insists on holding Cepu operatorship
The Jakarta Post Jakarta
U.S. oil giant ExxonMobil Corp. has vowed to fight for the operatorship of the oil-rich Cepu block following a recent move by the government to revive the negotiating team to end the continuing tug-of-war between the company and state oil firm Pertamina.
ExxonMobil Oil Indonesia Inc. president director Peter J. Coleman told reporters here on Sunday that his company would continue to stick to the memorandum of understanding (MOU) signed in June by the two companies and the government-sanctioned negotiating team that granted ExxonMobil the right to be the sole operator of the block for the entire duration of the contract.
"ExxonMobil will continue to hold out that position (as sole operator)," Coleman said. "Let's go back to that (MOU), that's the basis, and we are ready to move forward."
"We are committed to continuing to negotiate; we are committed to trying to understand that Pertamina has concerns with the proposal we have put forward."
Based on the proposal, which ExxonMobil considered to be consistent with the MOU, Pertamina and ExxonMobil would be equally represented in a supervisory body to Mobil Cepu Ltd. (MCL), which ExxonMobil established to build and operate Cepu.
The supervisory body would oversee MCL and have authority in approving budgets and major expenditures.
Pertamina, however, was apparently unhappy with this proposal, and wants a larger role in the operational side.
Responding to Pertamina's concerns, ExxonMobil, according to Coleman, offered Pertamina some senior positions in MCL, including as deputy manager of the development process, who would be the second-in-charge of the operation.
Pertamina was again unhappy, and even demanded that it be given operatorship status. Pertamina had also said that ExxonMobil could no longer demand sole operatorship as the MOU had expired, arguing that it was valid only for 90 days from the day of signing.
But ExxonMobil maintains that the MOU was still valid, noting that the 90-day stipulation was for Pertamina to report to an inter-departmental steering committee which oversees Pertamina in the negotiation. Exxon does not report to the steering committee.
To break through the new stalemate, the government has decided to revive the special inter-ministerial negotiating team, which in June managed to get both firms to sign an MOU to develop the block, ending a four-year dispute.
The team also managed to get the two companies to sign a production sharing contract with the government on Sept. 17 to develop the US$2.6 billion Cepu block, which contains estimated reserves of 500 million barrels of crude oil.
This time, according to State Minister of State Enterprise Sugiharto said, the team would settle the operatorship issue.
One possibility in settling the dispute, according to Sugiharto, would be to establish a joint venture company to build and operate Cepu, but this idea was rejected by ExxonMobil.
Coleman argued that establishing such a joint-venture company would just "delay the project" as it would take longer to get the legal work done as well as to recruit new employees.
More importantly, Coleman said, "It's a matter of accountability. We feel that if there is one company, that company will be accountable for the results. When that company is ExxonMobil, ExxonMobil worldwide will be accountable for those results. We will bring in all resources from around the world, i.e. technology and people, to make sure that the company delivers."