EXLUSIVE: Pertamina, Riau reach agreement on CPP block

State oil and gas company Pertamina had finally reach an agreement with the Riau provincial administration on the share composition in the joint venture to develop the Coastal Plains Pekanbaru (CPP) production sharing contract block in the province, a senior official of Pertamina said on Monday.

The official, who wanted to remain anonymous, told Petromindo.Com Riau governor Saleh Djasit and the provincial council had agreed that the province have a 10 percent stake in the joint venture and Pertamina 90 percent as proposed by the government.

Aside from the 10 percent stake, the province will obtain four compensations, which respectively allows the province to appoint a Riau native to sit in the board of directors of the joint venture, allows it to sell its 10 percent oil so that the proceeds will not have to go the central government's coffer first, requires Pertamina to provide three of its oil fields near the CPP block as a training ground for developing the Riau expertise in oil and gas sector, and requires Pertamina to develop community development for the local people.

Pertamina and Riau also agreed to give PT Caltex Pacific Indonesia some shares in the block in case the company was interested, the official said.

"The memorandum of understanding on the agreement will be signed tomorrow (Tuesday)," the official said.

The CPP block is being operated by Caltex, whose contract on the block expires in August this year. (Alex)