Pertamina, Riau to form JV to take over CPP block next year

The government said on Friday it expected state-owned oil and gas company Pertamina and the province of Riau to set up a joint venture to take over the operation of the Coastal Plains Pekanbaru (CPP) block from US firm PT Caltex Pacific Indonesia in February next year, a senior official of the Ministry of Energy and Mineral Resources said.

Director general of oil and gas Rachmat Sudibyo said both parties were still negotiating the share composition in the joint venture, but the gap between Pertamina's proposal and Riau's had narrowed.

Riau insisted on a 55 percent share for itself and a 45 percent share for Pertamina. However, Pertamina wanted equal partnership, Rachmat said.

Earlier, Riau demanded up to 75 percent stake in the planned joint venture and Pertamina offered only 15 percent.

"We hope the CPP block will be taken over by Pertamina and Riau in February or March next year," Rachmat said.

Located in the oil rich province of Riau, the CPP block, which now produces about 50,000 barrels of oil per day, was formerly a concession of Caltex.

The American company's contract over the block expired last August but the government has extended the contract until August next year as Riau and Pertamina have yet to reach an agreement over share composition.

According to Rachmat, the new joint venture needs about six months to complete the process of taking over the operation of the oil field. (*)