Caltex urges govt to issue decree on CPP contract extension

PT Caltex Pacific Indonesia (CPI) will urge the government to issue a Presidential decree as the legal basis for its appointment as the caretaker of the Coastal Plain Pekanbaru (CPP) when its contract for the oil block ends in August, this year.

"We will urge the government to issue the decree as we need certainty to act as the care taker," CPI president Humayunbosha told Riau Pos on Thursday.

The CPI president said that the company would spend up to US$15 billion to ensure that the production of the oil block would not decline during the transition period before the appointment of the new contractor.

The government has decided to extend CPI's contract to operate the CPP oil block for another year until the appointment of a new contractor.

"Actually we have asked the government to give at least 15 months to act as the care taker so that we will have enough time to prepare the transfer of the oil block to the new operator," Humayunbosha said.

Caltex's contract to operate the oil block, which produces between 50,000 and 60,000 barrels per day, would expire in August 21 this year. But the government has not decided the new operator which will resume the management and operation of the oil block.

Two years ago, the government decided to transfer the operation of the oil block to a joint venture between Pertamina and Caltex. But the plan was cancelled after President Abdurrahman Wahid agreed to involve the Riau administration in the joint venture.

Caltex later withdrew from the planned joint venture. The Riau administration insisted to have 70 percent stake in the joint venture but the demand was turned down.

The government finally decided to allocate 10 percent stake to the provincial administration and the other 90 percent to Pertamina. The decision has sparked protests in the province, with the local non-governmental organization threatening to take over the oil block if the province's demand to have 70 percent stake is not fulfilled. (*)