Caltex yet to apply for extension of oil and gas contracts

Indonesia?s top oil producer PT Caltex Pacific Indonesia (CPI) has not yet applied for the extension of its oil and gas production sharing contracts, which will expire very soon. It wants to calculate the economic value of the contracts before taking any decision on either to stop its activities or seek extension of the contracts, Investor Indonesia and Koran Tempo newspapers reported on Tuesday.

CPI corporate communications manager Harry Bustaman admitted on Monday that his company, a subsidiary of U.S. oil giant Chevron Texaco, had not yet asked the upstream oil and gas authority (BP Migas) to extend its contracts on the Kuantan and Siak blocks, which expire in 2005 and 2010, respectively.

?We are still considering whether to extend these contracts,? Harry told journalists in Jakarta.

The main objective of CPI, according to Harry, would be not only to maintain the existing contracts but also to increase the production volume. With its present average of production of around 550,000-570,000 barrel per day (bpd) -- which is almost half of the Indonesia?s total output of 1.2 million bpd ? CPI is the country?s biggest oil producer.

CPI, which has several oil blocks on Sumatra island and a huge oil complex in Riau province, said last month that it was seeking to maintain crude production at around 520,000 barrels per day in 2004, similar to this year's daily production target.

"Despite maturing operations, Caltex still have adequate oil reserves to pump. Caltex will invest around US$350 million per year to maintain the production level," said company president Humayunbosha.

With the use of more advanced technology, Caltex is optimistic that it can maintain the present level of production despite the fast depleting oil reserves.

The company's production peaked at one million barrels per day in May 1959 but it continued to decline in the following years. The company has now used more advanced drilling technology to enhance the oil drilling capacity. (*)