Riau again defends CPP takeover plan

Riau governor Saleh Djasit again defended the province's plan to take over the management and operation of the Coastal Plain Pekanbaru (CPP) oil block in the province after the current contract, now held by PT Caltex Pacific Indonesia (CPI) expired in August next year.

The governor said that the people had nothing to worry about the province's plan because it would not violate any regulation. "It will not break the existing oil and gas regulation. Just wait our proposal and the see," he told Riau Pos daily.

He said that the province would only replace Caltex position as a contractor of the oil block while state oil company Pertamina would still as the owner, which has the rights to obtain the larger share in the production-sharing contract.

According to the oil and gas law, Pertamina holds the rights to explore and produce the country's oil and gas resources. Other parties might operate an oil field under a production-sharing contract under which 85 percent of the oil output should go to the state oil company and the other 15 percent to the operator.

The government decided in 1998 to appoint PT Caltex Pacific Indonesia and state oil company Pertamina to jointly operate the oil block when the current contract, now held by Caltex expired in August next year. But President Abdurrahman Wahid later said that the provincial administration had the rights to operate its operate its own oil resources.

Many parties, however, doubted the ability of the province to operate the oil block without the help of Pertamina and Caltex. (*)