Pertamina board survives, Cepu deal follow-up urged

Pertamina board survives, Cepu deal follow-up urged

Leony Aurora, The Jakarta Post, Jakarta

Top executives at the state oil and gas firm PT Pertamina are
holding on to their seats, despite lingering reports of a shake-
up in the firm's top brass to smooth the way for the Cepu block
contract.

At the firm's shareholders meeting on Thursday, president
commissioner Martiono Hadianto confirmed that a reshuffle of the
board of directors or performance appraisal was not on the
agenda.

"According to the regulations, (the board's) performance may
only be assessed after an audited (financial) report," Martiono
said.

Pertamina has yet to have its financial reports from the last
quarter of 2003 to the first quarter of this year audited as the
company's initial capital has not been established, pending the
completion of its assets revaluation.

Speculations were rife that president director Widya Purnama
would be replaced, as, reportedly, he did not agree on the
memorandum of understanding (MoU) reached by a government-
sponsored negotiating team and ExxonMobil on the development of
the Cepu block last week.

Media reports say that candidates for Pertamina's top seat
included Martiono, Ministry of Energy and Mineral Resources
Director General of Oil and Gas Iin Arifin Takhyan and Gita
Wirjawan from JP Morgan Chase Bank Indonesia.

Martiono said that the meeting approved the participating
interests of Pertamina and Exxon in the block.

"It tasked the board of directors to follow up the MoU to make
it a binding contract within 90 days after June 25," he added,
referring to the signing date.

Several items that need to be drafted include a joint
operation agreement -- between Exxon with 45 percent of
participating interests, Pertamina (45 percent) and local
administrations (10 percent) -- production sharing contract.

Pertamina also has to form a new subsidiary to manage the
block.

Separately, Pertamina's vice president Mustiko Saleh said that
the management would do whatever was concluded in the meeting and
would follow up the deal.

"We will make sure that the government, as well as the
company, benefit as much as possible (from the deal)," he said.

The Indonesian negotiating team, led by Martiono but without
any Pertamina directors as members, has agreed that Exxon will
get between 6.75 percent and 13.5 percent from total output,
depending on oil prices. Pertamina will get a similar share.

Exxon has worked on the Cepu block under a technical
assistance contract (TAC), which expires in 2010, with Pertamina
and gets 35 percent of output. The new oil and gas law has
eliminated this kind of contract.

The two parties had previously agreed to divide equally the 40
percent of oil output they get from the government after 2010.

However, last year, after Widya took the top seat in
Pertamina, the state firm canceled the deal and indicated that it
would develop the untapped oil-rich block itself.

Meanwhile, Martiono said that Pertamina would prefer that the
liquefied natural gas (LNG) plants in Bontang, East Kalimantan,
and Arun, Nanggroe Aceh Darussalam, not be calculated among its
assets.

"The board of directors and commissioners have agreed that we
will retain only productive assets," said Martiono.

The Pertamina and energy ministry's teams have completed the
revaluation of assets, estimated to be Rp 124.6 trillion
(US$13.03 billion). The final say is with the Ministry of
Finance, which is still studying the assets.