New CPP contract will be based under new oil and gas law

The contract that will be awarded to a consortium of Pertamina and the Riau administration-owned company to take over the management and operation of Coastal Plain Pekanbaru (CPP) oil block in the province from the current operator PT Caltex Pacific Indonesia would be based on new Oil and Gas Law, Neraca reported on Wednesday.

Under the new law, the contract would be awarded by newly established Implementation Body or Badan Pelaksana (Balak) which will take over Pertamina?s regulatory function

Minister of Energy and Mineral Resources Purnomo Yusgiantoro said on Wednesday that the new body was expected to start operation before the current contract held by Caltex to operate and manage the CPP oil block expired on August 8.

"President Megawati has approved a decree that will allow the operation of the implementation body," the minister was quoted as saying. "The decree would be issued as the follow-up of the new Oil and Gas Law," he added.

Under the new Oil and Gas Law, Pertamina will purely act as a business entity. Its regulatory functions will be taken over by two separate agencies. The Implementation Body will be responsible for upstream operation while the Regulatory Agency will be responsible for downstream activities. (*)