Caltex proposes Riau have 10 percent stake in CPP block

PT Caltex Pacific Indonesia, a joint venture of American oil and gas firms Chevron and Texaco proposed on Monday that the Riau provincial administration have a 10 percent stake in the joint venture to be formed by the company and state oil and gas company Pertamina to develop the Coastal Plains Pekanbaru block in Riau.

Caltex's president Humayunbosha said during a meeting between the company and the House of Representatives' Commission VIII for mines and energy, research and technology and environment that if the provincial administration asked for a bigger stake in the joint venture, it would face difficulties in raising funds to buy the shares.

He did not however specify the composition of shares in the joint venture after Riau was allowed to have a 10 percent stake in the joint venture.

Caltex and Pertamina has agreed to form a joint venture for the development of the CPP block after Caltex's contract on the block expire next year with Pertamina having 55 percent shares and Caltex 45 percent.

But, the Riau provincial administration has not thus far seem interested in participating in the joint venture, insisting it would take over the operation of the block after the end of Caltex's contract.

In statement distributed during the meeting, Humayunbosha noted that oil and gas investors were attentively watching the CPP block dispute as the resolution of the dispute would set a precedent for their efforts to extend oil and gas contracts in the future.

"It could have an impact on the investment, especially the investment in the oil and gas blocks which are nearing the end of contractual period," Humayunbosha warned.

The CPP block produced more than 70,000 barrels of oil per day (bpd) last year but the output has declined to less than 60,000 at present as the result of the decrease in the investment made by Caltex. The company lowered the investment in the block due to the uncertainties about the future operation of the block.

"There was no long-term investment in the block over the past 18 months. We only made routine investment," Humayunbosha said.

During the meeting, Humayunbosha also voiced concerns about the troubles caused by the local people on Caltex's operation in Riau throughout the year.

He said Caltex's output had dropped by 30,000 barrels on the security problems with the output at the Rumbai field decreasing by 2,600 bpd, the Duri field by 10,800 bpd, the Minas field by 2,500 bpd, the Bekasap field by 12,9000 bpd.

He criticized the security officials for taking late action in handling the security problem. (Alex and Godang)