Decision on one-year extension for CPP oil block is final

Minister of Energy and Mineral Resources Purnomo Yusgiantoro said that the government?s decision to extend Caltex Pacific Indonesia?s contract to operate and manage its Coastal Plain Pekanbaru (CPP) oil block in Riau province for another one year until August 2002 is final.

The minister said that he hoped a presidential decree on the extension of the contract, which should have expired in August this year, could be issued next month.

"There is no more problem with the contract extension. We have informed the locals about the change in the contract,? he was quoted as saying by Petromindo online news portal.

Purnomo stressed that although the presidential decree had not been issued, the decision on the one-year extension was final.

The minister said that the one-year extension would be long enough as a transition period before the planned joint venture between Pertamina and the local administration-owned company was ready to take over the CPP operation and management.

According to the minister the one-year extension would be given on the condition that Caltex would be able to raise the production level of the oil block, which at present averaged only about 50,000 barrels per day.

Purnomo acknowledged that the oil giant company had asked the government to extend the contract to 18 months. But the requirement was rejected because based on a study, a one-year extension would be enough to pave the way for the transfer of the CPP operation and management to the new contractor.

The government has agreed to allow a joint venture between Pertamina and the local administration to jointly operate the CPP oil block when the current contract ends.

But the establishment of the joint venture has been delayed as both Pertamina and Riau demanded a bigger ownership in the oil block. (*)