Govt not to intervene Pertamina-Riau talks over CPP: Purnomo

Minister of Energy and Mineral Resources Purnomo Yusgiantoro said that the government would not intervene the negotiations between state owned oil Pertamina and the provincial administration of the Riau province over Coastal Plains Pekanbaru (CPP) oil block.

"Negotiations between Pertamina and Riau are continuing. Let the market mechanism determines (the result of the negotiations)," Purnomo told reporters. Asked about the government's possible action if the two parties could not make any decision this year, the minister said that both Pertamina and Riau still had much time to settle their difference.

The government has agreed to meet the Riau administration's demand to take over the operation of the oil block, which is currently operated by PT Caltex Pasific Indonesia. However, the ministry of energy and mineral resources will not issue its final approval until the provincial administration finds its partners in managing the oil block.

The province has agreed to follow the government's advice to involve Pertamina and Caltex as its partners in operating the CPP oil block but negotiations on the establishment of a joint venture which will operate the oil block failed to yield quick result as all parties involved demanded a larger stake.

The Riau province insists to get a 70 percent stake and gives the other 30 percent to Pertamina and Caltex. Pertamina refuses the offer and demands to have at least 49 percent stake in the joint venture.

But Pertamina chief negotiator Effendi Salam said that Pertamina was ready to get lower stake in the joint venture if the government asked it to do so. "The ball is in the hand of the government. Pertamina is ready to accept all the decision even it is given zero percent," he was quoted by Riau Pos as saying.

Speaking in a dialogue with the federation of Riau students, Pertamina is ready to become an agent of development in provinces. (godang)