Pertamina, Riau sign agreement on CPP block

The state-owned oil and gas firm Pertamina, and the Riau provincial administration have reached an agreement to co-manage the Coastal Plain Pekanbaru (CPP) oil block when the contract of the current operator PT Caltex Pacific Indonesia expires on Aug. 8, 2002, according to a Pertamina press statement released on Thursday.

The statement said that both the Riau administration and Pertamina agreed each would have a 50 percent participating interest of the contractor share (15 percent) in the CPP oil block.

Riau initially demanded a much greater stake, while Pertamina insisted on an equal shareholding.

The statement also said that CPP oil block would be managed via a production sharing contract mechanism between Pertamina and the Riau province which would be represented by the provincial-owned company called PT Bumi Siak Riau Pusako. The two would set up a consortium to operate the CPP block.

The statement also said that both sides had an option to sell their respective oil split.

Located in the Riau province, the CPP block currently produces some 50,000 barrel per day of oil.

To maintain the production level, some US$48 million in funds were needed in the first year.

It is still not clear whether Caltex can have a role in the new operation.

Meanwhile, Pertamina president Baihaki Hakim said Thursday that the agreement with Riau should provide a conducive business climate to boost the production of the CPP oil block to 70,000 bpd.(Godang)