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Exploration schedules in Cepu put into doubt
Lawmakers have put the schedule for ongoing oil and gas exploration in the Cepu block into question as the operator has yet to complete the acquisition of 250 hectares of land in Bojonegoro, East Java, where the massive block is partly located
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Lawmakers have put the schedule for ongoing oil and gas exploration in the Cepu block into question as the operator has yet to complete the acquisition of 250 hectares of land in Bojonegoro, East Java, where the massive block is partly located.
"Our visit to the block shows the exploration progress has not made much progress as previously promised by the operator," said Sutan Bhatoegana, the deputy head of House's Commission VII overseeing energy and mineral resources, during a hearing Tuesday.
Mobil Cepu Ltd. (MCL), a local subsidiary of United States energy giant ExxonMobil, is currently exploring the massive oil and gas field in Cepu block as the operator. State oil and gas company PT Pertamina owns the other 50 percent participating interest in the block.
The government is pinning its hope on the Cepu block, which at its peak was estimated to be able to produce up to 160,000 barrels of oil per day -- around 15 percent of total national production, to help boost its dwindling production.
But, up to now, it has yet to start production, while it could take for as long as two years to peak.
Exxon has said that one of the problem hampering the progress in the block is the difficulties in securing land acquisition, with many residents owning land within the block refusing to sell.
According to Wahyudin Munawir of Prosperous and Justice Party (PKS), one of the reasons behind the residents' refusal to sell is that the price offered by the company is too low.
He said the price offered by the company, Rp 75,000 to Rp 80,000 for a meter square of land, was too low. "My investigation found that the price even fell to Rp 60,000 in some areas."
Nazaruddin Kiemas echoed Wahyudin's remarks.
"The price is just not fair, while what is at stake is their land and farms," he said.
MCL vice president Maman Budiman told the hearing that the offered price ranges for the land had been reported and approved by the upstream oil and gas regulator BPMigas.
Maman did not mention whether the company would be willing to offer higher range of prices.
Bojonegoro regent Suyoto, who was also present at the hearing, said he would try to facilitate the smooth negotiation of the land acquisition program.
He did not mention how.
Discovered in March 2001, Cepu is believed to contain more than 250 million barrels of oil.
The Cepu block is expected to start producing by 20,000 barrel per day of oil in March next year from existing wells located in lands already acquired. (hwa)
