Discussions to determine Cepu Block operatorship continue

Eric Watkins
Senior Correspondent

LOS ANGELES, Jan 17 -- Indonesia's State Minister for State-Owned Enterprises Sugiharto said discussions will take place this week concerning operation of the oil and natural gas fields on the Cepu Block.

ExxonMobil Corp. and state-owned PT Pertamina each have agreed to a 45% stake in the block with the remaining 10% going to the administrations of district areas where the oil block is located.

But the two sides have failed to agree on who will operate the block. Pertamina wants an operatorship that will change hands every 5 years, with itself assuming the first 5-year term, while ExxonMobil prefers to keep to a memorandum of understanding signed in June 2005 making it sole operator of the block for 30 years (OGJ Online, Dec. 12, 2005).

To help break the impasse, Sigoharto said he would meet the coordinating minister for economic affairs along with a state negotiating team to discuss the issue this week.

Sigoharto said no progress had been made in solving the matter as there were no negotiations following the Christmas and New Year holidays.

Sugiharto said the project was a high-risk investment and therefore the two companies had to clearly state what they would do in the first 5 years of the block's operation.

He said the two sides each had been told to submit programs on what they would do as operator of the block, but that only ExxonMobil had submitted such a document so far.

Meanwhile, Pertamina reportedly has rejected a plan by the government to establish a joint operating unit with ExxonMobil for the block, saying it would be impossible to have a joint operator.

Contact Eric Watkins at hippalus@yahoo.com.

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