Riau asked to reject production-sharing deal with Pertamina

Economists at the University of Riau have asked the Riau administration to reject the production sharing scheme offered by the state owned oil company Pertamina in taking over the management and operation of the Coastal Plain Pekanbaru (CPP) oil block.

Economists Edyanus Herman Halim said that if the local government accepted the deal, it would become a bad precedence for the province's future efforts in controlling its natural resources. "The production sharing scheme offered by Pertamina will only give a short-term benefit for the province," he told Riau Pos.

He said that the Riau province as de facto owner of the oil field should receive a larger share in the production split. "The production sharing split offered by Pertamina is certainly not fair," he said, stressing the need of the local government to reject such a deal.

The secretary of the province's technical team for the takeover of the oil block Edi Syahputra confirmed on Tuesday that the ministry of mines and energy had accepted the province's proposal to take over the management of the oil bock from PT Caltex Pacific Indonesia (CPI) once the current contract ends in August, next year.

Eddy said Pertamina, which acts on the behalf of the central government would receive 85 percent of the oil production while the local government would receive the remaining 15 percent.

He said that the provincial administration would control about 70 percent of the 15 percent allocation while the province's partner in operating the oil block would get the remaining 30 percent. (*)