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Cepu block row over pipeline licence to be settled soon
The central government and the regent of Tuban, the administrative area covering part of the huge Cepu oil and gas block, expect to resolve a dispute over a pipeline installation licence within three weeks
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The central government and the regent of Tuban, the administrative area covering part of the huge Cepu oil and gas block, expect to resolve a dispute over a pipeline installation licence within three weeks.
Tuban's regent Haeny Relawati said Tuesday she and the central government had set this time line for resolving the license problem, which has contributed in part to at least a four month delay in the early production plans for the block.
"The Energy and Mineral Resources Ministry and BPMigas (upstream oil and gas regulator) will give all necessary documents within seven days. Then, we will need ten days to verify the documents," Haeny said after a closed meeting with Evita H. Legowo, director general for oil and gas at the ministry, and BPMigas's chairman R. Priyono.
The Cepu block was earlier expected to begin producing up to 20,000 barrels of oil per day from January this year. But, as of today, the block has yet to reach this target.
In a hearing with lawmakers two weeks ago, BPMigas's chairman R.Priyono blamed the regent of Tuban for the delay, saying the regent had yet to issue a license required for the installation of a ten kilo-meters length of pipeline.
According to BPMigas, the Cepu block needs a total of 37 kilometers of pipeline to channel the oil from the block's central processing unit to an offshore floating storage facility. About 10 km of this pipeline passes through the Tuban regency.
Haeny said her administration had not issued the licence as the block's operator, Mobil Cepu Ltd, a local subsidiary of US energy giant ExxonMobil, had failed to provide certain legal documents.
"We want the operator to give us an official document stating it has received official approval to build a pipeline in the area," said Haeny, adding that, she feared legal problems in the future if she issued the license without such documents.
Evita said government could not disclose details of the production sharing contract with the operator. "But, we think that maybe we can submit an official appointment letter from the ministry. The letter may quote parts of the contract," she said.
Despite progress on the dispute, the plan to include the Cepu block planned early production output of 20,000 bopd in oil output and state revenue figures for this year will probably not happen, due to delays.
BPMigas's planning deputy Achmad Luthfi had said the failities required to ensure early production targets to produce 20,000 bopd would only be completed in August.
