Caltex seeking royalty-based contract
Tuesday, May 22 2001 - 05:30 AM WIB
State-owned Pertamina's top oil contractor PT Caltex Pacific Indonesia yesterday said it preferred a royalty-based system over the current split in the production sharing contract (PSC).
"We prefer a royalty-based PSC, because it will boost business development efforts," Caltex CEO Humayunbosha told reporters following a meeting with the Parliament in Jakarta.
Under the current PSCs, Pertamina gets 85% of revenue with the contractors enjoying the remainder.
Under a royalty-based system, the contractors' tasks would be more measurable.
"It will be based on the annual output, meaning every year we will calculate how much royalty the government gets from each activity," he said.
Several oil-producing countries have implemented such a royalty-based system to attract foreign investors and contractors.
"If Indonesia sticks to this split-based PSC, this (sector) will be uninteresting," he added.
He said that such a split-based system allows the government, through the state oil and gas company Pertamina, to hold control of the management.
"This management control has often been misused, resulting in collusive practices," Humayunbosha said.
PT Caltex produces up to 800,000 barrels of oil per day.
Asia's only member of the Organization of Petroleum Exporting Countries (OPEC), Indonesia relies heavily on oil and gas exports.
Pertamina, however, is still struggling to meet the new oil output quota set by OPEC, and has called on oil contractors to raise production.(*)