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)