No extension for ExxonMobil: House
Fabiola Desy Unidjaja, The Jakarta Post, Jakarta
Lawmakers have urged state oil and gas company Pertamina to negotiate a better income sharing scheme for the Cepu oil field in Central Java as a prerequisite for a contract extension past the year 2010 for U.S.-based ExxonMobil Oil.
"Unless they (ExxonMobil) are willing to change the income sharing ratio to 85:15 for Pertamina and them respectively, Pertamina should not extend the contract that is to expire in 2010," the chairman of the House of Representatives' Commission XI on financial and banking affairs Max Moein said during Monday's hearing.
The legislator pointed to the existing Technical Assistance Contract (TAC) between the companies, in which Pertamina has the right to 65 percent of the shared income.
Exxon has shown interest in extending the contract until 2030, saying the company needs more time to fully explore the oil field.
Pertamina's president director Widya Purnama told the hearing that the state firm has considered not extending the contract and is willing to open new bidding for the block should it not have funds to cover operational costs.
"The site has high potential as it can produce up to 150,000 barrels per day (bpd). Imagine how much money Pertamina can make from the site," he said.
The call for renegotiation of the contract had been addressed earlier by the House's Commission VII on mining and environmental affairs.
The oil field, located in an area on the border of Central Java and East Java, is estimated to have oil reserves of two billion barrels and gas reserves of 11 trillion cubic feet (TCF).
When asked about the huge amount of money needed to operate the field, Max said: "By 2010, we will have the money needed to run the block."
The prolonged dispute between Pertamina and ExxonMobil over the operation of Cepu block started in the early 1990s when Pertamina handed over the block to PT Humpuss Patragas under a TAC. Humpuss is owned by Hutomo "Tommy" Mandala Putra, the youngest son of former president Soeharto, who is currently in jail for ordering the murder of a supreme court judge.
In 1999, Humpuss sold its entire stake in the block to ExxonMobil Cepu. ExxonMobil asked for an extension of the current TAC until 2030 after finding huge oil and gas reserves in the area, but Pertamina rejected the request.
At the time of the hand over to Humpuss the block only produced a few thousand barrels of oil per day.