Pertamina has said it will not extend the ExxonMobil's contract to operate the Cepu fields when it expires in 2010. However, Pertamina upstream deputy director Eteng A. Salam said the company was proposing other forms of cooperation, including a possible joint venture. "Pertamina will not extend the contract with Exxon after it ends in 2010. However, we are still keeping open business opportunities for ExxonMobil," Eteng said.
According to reports, ExxonMobil hoped to extend its technical assistance contract (TAC) over the Cepu oil block, which is located in Central and East Java, until 2030 after it discovered reserves in excess of 250 million barrels of oil in the block last year.
But Pertamina demanded tougher terms for the extension of the contract after the government's oil and gas research institution Lemigas found the Cepu oil block had oil reserves of about 500 million barrels, much higher than the volume claimed by ExxonMobil.
Among Pertamina's demands were cash bonuses and a greater share in the oil block. Eteng did not say whether Pertamina's decision not to extend the contract was caused by a failure to secure these demands. He would only say the decision was made because Pertamina wanted a more profitable scheme in the management of the Cepu oil block. The company has reported its decision to the board of commissioners and a final decision will be made by President Megawati Soekarnoputri.