Pertamina may acquire greater stake in Cepu
Pertamina may acquire greater stake in Cepu
JAKARTA (JP): American-based oil and gas company ExxonMobil
Oil Indonesia Inc. may sell more than 10 percent of its stake in
Cepu's giant oil block in East and Central Java to state oil and
gas company Pertamina, according to an executive at the state
company.
Pertamina director for production-sharing contracts Iin Arifin
Takhyan said on Wednesday that ExxonMobil had indicated it was
ready to offer Pertamina more than its initial proposal of 10
percent of its stake in Cepu.
"We (Pertamina) are negotiating for a higher stake, by the end
it will come down to a compromising figure," Iin said.
Pertamina and ExxonMobil are now in talks over the ownership
composition of the Cepu block.
The American company recently announced the discovery of an
estimated 250 million barrel oil reserve in the block.
ExxonMobil officials have claimed the block may be capable of
producing 100,000 barrels per day by the year 2004.
ExxonMobil develops the field under a technical assistance
contract (TAC) between its subsidiary Cepu (Mobil) Limited with
Pertamina.
Last Month, Pertamina's president Baihaki Hakim demanded more
than 10 percent shares in Cepu for Pertamina.
Baihaki charged that Cepu's previous owner, PT Humpuss
Patragas, took over the block from Pertamina through what he
called a "hostile takeover."
TAC contracts have gained a bad reputation for often being
abused by politically well-connected businessmen to access the
oil and gas sector.
Pertamina transferred Cepu to Humpuss in 1990, which at the
time was controlled by former president Soeharto's youngest son,
Hutomo Mandala Putra.
Humpuss later sold its shares to ExxonMobil.
Natuna
Iin also said Pertamina planned to offer Thailand gas supplies
from ExxonMobil's East Natuna gas fields, located in the South
China Sea.
"Gus Dur is planning a visit there (Thailand), that's when we
want to offer them our gas," Iin said referring to President
Abdurrahman Wahid by his popular nickname.
Development of the East Natuna gas field, also known as the
Natuna D-Alpha gas project, has been postponed due to the absence
of a buyer.
Containing a high concentration of carbon dioxide, the gas
field is deemed too risky for development until Pertamina can
find a feasible market.
Iin said East Natuna has total reserves of 140 trillion cubic
feet (TCF), of which 72 percent contain carbon dioxide.
He added however that the remaining 45 TCF of gas, is still a
sizable reserve.
According to him, Malaysian state oil and gas company Petronas
is eying gas supplies from East Natuna, with early talks
underway.
Petronas had told Pertamina it might need up to 1 billion
standard cubic feet of natural gas per day by the year 2010, Iin
said.
Iin further said that Pertamina and the government were
mulling extending the production-sharing contract held by Anglo-
American oil and gas company Beyond Petroleum (BP) on the Kangean
gas field offshore Madura, East Java.
BP is seeking an early extension of the contract which expires
in 2010 he said.
He said BP was interested in supplying gas from its Kangean
gas field to cover a predicted gas shortage by the year 2004 in
East Java.
However, he added, without a contract extension of at least
another 20 years, this project would be unfeasible.
The investment cost is estimated to run at $300 million, for
which the remaining 10 years of BP's contract is too short to
make a feasible return.
Iin said Pertamina and the government understood the reason
behind BP's request, but they feared they would raise suspicion
of corruption by meeting the company's request.
He said a decision was hard to make, as an early contract
extension wouldn't look good, "politically".(bkm)