Indonesia threatens to seize oil field
(Why the biggies need to keep their profits when they can, it ain't easy dealing with the third world countries)
Tuesday November 15, 7:30 am ET
JAKARTA (Reuters) - Indonesia threatened on Tuesday to take over the $2 billion Cepu oil block unless Exxon Mobil Corp. (NYSE:XOM - News) and state oil firm Pertamina resolve a row by the end of the year over who will operate the resource-rich field.
"If there is not an agreement, then we can take it over and give it to someone else," chief economics minister Aburizal Bakrie told reporters in comments overshadowing one of Exxon's 10 biggest global undeveloped projects.
"We hope that at the latest, this is resolved by the end of the year."
The row centers over who will operate the field on Java island.
Pertamina has said it wanted the role of operator to be rotated among the two entities but says Exxon rejects this.
The disagreement is holding up follow-through on the closely watched deal, which the government signed in September with Pertamina and Exxon, to develop the block for 30 years.
Cepu, which Jakarta estimates could hold more than 500 million barrels of recoverable oil and produce up to 180,000 barrels per day, could boost waning production by Asia's only OPEC member by 20 percent.
Separately, State Enterprises Minister Sugiharto said there was still time to negotiate, reiterating the government wanted the parties to jointly operate the field.
"Drafting on the legal aspects has to be in-depth. In business, this is normal," he said.
A final agreement on key issues such as the production split and share interests was reached in September with active government involvement but until now Jakarta had appeared to have stepped aside from the current negotiations.
Pertamina and Exxon hold equal 45 percent stakes in Cepu, with the remaining 10 percent going to the regional government.
The government has projected Cepu would begin production in 2008 after an estimated $2 billion in investment, but that date may be pushed back if negotiations drag on.
Under a previous scheme, Exxon Mobil was operator of the block under a technical assistance contract with Pertamina that expires in 2010, and has been negotiating for four years to extend the contract and begin development.
Cash is King until further notice!!!
My comments on companies are usually my opinion of long term success (years). The PPS may go up or down greatly in the meantime depending on the number of greedy suckers with money.
