Caltex wants to be involved in future operation of CPP oil block

PT Caltex Pacific Indonesia (CPI) has asked the government to involve the oil giant company in the future operation of Coastal Plain Pekanbaru (CPP) oil block.

Caltex president Humayun Bosha told reporters in Jakarta on Thursday that the oil giant as the company, which firstly developed the oil block had the rights to be involved. "At least we should be involved in negotiations related to the transfer of the oil block to Riau province," he said.

Humayun said that the demand of the Riau provincial administration to have 70 percent stake in a joint venture which would operate the oil block was unrealistic because the oil and gas company, which was recently established by the province to represent it in the joint venture had yet to have proven track records in the oil production activities.

The government bowed to the provincial demand late last year to allow it to operate and manage the CPP oil block when the current contract, which is now held by Caltex, expired in August next year. The government, however, says it will issue a final approval only after the province finds experienced companies to jointly operate the oil block.

The provincial administration has agreed with the government's proposal to work with Pertamina but negotiations over the ownership in the joint venture which would manage the oil block have failed as both parties demand a controlling stake in the company. The province demands to have a 70 percent stake while Pertamina wants at least 51 percent.

According to the existing oil and gas law, the country's oil resource is solely owned by the government and should be developed under a production sharing contract in which the government will get 85 percent of the oil production and the contractor the other 15 percent. The joint venture, which is now being negotiated, by Riau and Pertamina will act as the contractor of the CPP oil block.

Humayun said that Caltex would only convey its demand only after Pertamina and Riau settled their difference.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro said on Thursday that he had asked the board of the commissioners of Pertamina, Coordinating Minister for the Economy, Minister of Finance and the National Development Planning Board (Bappenas) to hold a meeting in a bid to break the deadlock.

Riau governor Saleh Djasit insisted that the provincial administration should be given 70 percent stake in the joint venture.

"We have no problem with capital because many institutions will help us. We also have no problem with management because we can hire the expertise and the current workers at the CPP can continue to work there,'' Djasit said.

PT Caltex Pacific Indonesia now operates the field, which produces around 60,000 barrels per day (bpd) of oil, under a contract, which expires next year. (Godang)