Extension of CPP block to Caltex a bad precedence: Experts

The one-year extension of the Coastal Plain Pekanbaru (CPP) oil block contract to PT Caltex Pacific Indonesia is a bad precedence for other oil and gas production sharing contracts (PSC) because, according to Law No. 8/1971 on oil and gas, all expiring PSC contracts should be returned to state oil and gas company Pertamina, Kompas daily reported on Thursday.

Oil and gas expert Kurtubi said CPP block, after 20 years operated by Caltex, must have been returned to Pertamina, and it would not be difficult for Pertamina to operate the block, that had been in operation for 20 years.

Then after taken over by Pertamina, the government could continue negotiations with the Riau administration over the split of income or shares for the CPP block. Therefore, income from CPP for the whole year could be saved in an escrow account, then after the government, Pertamina and the Riau province reached an agreement, the money could be divided based on the agreement.

By extending the CPP contract to Caltex, it would only give the foreign company a better hand in the country's oil and gas industry, according to Tadjuddin Noer Said, former legislator and currently member of the anti-monopoly commission.

Tadjudin expressed his disagreement with an assumption that our manpower was not ready to assume jobs in the oil and gas industry. It's all resulted from the government's wrong policy on the oil and gas sector, that gives too much opportunity to foreign companies, rather than to domestic companies and workers. (*)