Govt plans to extend Exxon's Cepu contract

Govt plans to extend Exxon's Cepu contract

Dow Jones, Singapore

Indonesia's new government plans to grant Exxon Mobil Corp. a
long-delayed extension of its contract to develop a giant oil
field and resolve other disputes with foreign investors, the
Financial Times reported on its Web site, citing the country's
chief economics minister.

Aburizal Bakrie, coordinating minister for the economy, said
the government has ordered Pertamina, the state oil and gas
company, to restart negotiations with the U.S. energy company
over the massive Cepu field in the island of Java, the FT
reported on Monday.

The talks, which have been stalled since June by Pertamina's
refusal to negotiate, are aimed at developing joint production
operations at Cepu, the FT reported.

Aburizal said the new government wants to resolve Cepu and
other disputes involving international companies in a show of its
commitment to improving Indonesia's investment climate.

He said President Susilo Bambang Yudhoyono planned to raise
the Exxon Mobil case as well that of Karaha Bodas, a U.S. power
investor, during a meeting with President George W. Bush at the
Asia-Pacific Economic Cooperation summit in Chile later this
month.

The new deal with Exxon Mobil, he said, would be built around
an agreement discussed in June in which the U.S. company promised
to pay US$125 million to Pertamina in exchange for a 20-year
extension of the current exploration contract, which expires in
2010. That agreement stalled when Pertamina's government-
controlled supervisory board refused to sign it, the report said.

A new management appointed in August also rebuffed Exxon.

Aburizal said Pertamina would now have to work with Exxon
Mobil, although he wanted to see a greater role in production for
Pertamina in any new deal.

Exxon Mobil has said it would invest more than $2 billion in
the Cepu field, the report said.