Exxon upbeat on Cepu production schedule

The Jakarta Post, Jakarta | Thu, 12/04/2008 10:48 AM  

PT Mobil Cepu Ltd. (MCL), the subsidiary of energy giant ExxonMobil that operates the Cepu oil and gas block, has now ensured that the yet-to-be-completed land acquisition of 250 hectares in Bojonegoro, where the block is partly located, will not disrupt reaching its first oil production target by Dec. 10. 

Exxon Indonesia spokesperson Deva Rachman said Wednesday MCL was now making its final preparations on its first oil production plans with state oil and gas firm PT Pertamina, its partner, and local and central government, in order to meet the schedule. 

On Tuesday, MCL reported to House commission VII, which oversees energy and mineral resources, on starting its first oil production on Dec. 10 despite problems in acquiring land within the block owned by residents. 

"The first production site will produce less than a thousand barrel per day (bpd), soon increasing to 20,000 bpd by March next year," said MCL vice president Maman Budiman during the hearing. 

According to Maman, the company would stick to its schedule of producing up to 100,000 bpd by 2010 and 165,000 bpd by 2012. At its peak, the block's production will represent around 15 percent of total national oil output. 

Discovered in March 2001, the Cepu block is believed to contain reserves of more than 250 million barrels of oil. 

Lawmakers, however, had put the company's schedule into doubt when they found that MCL had yet to complete the acquisition of 250 hectares of land in Bojonegoro, East Java, where the main production facility for the block will be built. 

Bojonegoro regent Suyoto told The Jakarta Post Wednesday that his administration would be more than willing to help facilitate the negotiations. 

"We are ready to facilitate the negotiations if they ask us," he said. 

"It seems like negotiators from MCL could not yet make smooth deals with the local people. Land owners tend to increase the prices when they know there is oil beneath their land." 

Even the 20-hectare land site where the first oil production would come from on Dec. 10 did not belong to MCL., he said. MCL is only renting it from the Bojonegoro administration. 

MCL said it had prepared a budget of Rp 10.8 billion (US$869,546) for the acquisition of the 250 ha of land. 

Sutan Bhatoegana, the deputy head of House Commission VII, agreed that mediation from local government would help settle the land acquisition sooner. (hwa)