Operator of CPP oil block to be decided by Riau and Pertamina

The operator of the Coastal Plains Pekanbaru (CPP) oil block will be decided by the provincial administration of Riau, and state oil and gas company Pertamina, which according to the existing law, is the legal owner of the country's oil and gas concessions, including the CPP oil block.

Riau Governor Saleh Djasit said in Pekanbaru on Tuesday that the local government could not act alone in the appointment of the operator of the oil block because Pertamina as the owner of the oil block should be also involved in deciding the operator.

"The negotiation is going on but the main guidelines in the operation of the oil block have been achieved. I don't know the latest progress of the talks because I have yet to meet Pertamina," he was quoted as saying by Riau Pos daily when he was asked about the result of the negotiations between the local government and the state oil and gas company about the future operation of the CPP oil block.

Regarding the production split with Pertamina, the governor said that the Riau administration would continue to demand that 70 percent of the CPP oil block. He did not, however, specify whether the 70 percent portion is based on the oil production or the ownership of the planned joint venture company which will operate the oil block.

"Pertamina has agreed on 51:49 split ratio in favor of the local government. But we resist to get 70 percent," he added.

According to the oil and gas law, Pertamina has the rights to get 85 percent of the oil production in all oil concessions in the country, while the company which acts as the operator will get the remaining 15 percent.

Earlier reports said that the Riau administration demands to obtain at least 70 percent of the 15 percent oil production to be allocated to the operator of the CPP oil block. (*)