Pertamina seeks up to 20% stake in Cepu oil field

Pertamina seeks up to 20% stake in Cepu oil field

JAKARTA (JP): State oil and gas company Pertamina is seeking
to acquire an up to 20 percent stake in the planned joint venture
with United States-based ExxonMobil Oil Inc. to develop the oil
reserves of the Cepu block in Central and East Java, a company
executive said on Wednesday.

Pertamina's upstream director Gatot K. Wiroyudo said a team
from his office was still negotiating with ExxonMobil.

"Pricing for the 20 percent stake cannot be announced yet, as
it depends on many factors such as the investment target," Gatot
told Antara on the sidelines of a hearing with the House of
Representatives' Commission VIII, which oversees among other
things energy affairs.

The Cepu block is wholly owned by ExxonMobil, which develops
the block through its unit, Cepu Mobil Limited.

In April, ExxonMobil announced that Cepu Mobil had discovered
oil reserves of more than 250 million barrels in the block.

With such reserves, the block might be able to produce around
100,000 barrels per day (bpd) by the year 2004, according to
ExxonMobil's officials.

The company earlier said Pertamina had agreed to a 10 percent
participation stake in Cepu.

But, denying the statement, Pertamina's president Baihaki
Hakim demanded a greater share for Pertamina, claiming that the
Cepu block once belonged to the state company but Pertamina had
been unjustly deprived of it due to political pressure.

Cepu Mobil is developing the block under the technical
assistance contract (TAC) initially awarded to PT Humpuss
Patragas, linked with former President Soeharto's youngest son
Hutomo Mandala Putra.

Baihaki charged that Humpuss gained the block from Pertamina
in 1990 through what he called a "hostile takeover."

Following the downfall of Soeharto in 1998, Humpuss sold its
shares to ExxonMobil.

During the hearing, Baihaki also said that progress had been
made in resuming the operation of ExxonMobil's gas fields in
Arun, Aceh.

"A Pertamina and ExxonMobil advance team is currently on site.
One or two wells have begun operation, albeit on a small scale,
and in tight coordination with security personnel," he explained.

ExxonMobil suspended its Arun gas operation in mid March,
following harassment by suspected local rebel forces.

The move prompted the nearby Arun LNG plant to halt its LNG
exports to Korea and Japan.

The government has sent military reinforcements to beef up
security around ExxonMobil's facilities.

Despite reports of improving security conditions in the area,
it remains unclear when ExxonMobil will resume operation.

The company has said it would not return until security
conditions had improved such that its staff was able to work
safely.

Baihaki said he hoped ExxonMobil would be able to resume its
Arun operation by the end of June at the latest.

Despite disruption of production at Arun, Pertamina was still
able meet its obligation to Arun's customers in South Korea and
Japan by sending LNG supplies from its LNG plant in Bontang, East
Kalimantan.

But beyond June, Baihaki warned, Pertamina may not be able to
continue to supply LNG as Bontang would be running at full
capacity to meet the LNG demands of its own customers and have no
extra output to cover Arun's shortfall. (bkm)