"The negotiations have been completed and we have finalized everything regarding the substance (of an agreement), Rizal Mallarangeng, spokesman of the Indonesian government's negotiating team, told reporters. "Everything related to the substance (of a deal) is no longer a problem (and) the next step is a procedural matter. An Exxon Mobil representative in Jakarta confirmed that upbeat assessment of the talks. "We have agreed on the key terms and principles of Cepu negotiations," a Jakarta-based spokeswoman for Exxon's local unit, Deva Rachman told Dow Jones Newswires. Successful conclusion of the negotiations Friday should end a long-simmering investment dispute that Indonesia's government has blamed for souring prospective foreign investor sentiment in Indonesia. Indonesia recorded a 26% year-on-year decline in approved foreign direct investment to $10.3 billion in 2004. Exxon Mobil brought the rights to the Cepu block in 1998 from a company run by Tommy Suharto, a son of Indonesia's former dictator. The U.S. firm soon discovered that the oil block holds a commercial quantity of crude oil. The pending expiration of Exxon Mobil's contract in 2010 to develop the site prompted the company to decline investment in the necessary deep-drilling equipment to tap the block until the government extended that contract. The Cepu oil block contains estimated reserves of some 600 million barrels of crude oil and the dispute over the block is often cited as an example of the policy confusion that has caused Indonesia's crude oil output to plunge in recent years, turning the country into a net importer of crude oil during several months in 2004. The thorniest issue the two sides had to resolve was the revenue sharing agreement between Exxon Mobil and state-owned petroleum firm Pertamina (PTM.YY). Indonesia's government has agreed to give Exxon Mobil 6.75% of Cepu revenues if world oil prices are above $45 a barrel and 9% of revenue if oil prices are between $40 and $45 a barrel, said Martiono Hadianto, Pertamina's chief commissioner and the head of the government's negotiating team. Exxon Mobil will get 11.25% of revenue if oil prices are between $35 and $40/bbl. If oil prices fall below $35/bbl the U.S. firm will get 13.5% of revenue. "Starting today, it will take 90 days for us to finalize the joint operations agreement which will be signed by Exxon, Pertamina and the (Cepu) regional government and for the government to award a production sharing contract to a contractor," Hadianto said. Hadianto said the government expects the Cepu block to start producing oil in late 2007 or early 2008, with capacity likely to reach between 160,000 barrels a day ando 180,000 barrels a day within two years after operations begin. That production will require an investment of $2 billion, of which Pertamina and Exxon Mobil will pay 45% each and the regional government will pay the remaining 10%. PIN/Dow Jones