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Exxon and Pertamina in talks to revise Cepu deal
PT Pertamina is in talks with US oil producer Exxon Mobil Corp over the possibility to revise their joint venture agreement on the Cepu oil and gas block following a complaint from upstream oil and gas regulator BPMigas
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T Pertamina is in talks with US oil producer Exxon Mobil Corp over the possibility to revise their joint venture agreement on the Cepu oil and gas block following a complaint from upstream oil and gas regulator BPMigas.
BPMigas said Pertamina’s position in the agreement was “weak”, but refused to elaborate on the perceived weakness.
Priyono, chairman of BPMigas, said the regulatory body would further study the agreement in a bid to improve it.
“We will continue evaluating the agreement. I have asked BPMigas’s deputy for operations to call both Pertamina and Exxon to discuss this matter,” Priyono said.
Spokesperson for Exxon, Maman Budiman, confirmed Friday that a negotiation was underway with Pertamina. He refused to disclose key points in the negotiation, pending the final result.
The Cepu block is located at the border between East and Central Java. The block is said to hold proven reserves of 600 million barrels of oil and 1.7 trillion cubic feet of gas. Mobil Cepu Ltd (MCL), a local subsidiary of Exxon, and Pertamina each holds a 45 percent participating interest in the block. A consortium of enterprises controlled by provincial administrations holds the remaining 10 percent of participating interest.
MCL has been appointed as the block operator.
The government has high hopes that the Cepu block can help boost national oil output which is declining with the aging of the existing oil fields. But, the development of the block has drawn strong criticisms due to repeated delays in achieving the agreed early production target of 20,000 barrels oil per day (bopd).
The block was supposed to begin contributing the 20,000 bopd since December last year, but this has yet to be realized.
“The recent production of the block is at about 18,000 bopd, but this is still unstable” Priyono said.
Maman said the output was still unstable because the production facilities now being used were still in the commissioning phase.
East Java Governor Soekarwo has also expressed disappointment over the “low production” of the Cepu block oil field, saying this has caused the provincial administration financial losses as it has not yet been able to benefit from any profits resulting from its participating interest share in the block.
BPMigas said Pertamina’s position in the agreement was “weak”.
