Caltex might reject the offer to jointly operate CPP oil block

PT Caltex Pasific Indonesia might reject the offer to take part in the future operation of the Coastal Plain Pekanbaru (CPP) oil block if the oil giant is not given a significant stake, an informed source at the company told Petromindo.com on Saturday.

The source said that the American oil giant was offered to get less than a half of the 15 percent stake allocated to Pertamina. With such a meaningless stake, it will not feasible for Caltex to join the partnership, he said.

According to the source, shareholders of the oil giant, Texaco and Cevron, had decided to stay away from the joint venture if the company serves only as minority shareholder. "It will be better for the company to focus on its existing oil fields, rather than becoming a minority shareholder in the joint venture," the source added.

The source said that the ownership of the joint venture, which would take over the operation of the CPP oil block after the current contract expired next year, should be split equally among the interested parties so that all the shareholders would have an equal position in managing the oil block.

The government has agreed to allow Riau to take over the operation of the oil block, which is currently operated by Caltex. However, the ministry of energy and mineral resources will not issue its final approval until the provincial administration finds its partners in managing the oil block.

The province has agreed to follow the government's advice to involve Pertamina and Caltex as its partners in operating the CPP oil block. But Director General of Oil and Gas Rachmat Soedibyo said negotiations on the establishment of a joint venture which would operate the oil block did not run as expected as all parties involved demanded a larger stake.

The Riau province insists to get a 70 percent stake and gives the other 30 percent to Pertamina and Caltex. (*)