0 Govt says delay behind Exxon’s boss replacement

The delays in the long-awaited Cepu oil block in East Java, operated by ExxonMobil Indonesia, is one of the main reasons behind the government’s decision not to renew the tenure of the firm’s president director Richard J. Owen, an Indonesian official has said. The upstream oil and gas regulatory special task force SKKMigas operations deputy Gde Pradnyana told The Jakarta Post on Monday that the project was expected to be completed in May 2014 and would subsequently boost the country’s dwindling oil production. “However, under Owen’s tenure, the project might be pushed back to September 2014. 

This is a major project and the government is relying on it, thus another delay has worried us,” he said in a telephone interview. Gde said that the Cepu project, which previously had been expected to start in 2008, then delayed to 2011, had already been delayed during the tenure of Owen’s predecessors. The official attributed the US-based oil and gas giant ExxonMobil’s subsidiary’s failure to communicate with land owners around the Cepu block area as one of the main reasons behind the delays. 

“The clock is ticking and those expatriates continue to receive paychecks while the project continues to be delayed. Perhaps this is not entirely Owen’s faults but since he is the leader, we decided not to grant an extension of his contract,” Gde said. SKKMigas, he added, expected Owen’s replacement to speed up the project’s completion. Crude oil production in Indonesia has decreased from 1.3 million barrels per day (bpd) in early 2000 to 900,000 bpd in 2011 as the country has yet to unearth new hydrocarbon reserves. 

President Susilo Bambang Yudhoyono’s administration has set an ambitious target of raising Indonesia’s crude oil production to 1 million bpd in 2014 through the development of the Cepu block. Cepu’s peak production is projected to reach 165,000 bpd. Separately, ExxonMobil Indonesia’s vice president for public and government affairs, Erwin Maryoto, rejected the regulator’s statement claiming that the Cepu block had always been projected to hit production levels of above 150,000 bpd by the end of 2014. Erwin said that ExxonMobil had solved most of the land acquisition problems and had received support from regional administrations including the Bojonegoro authority in resolving the issues.

source : the jakarta post