Petroleum

Petroleum The recent discovery of oil and gas fields in the area is providing new economic opportunities. The oil/gas fields are found in several locations, including Banyu Urip, Alas Dara, Alas Tua West, Alas Tua East, Jambaran, Cendana (ExxonMobil 45%, Pertamina 45%, local companies 10%) - under Joint Operating Agreement) and Sukowati (Operated under Joint Operating Body - Petrochina Pertamina East Java). The Banyu Urip oil and gas field has provenoil reserves of over 250 million barrels, with peak production of about 165,000 barrels per day, accounting for 20 percent of the present national crude oil production.[17] The main exploration started officially when a cooperative contract signed on September 17, 2005 with Mobil Cepu Ltd., a subsidiary of ExxonMobil as main operator. A Joint Operation Agreement (JOA) between state oil company Pertamina was signed in March 2006. Pertamina and ExxonMobil concluded 30-year production-sharing contract in which each company would share 45 percent interest in the block. The remaining 10 percent would go to the local governments.[18] Foreign companies, mainly from China, have started to invest in Bojonegoro in various projects related with the planned exploration and exploitation of the Cepu Block oil fields with total value of US$8 million.[19] According to the former minister and ambassador to the United States, Dorodjatun Kuntjoro-Jakti, Tuban and Bojonegoro would resemble Texas, because of its gas and oil resources.[20] Communities in Bojonegoro has benefited from community development projects by foreign companies like ExxonMobil, which have built houses of worship, schools, community health centers, and infrastructure.[21] However, oil production is becoming a source of controversy. A number of Regional Representatives Council (Dewan Perwakilan Rakyat, DPD) members grouped in the People's Front for the Salvation of the Cepu Block (GRPBC) have called for the cancellation of the Joint Operation Agreement (JOA) between the government and ExxonMobil on the Cepu Block oil fields. They demand it to be cancelled because the agreement had been signed "in an atmosphere rife with suspected corruption, collusion and nepotism, and on the basis of a public lie" and will make the Indonesian government lose US$1.32 billion of revenue. [22] And Now, New Bojonegoro Leader (Bupati Bojonegoro) are waiting for new re-agreement with ExxonMobil to avoid corruption, collusion and nepotism. Oil exploration and production activity has also caused several accidents. On August 31, 2006, a gas leak in Sukowati-5 oil well (Operated by JOB Pertamina Petrochina East Java) released hydrogen sulfide gas to residential areas. At least 16 villagers had to be treated for suffocation because of the gas inhalation.[23] The environmental effects of the oil industry have become a concern of Bojonegoro residents. Some villagers claimed the presence of the oil well has not caused any improvement of the local economy and the village. Since the exploration of the Sukowati oil well in an area measuring five hectares in July 2005, the village's land has become drier and harvest significantly reduced.[24] There is also concern that income distribution inequality could cause social unrest, when compounded with the Indonesian notorious reputation of corruption.