Operation of CPP oil block should involve financial agencies

The operation of the Coastal Plain Pekanbaru (CPP) oil block should not only involve the Riau provincial administration and Pertamina but also financial institutions, according to Director General of Energy and Mineral Resources Rachmat Sudibyo has said.

Rachmat said in Jakarta on Tuesday that the operation of the CPP oil block should be supported by at least two or three financial institutions because with a 70 percent ownership, the Riau province would be financially too weak to carry out the job.

Speaking to Astaga.com, Rachmat said that his office had given Riau until the end of this month to decide the amount of the stake it would take up and names of financial institutions, which would be involved.

"Another delay in the transfer of the management of the CPP oil block would further hurt its production," he said.

Secretary general of the ministry Djoko Darmono said earlier that the appointment of Riau as the operator of the oil block could not be carried this month as originally scheduled because both Pertamina and Riau were still fighting for a larger ownership in the oil block.

The government had initially given Riau three options to operate the CPP oil block, which is currently operated by Caltex. The provincial administration under the three options was offered to manage the oil field in joint venture with Pertamina, or with Caltex or with both of two oil giants. But the province rejected the offer and demanded to select its own partners.

The Riau, however, later abandoned its own option and returned to a negotiation table to work with both Caltex and Pertamina in operating the oil block.

The Riau administration has established a new company to take over the management of the oil block after the current contract expired in August next year.

Separately on Tuesday, Darwis Ridha, a representative of the Riau province in the House of Representative, said that the government's half-hearted position regarding the transfer of the oil block might be related to its plan to submit new oil and gas law, which will among others remove Pertamina's monopoly.

"It is likely that the government will wait for the approval of the new oil and gas law before making any decision about the CPP oil block," he was quoted as saying by Riau Pos.

He promised he would soon meet the newly appointed minister of energy and mineral resources in order to know the real position of the government.

Meanwhile noted and senior lawyer Adnan Buyung Nasution urged the provincial administration to invite Vice President Megawati Sukarnoputri to see her self how strong the people's desire to operate their own natural resource.

"Vice President should be invited so that he she will know the aspiration of the people," he told reporters following his meeting with Governor Saleh Djasit in Pekanbaru on Tuesday. (*)