Monday, February 20, 2006

Exxon is inches away from Cepu deal

ExxonMobil Corporation is just inches away from striking a deal in one of the biggest oil discoveries in Indonesia's history. The four-year battle to develop the giant oil and gas reserves in Cepu Block partly sealed over the weekend when Vice President Jusuf Kalla visited the site in Bojonegoro Regency with some ministers.
As both Pertamina and ExxonMobil insists to be the operator of the US$2 billion investment, Kalla said that government takes into account three issues: Technology, financial capability, and efficiency in operation. ExxonMobil, the largest oil producer in the world, would easily beat Pertamina in these fronts despite concerns on its higher costs compare to its neighbor in Sukawati field operated by PetroChina and Pertamina.
The most likely outcome will be that both companies establish a joint operating committee, a kind of joint operating body but exactly like the one implemented in Sukawati by Pertamina and PetroChina, in which Pertamina will be the CEO and Exxon as the COO. The JOC will supervise the operation to be conducted by Mobil Cepu Limited, a subsidiary of ExxonMobil, that has been there since 1999 when it acquire the fields from Humpuss Patra Gas, a company owned by Humpuss Group.

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