Pertamina's management retained, Cepu deal followup 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.