ExxonMobil likely to get Cepu contract extension
ExxonMobil likely to get Cepu contract extension
Urip Hudiono, The Jakarta Post/Jakarta
State oil and gas firm PT Pertamina is expected to extend U.S.-
based ExxonMobil Oil's contract for the Cepu block, which is
currently being negotiated.
"We appreciate what ExxonMobil has done (with the block), so
we will extend the contract, if possible, without having to wait
until the contract ends in 2010," Pertamina's chief commissioner,
Martiono Hadianto, said on Friday.
However, he said if the contract was extended, it would have
to be drawn up according to current regulations, including new
production sharing terms.
"Any contract will also have a term of 30 years," he said.
Concerning the progress of the negotiations, the head of
Pertamina's negotiating team, Rizal Mallarangeng, said both
companies were upbeat about finalizing a contract in the near
future as they neared agreement on several problems that had
stalled talks.
"We just need a few more days to match our terms and reach a
final, win-win solution," he said, adding that wrapping up the
contract was important for helping Indonesia increase its oil
production and improve its overall investment climate.
The negotiation had previously been scheduled for conclusion
on May 20.
Martiono said 11 terms remained to be negotiated, most
importantly on the production revenue split, participating
interests and work areas.
He said Pertamina would not rush to reach an agreement that in
the end would hurt the country, nor would the country speed up
talks just to finalize the contract in time for President Susilo
Bambang Yudhoyono's official visit to the United States next
week.
A senior official at the Ministry of Energy and Mineral
Resources told Dow Jones newswire that Susilo would meet with
officials of major U.S. oil and gas firms during his May 24 to
May 27 visit, offering the development of 20 new oil and gas
blocks and two natural gas pipeline projects estimated at between
US$400 million and $600 million in value.
Indonesia has seen its average oil production decline by 5
percent per year, causing the country to miss its Organization of
Petroleum Exporting Countries (OPEC) quota of 1.425 million
barrels per day (bpd) over the last three years. Indonesia is now
on the verge of becoming a net oil importer.
The Cepu block -- on the border between Central Java and East
Java and estimated to have two billion barrels of potential oil
reserves and 11 trillion cubic feet of potential gas reserves --
is expected to add about 18 percent to Indonesia's current oil
output.