Jakarta Props ExxonMobil Joint Venture on Disputed Oil Field

More oil to be controlled by another unstable Islamic country.
---BumbleBeeBoogie

Jakarta Proposes ExxonMobil Joint Venture on Disputed Oil Field
The Associated Press
Published: Sep 1, 2003

JAKARTA, Indonesia (AP) - Indonesia has proposed that U.S. energy giant ExxonMobil and state-owned oil company Pertamina jointly develop a huge oil field that is the center of a dispute between the two companies.
Energy Minister Purnomo Yusgiantoro told reporters Monday that Pertamina planned to raise money through bonds and other sources to help fund part of the field's development costs.

"Pertamina has proposed a 50-50 joint venture," he said.

Cepu Field, situated on Java island, about 300 miles southeast of Jakarta, has become a battleground between ExxonMobil, which has a contract to develop it until 2010, and local politicians that want Pertamina to take control.

Deva Rachman, a spokeswoman for ExxonMobil, said the company could not immediately comment on the joint venture proposal.

The U.S. company has found 600 million barrels of proven crude reserves since it won a 10-year contract from Pertamina in 2000 to develop the field. ExxonMobil says it has spent $400 million on the site so far and is willing to invest a further $2.6 billion to get the oil pumping, but will only do so if its contract is extended.

Negotiations have stalled over Pertamina's demand for a half share in the project. ExxonMobil has said it's willing to agree to Pertamina's demands, but only if the state-owned company puts in half the development costs.

Pertamina spent nearly 30 years searching Cepu without making any major finds. ExxonMobil used deep-drilling equipment to discover the major oil reserves. Pertamina claims ExxonMobil concealed important information about Cepu before the current contract was signed.

ExxonMobil's discovery of the Cepu reserves are significant for Indonesia, which risks becoming a net importer of crude due to slow development of new projects. The country currently has about 5.1 billion barrels in total proven reserves, probably enough to last about 10 more years, according to industry estimates.