PEPC in Partnership with ExxonMobil and Badan Usaha Milik Daerah (BUMD) Manage the Cepu Block

On 17 September 2005, an agreement was entered for a Cooperation Contract (KKS) of Cepu Block between BPMIGAS on behalf of the Government and the Contractor which was Mobil Cepu Ltd. (MCL) and Ampolex (Cepu) Pte. Ltd. (both are subsidiaries of Exxon Mobil) and PT Pertamina EP Cepu (PEPC) with a contract period of 30 years. The composition of Participating Interest (PI) of each party is 50% MCL and Ampolex and 50% PEPC. The composition of PI was subsequently changed after the signing of a supplementary agreement of KKS on 30 October 2008 and on 26 February 2009 to include four regional government-owned companies (BUMDs) represented by a Cooperation Body as one of the PIs with 10% participating interest. Therefore, the composition of PI became 45% Pertamina EP Cepu, 45% MCL and Ampolex, and 10% BUMD.

To manage the oil gas activities in the Cepu Block KKS, a Joint Operating Agreement (JOA) of the Cepu Block, following a lengthy process, was signed on 15 March 2006 by MCL, Ampolex and PEPC effective retroactively as of 17 September 2005. The JOA also stipulates that MCL is appointed as the Cepu Block Operator.

First Oil from the Banyu Urip Filed under a Scheme of Early Production Facility(EPF)

Since 2006, the operational activities of PEPC in Cepu Block effectively commenced with three main activities which are exploration activities, development activities of Banyu Urip oil field and planning activities of the development of Jambaran - Cendana gas field. On 31 August 2009, BPMIGAS declared the First Commercial Production for the oil production of Banyu Urip Field with an average production of 5,000 BOPD. To this day, the Project is called the Early Production Facilities (EPF) and produces an average of 29,000 BOPD.

Chairul Tanjung Inaugurates the Banyu Urip Production Facility

The Coordinating Minister for Economic Affairs, Chairul Tanjung (CT) inaugurated the production facilities of oil and gas field in Banyu Urip, Cepu and other ESDM projects in the District Gayam, Bojonegoro, Wednesday (10/08/2014) afternoon

The inauguration was also attended by the Deputy Minister of Energy, the Secretary-General and Director General of Energy, Chairman of SKK Migas, the BPH Migas, the Board of Directors of SOEs, Pertamina, PLN and several directors of private companies from the Bojonegoro area (local) or from outside the Bojonegoro.According to CT, the President himself would have wanted to inaugurate projects in oil and gas and electricity sectors, which involved an enormous amount namely Rp100 trillion."Pak SBY actually wants to be there in person. It's been tabled several times but the situation does not make it possible," he said.He continued, while at Juanda Airport, the President inaugurated the Cepu project and also had discussions with the National Energy Board on the advantages and disadvantages. The plan involved about 10 oil and gas projects that will be unveiled, two places for oil and gas and eight related to electricity."Gas and electricity are something hot in this country. Because the largest subsidy in the country originate from there," he explained.Chairul also added, production and consumption of oil and gas production are far from balanced. Oil consumption reached 1.3 million barrels per day while production only reached 800,000 barrels per day."It shows that the decline forced to import huge quantities," he added.During the inauguration today, Banyu Urip Cepu was able to produce 30,000 barrels of oil and the planned peak production in 2015 is expected to reach 165,000 barrels a day.

Formal Ceremony on the Mooring Tower for the Banyu Urip Oil Field

The Banyu Urip Field Development Project has progressed significantly. Such progress is evidenced by the completion of the mooring tower, an event that was inaugurated by Mr. Muliawan, the Deputy for Operations Management of the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) on Friday 19 September 2014. The inauguration of the mooring tower construction took place in Sumuranja, Pulo Ampel, Serang, Banten, attended by Mr. R.P. Yudantoro, Director for Operations of PT Pertamina EP Cepu, Mr. Dan Wieczyinski, the Project Executive of Mobil Cepu Ltd., Mr. Hadi Ismoyo, Head of the Badan Kerjasama PI Blok Cepu and representatives from Pertamina Upstream. The mooring tower will be dispatched to Tuban, East Java to complement the development of the Banyu Urip oil and gas project development at Cepu Block, located in Bojonegoro, East Java, which has reached more than 90% on the third week of September 2014.The mooring tower is a series of steel construction in the Banyu Urip Project EPC-3 construction project which constitutes a portion of the infrastructure to distribute oil offshore to the Gagak Rimang FSe which had been previously been inaugurated and will be moored to the tower structure that is buried in the seabed. The design is such that it will allow the vessel to move in the direction of the winds, waves and sea current without impeding the oil flow from the inlet pipe. Mr. R.P Yudantoro, the Director for Operations of PT Pertamina EP Cepu expressed his appreciation for the completion of the mooring tower at it constitutes an essential tool in sustaining the oil and gas production in Banyu Urip. The completion of the mooring tower and its prompt arrival in Tuban are expected to drive the EPC-1 to immediate completion.Mr. Muliawan, the SKK Migas Deputy for Operations Management stated that the completion of the mooring tower will provide leverage to the production increase from the Banyu Urip Field, which is the backbone of the targeted achievement of oil production in the State Budget for 2015 of 845,000 bopd "Due the importance and strategic nature of the Banyu Urip Development Project to the upstream oil and gas sector in particular, and to the Indonesian nation in general, all parties stakeholders are expected to give their full support for the project to run as planned" he said. With current production capacity of 30,000 bopd, production from the Banyu Urip Field will increase in stages to reach its peak of 165,000 bopd in 2015.

Production From The Cepu Block Increased By 10,000 Bopd Through The Early Oil Expansion (Eoe) Program

Indonesia deserves to be proud. In the midst of a shortfall and difficulties to meet the national energy demand, the Cepu Block in October 2014 increased its production by 10,000 BOPD from 30,000 BOPD to 40,000 BOPD. Previously, the production had stood at 30,000 BOPD which had been obtained from the Early Production Facility (EPF) of Well Pad - A in the Banyu Urip field. Similar to the EPF program, the additional 10,000 BOPD were also obtained from a new program initiated by PT. Pertamina EP Cepu (PEPC), namely the Early Oil Expansion (EOE), that is, producing oil from Well Pad - C by using production facilities leased from a third party. This event was revealed by the President Director of PT Pertamina EP Cepu, Amril Thaib Mandailing. He said that the EOE Proposal had been accepted by all the parties composing the Cepu Block PSC Consortium, following a tortuous process and finally leading to SKK Migas approval. The EOE program commenced in July 2014 covering activities of permits arrangement, sourcing, engineering and other actions. Despite the many hurdles, the EOE program led to a production of 10,000 BOPD on 23 October 2014."The EOE program was undertaken by activating 3 new oil production wells from the Banyu Urip Wellpad C namely C03, C04 and C06. Fluid from the said production wells was processed using production facility units leased from a third party with a capacity of 10,000 BOPD. Such production facilities were capable of processing well fluid to obtain oil with a quality that meets the specifications required by the buyer as stipulated in Crude Sale Agreement (CSA)", he added.The EOE started on 23 October 2014 with 2,000 BOPD following the signing of the Official Report on the validation of the metering system as the point of sales for the crude oil by the Directorate-general for Oil and Gas and SKK Migas on 22 October 2014. Production increased gradually, reaching 10,000 BOPD on 30 October 2014.The production increase from the Cepu Block through the EOE as initiated by PEPC will generate raised revenue to Pertamina in excess of US$ 13.5 M per month (45% PEPC Share). This EOE program is set to last 8 - 14 months.