Riau allowed to take over CPP oil blcok

President Abdurrahman Wahid has pledged to allow the people of Riau to take over the Coastal Plain Pekanbaru (CPP) oil block after the current contract to manage and operate the oil block expired in August next year.

Abdurrahman, more popularly called Gus Dur, however, said that the local government should first establish a competitive company to enable it to manage and operate the CPP oil block, which is now operated by PT Caltex Pasific Indonesia (CPI) under a production sharing contract with state oil and gas company Pertamina.

"If the (planned firm) can compete, the central government will guarantee it. If the finance minister's signature is not enough, I will sign my self and ask the funding from overseas," Gus Dur said in his dialogue with local leaders during his brief visit to the province.

The President's visit was marred by massive student protests demanding the central government to respect the result of the Riau People's Congress last year. The congress has asked the central government to allow the Riau people to choose three options; independent, federal or autonomy.

The people of Riau, the country's largest oil producer has for long time demanded the government to give it more power in managing its oil resource. The province wants to take full control of CPP after the current contract expires next year but the government ignores the demand and instead ask Pertamina and Caltex to take over the oil block.

Under the existing regulation, the sole rights to operate oil and gas resources are still held by Pertamina as the representative of the government. This law has become a major barrier of the local authority to control their own oil and gas fields despite the government's plan to implement the law on autonomy and law on the inter-government fiscal balance, which give the local authority more power to administer their areas politically and financially.

During his visit, Gus Dur also said that he would ask Pertamina and Caltex their negotiation on the establishment of the oil block to pave the way for the Riau province to set up its own company to take over the oil block. (*)