Presidential decree to back CPP takeover

President Abdurrahman Wahid will issue a special decree to support the transfer of the management and the operation of the Coastal Plain Pekanbaru (CPP) oil block from the current operator PT Caltex Pacific Indonesia to the provincial administration of Riau, Suara Kita reported.

"Gus Dur (the president's popular nickname) strongly supported the takeover plan and he would issue a special decree to allow the transfer of the authority over the oil block run smoothly," a provincial social leader told the daily on Friday.

The source said that the plan to issue the special decree was expressed by the President during his recent visit to the Palace. "The decree is very important for Riau because the decree will provide the province a strong legal base to operate the CPP oil block," he said.

The government initially asked Pertamina and Caltex Pacific Petroleum to jointly operate the CPP oil block, when the current contract ended in August next year. But the decision was opposed by the local people who said that the local government was the most rightful party to operate oil block.

The protests continued until Gus Dur stepped in and said that the authority of the oil block should be transferred to the local administration to support the government's efforts to empower the local economy.

The ministry of mines and energy has proposed the Riau province to operate the oil block in cooperation with either Pertamina or Caltex or with both of them. But the proposal was rejected as Riau, instead, demanded to operate the oil block with partners of his own choices.

Caltex, which operates the oil block until the contract is expired in August next year, has reduced operational costs due to uncertainty in the future of the oil field, causing the fall in its daily production to some 50,000 barrels from about 80,000 barrels early this year. (*)