Indonesia Fights With ExxonMobil

Indonesian oil firm Pertamina insists on being joint operator of Indonesia's $2 billion Cepu oil block, and talks with Exxon Mobil are still deadlocked, the company's chief said on Wednesday.

Widya Purnama told reporters that Exxon was sticking to its demand to be sole operator of the block during the 30-year contract period.

Exxon has said it was the rightful operator of Cepu on Java island under an initial accord signed this year that Purnama described as non-binding and no longer valid. The two sides have an equal 45 percent stake in Cepu, the OPEC member's biggest oil discovery in decades.

Chief economics minister Aburizal Bakrie last week threatened to wrest Cepu from Exxon and Pertamina if they failed to work out by the year-end who would operate a project the government had hoped to hold up as a banner foreign deal.

The threat also casts a pall over one of Exxon's 10 biggest undeveloped oil finds and Indonesia's attempts to stem declining output. Cepu is expected to ultimately produce up to 180,000 barrels per day, raising Indonesia's production by 20 percent.

Purnama said Exxon's insistance on being operator in accordance with a Memorandum of Understanding signed earlier this year was irrelevant.

"Exxon has always talked about the MoU. However, the MoU is a non-binding agreement, so it is no longer valid after we signed the agreement with the government in September," he said.