Pertamina hints Caltex must be included in CPP deal
Thursday, February 22 2001 - 03:00 AM WIB
State-owned oil and gas company Pertamina said Wednesday that in order to keep cost of production low, current operator of Coastal Plain Pekanbaru (CPP) Block Caltex Pacific Indonesia (CPI) must be included in the new venture that would take over the operation of the block.
Gatot said currently cost of production of one barrel of oil from CPP block was lower than US$ 1 per barrel, and excluding CPI from the deal would only mean the cost to increase because the new venture would not be permitted to use CPI's facility.
Negotiation had been progressing between Pertamina and the Riau administration over the composition of interest participation in the new venture.
The government had insisted that Riau be given 10 percent of participating interest while Pertamina would get the rest.
Gatot said that Pertamina would offer CPI some portion of its interest, but would still retain majority in the new venture.
According to Gatot, before Riau interfere in the venture, Pertamina and CPI had had an agreement that Pertamina would hold 55 percent of interest while CPI would hold the rest.
"So we are optimistic CPI would still be interested to enter the new venture provided that we offer them competitive rate of return, " said Gatot.
Separately, a CPI senior executive Wahyudiana Ardiwinata said CPI had form a special unit to prepare for smooth transition to whichever party would operate the block. According to the existing contract, CPOI would end its management over CPP block in August. (alex/godang)