Govt decides to give Pertamina a majority stake in CPP block

The government has decided to give state oil and gas company Pertamina a majority stake in the planned joint venture to develop the Coastal Plains Pekanbaru oil block in Riau after the current contract on the block held by PT Caltex Pacific Indonesia expires next August, Minister of Energy and Mineral Resources Purnomo Yusgiantoro said.

Purnomo said on Friday in Merak, Banten during an inspection of fuel smuggling that the government has yet to officially notify the future partner of Pertamina in the joint venture - the Riau provincial administration - on the decision.

"We (Pertamina) shall be dominant (in the joint venture). Being dominant means (having) more than 50 percent shares," Purnomo said.

He noted however that the government had yet to determine the "precise" figures of Pertamina's shares in the joint venture.

But, he promised the government would make a final decision on the matter in January next year at the latest.

"If not the end of the year, there must be a conclusion by January next year," he said.

According to Purnomo, the proposal that Pertamina have a majority stake in the joint venture came from himself along with Coordinating Minister for Economy Rizal Ramli, Coordinating Minister for Political, Social and Security Affairs Susilo Bambang Yudhoyono and Minister of Home Affairs and Regional Autonomy Surjadi Soedirdja.

"The Vice President (Megawati Soekarnoputri) and the President (Abdurrahman Wahid) have approved the proposal," he said.

The four ministers took over talks about the CPP block after Pertamina failed to reach an agreement with Riau on the share composition in the joint venture that will develop the block. Pertamina wants a 51 percent stake in the joint venture, while Riau insists that it should have a 70 percent stake.

Purnomo said the Autonomy Law No. 22/1999 and the Intergovernmental Fiscal Balance Law No. 25/1999 stipulated that the central government will take 85 percent of the government's oil revenue with the remaining 15 percent to be delivered to the regions which produce the oil.

As such, the central government has authority over the country's oil resources, he said.

"The authority (over the country's oil resources) lies with us. As such, we (have the right) to decide (on the CPP block's fate)," he said.

Director general of oil and gas Rachmat Sudibyo, who accompanied Purnomo during the inspection, said Caltex, which initially voiced interest to continue developing the block, had quitted negotiations on the block after seeing that chances were slim for it to obtain a large shares in the joint venture to develop the block. (Godang)