Govt wants Caltex and Pertamina to develop CPP block

The government wanted PT Caltex Pacific Indonesia together with state oil and gas company to continue developing the Coastal Plains Pekanbaru (CPP) block after Caltex's current contract on the oil and gas block expired next year, a senior official at the ministry of energy and mineral resources said.

"The government still wants Caltex and Pertamina to be involved in the development of the block. The reason is simple, that is both Caltex and Pertamina well know the characteristics of the oil fields in the block. Thus, they will be able to quickly anticipate any radical decrease in the fields' output," director general of oil and gas Rachmat Sudibyo told Petromindo.Com and Suara Pembaruan recently.

"We are not sure other contractors can quickly anticipate the decrease in the output, because they don't know the characteristics of the fields," he added.

He said the government is seeking to increase the country's oil output to meet the rise in oil production quota set by the Organization of Petroleum Exporting Countries (OPEC). Thus, the government wanted the future developers of the CPP block to maintain or increase the block's oil production level.

The block produced up to 70,000 barrels of oil per day last year, but the oil output has dropped to between 55,000 and 60,000 at present due to the decrease in Caltex's investment in the block and the security problems posed by the locals.

Aside from Caltex and Pertamina, the Riau provincial administration is also very keen to co-develop the block after Caltex's contract on the block expires and it has established a company for that purpose.

At some points, the province has even insisted to develop the block by itself.

The province, which accounts for more than a half of the country's 1.3 million barrels per day of oil production, has been disgruntled at the fact that the central government took most of the province's oil revenue for decades during former President Soeharto's era.

The ministry has asked the provincial administration to make a proposal containing the details of its plan to develop the block.

Rachmat said the government had initially expected to make a final decision on the developers of the block by August this year after receiving the proposal from the province but it delayed the decision making because thus far the province had only submitted a proposal containing "rough plan" for the development of the block.

He said the ministry still expected the province to complete the proposal containing clear details on its plan to develop the block.

The ministry hoped to make final decision by the end of the year, he said. (Alex)