Govt offers three options to Riau province

The government has offered three options to the provincial administration of Riau in operating the Coastal Plain Pekanbaru (CPP) oil field, Media Indonesia, Republika reported on Friday.

Minister of Mines and Energy Susilo Bambang Yudhoyono said in Jakarta on Thursday that the options included offering the local government to operate the oil block together with Pertamina and PT Caltex Pacific Indonesia (CPI); to operate the oil block with Caltex or to operate the oil block with Pertamina.

The minister said that the three options were formulated by the board of commissioners of the state oil and gas company Pertamina in response to President Abdurrahman Wahid's call to involve the provincial administration of Riau in managing the province's oil and gas resources.

The minister said that his office, Pertamina, Caltex and the Riau province would discuss the options in Jakarta today (Friday). "Technical matters related to the options would be discussed during the meeting," he added.

The government initially assigned Pertamina and Caltex to jointly operate the CPP oil block once the current contract, now held by Caltex, expires in August next year. But the negotiations over the establishment of the joint venture to operate the oil block was suspended last week after the President bowed to the demand of the Riau people to take over the oil block.

According to the existing law, the country's all oil resource should be operated under a production sharing contracts with Pertamina. This has caused outcry in the oil rich province such as Riau because almost all the oil revenues go to the central government through Pertamina.

Under the production contract, Pertamina generally get 85 percent of the oil production and about 65 percent of the gas output from the contractors. (*)