Government hopes to end Cepu row
Government hopes to end Cepu row
Rendi A. Witular, The Jakarta Post/Jakarta
The government hopes to soon resolve a serious contract row over
the Cepu oil block in Central Java between state oil and gas firm
PT Pertamina and U.S. oil giant ExxonMobil.
Coordinating Minister for the Economy Aburizal Bakrie said on
Friday at the State Palace that there was "progress in the
negotiations" with the government offering ExxonMobil less than a
15 percent stake in the contractor allocation split.
The government will have an 85 percent stake in developing the
project, with the remaining 15 percent allocated for the field
contractor, in this case Pertamina and ExxonMobil.
At present, ExxonMobil and Pertamina are still negotiating
their split of the 15 percent allocation.
"We expect to wrap up the negotiation soon. The government
remains firm on its stance to offer ExxonMobil a lesser share
than the usual, that is, less than 15 percent," Aburizal said.
The minister made the remark after accompanying the
government's negotiating team to report the progress on the
dispute settlement to President Susilo Bambang Yudhoyono.
He said Susilo agreed that the negotiation should continue and
that it should immediately produce results, since the country has
a shortage in investment in the oil and gas sector.
"The President suggested that the team seek the best solution
for the dispute," he added.
Meanwhile, the negotiating team head Martiono said one of the
main stumbling blocks in the negotiation was the percentage share
for ExxonMobil from the 15 percent allocation for the contractor.
"There are 11 items that have still not been agreed upon.
However, the most daunting task of all is the split. If this is
settled then the remaining items will be easier," he said.
Pertamina and House of Representatives Commission VII for
energy and mining agreed on Wednesday to oppose any outcome
resulting from the negotiation, pointing to the questionable
establishment of the negotiating team.
A day later, Vice President Jusuf Kalla told legislators not
to interfere in the government's domain, insisting that talks
over the dispute would go on for the sake of the people's
welfare.
The Cepu block -- which is located on the border of Central
Java and East Java and owned by Pertamina but operated by
ExxonMobil Indonesia under a technical assistance contract -- has
vast oil reserves.
However, ExxonMobil has stalled the development of the Cepu
block since 2001 to seek an extension to its contract which is
set to expire in 2010, as well as a greater share in the block.
The block is estimated to have two billion barrels of
potential oil reserves and 11 trillion cubic feet of potential
gas reserves, which is expected to increase Indonesia's oil
output by 18 percent. Output has been declining over the last
five years.