Its solution is to allow a 50-50 joint venture between the two companies to develop the potentially huge oil field that has already supplied 600 million barrels of proven crude.

The feud erupted when ExxonMobil discovered oil after it had signed a contract in 2000 to develop Cepu field after Pertamina had spent 30 unsuccessful years in the region. Local politicians - and Pertamina - have accused the US company of concealing important information about Cepu before the contract was agreed upon that allows ExxonMobil to exploit the area until 2010.

ExxonMobil has said that it will not immediately comment on the joint venture proposal but it would agree to Pertamina's demands provided that the state-owned company puts in half the development costs and extends its contract. It claims that it has already spent US$400 million and is willing to invest a further US$2.6 billion, but only if its contract is extended beyond 2010.

Energy Minister Purnomo Yusgiantoro has revealed that Pertamina plan to raise the necessary money through the issue of bonds and other sources.