Riau has yet to decide how to operate CPP oil block

The Riau provincial administration has yet to decide what systems it will adopt in operating the Coastal Plain Pekanbaru (CPP) oil block despite the requirement from the ministry of mines and energy that the province should be ready with its proposal within a month, Riau Pos reported on Friday.

"The team is still deciding whether the province will operate and manage the oil block alone or establish a consortium," the spokesman for the governor's office Ruskin Har said in Pekan Baru on Thursday.

He, however, hinted that the province might take the second choice because if it manages and operates the oil block alone, it would face difficulties to raise the funding and skilled workers to sustain the level of the crude oil production from the oil field.

Ruskin said that as described by the governor earlier, that the takeover of the oil block would not violate the oil and gas law because the province would only take the place of Caltex Pacific Indonesia's role merely as an operator. "It means that Riau will only receive 15 percent share in the oil production, while the other 85 percent will go to Pertamina on the behalf of the government," he added.

The fate of the CPP oil block will be decided before August this year so that there will be no more uncertainty about the oil production from the oil field, director general of oil and gas at the Ministry of Mines and Energy Rachmat Soedibyo said in Jakarta last week.

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 the negotiations on the establishment of the joint venture were suspended after President Abdurrahman Wahid later said that Riau had the rights to operate its own oil resources.(*)