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.