Govt to extend Caltex's CPP contract

Minister of Energy and Mineral Resources Purnomo Yusgiantoro said the ministry is prepared to approve a proposal by Pertamina to extend PT Caltex Pacific Indonesia's contract to operate the Coastal Plain Pekanbaru oil block by one year. The contract expires in early August. PT Caltex is a joint venture between Chevron Corp. and Texaco Inc.

"We are ready to (extend the contract), because it's very important to bring production back to previous levels," he was quoted by Dow Jones Newswires as saying in Singapore on Monday.

Purnomo said production at the CPP block declined to 60,000 barrels per day (bpd) from normal output of 70,000 bpd. Indonesia's total oil production is 1.46 million bpd, including condensate, Purnomo said.

Purnomo said the ministry hasn't yet received Pertamina's proposal on CPP but expects to receive it very shortly. Pertamina and the Riau province government have yet to reach a final decision over the split in CPP shares and control of the block's operations.

The Riau government, backed by the local parliament, had demanded a 70% stake in a joint venture company that will take over Caltex 's operation of the CPP block in August.

The joint venture company hasn't been established, as it is pending the acceptance by the Riau government of the 10% stake. The central government wants to give only 10% to the Riau government and the remaining 90% to Pertamina. (*)