Govt steps in to settle Cepu block row, again
Rendi A. Witular, The Jakarta Post, Jakarta
The government has decided to once again try to help unlock the stalled negotiations between U.S. oil giant ExxonMobil Corp. and state-owned oil and gas firm PT Pertamina over who will be in charge of managing the oil-rich Cepu block.
A special interministerial negotiating team, which in June managed to get both firms and the government to seal a deal for developing the block ending a four-year dispute, has been reactivated to settle the row, said State Minister of State Enterprises Sugiharto on Wednesday.
"The previous interministerial team is now tasked with helping Pertamina and ExxonMobil to settle the operatorship issue. I may say this will no longer be a business-to-business settlement," Sugiharto said.
Sugiharto said the composition of the team would be the same, except for its chairman Martiono -- Pertamina's chief commissioner -- who has been replaced by Roes Aryawidjaja, a Pertamina commissioner and deputy state minister of state enterprises.
Other members of the team include Pertamina commissioners Muhammad Abduh and Umar Said, Pertamina president director Widya Purnama, Pertamina vice president director Mustiko Saleh, and the Ministry of Finance's director for oil and gas revenue, Sahala Lumban Gaol.
Also on the team are Lin Che Wei, an expert advisor at the Office of the State Minister for State Enterprises, Mohammad Ikhsan, an expert advisor at the Office of the Coordinating Minister for the Economy, and Rizal Mallarangeng, a political analyst.
Sugiharto said the team had recently come up with a possible solution to the deadlock involving Pertamina and ExxonMobil setting up a joint-venture company to specifically operate the block based on a 50/50 arrangement.
"There has been progress made by the team. We have come up with another option aside from the previous one involving alternating turns as operator every five years ... I am optimistic the issue can be settled soon," he said.
The government-sanctioned team managed to get ExxonMobil and Pertamina 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.
At its peak, the block is expected to produce up to 170,000 barrels of oil per day (bpd) -- roughly 17 percent of the country's current annual oil output.
After the deal, optimisms was high that exploration of the block would begin quickly without the need for government assistance in the negotiations for a joint operating agreement (JOA) between Pertamina and Exxonmobil.
However, talks over the JOA have become deadlock with each side holding out for principal control of the block.
Under the memorandum of understanding (MOU) signed in June by the two companies and the government-sanctioned team, ExxonMobil would have the right to become the sole operator of the block for the entire duration of the contract.