Riau may choose own partner for CPP oil block

The Riau provincial administration may chose its own partner to develop the Coastal Plain Pekanbaru (CPP) oil block, the province's governor Saleh Djasid said here on Friday.

Saleh said the province would prefer to operate the CPP oil block with partners other than Caltex Pasific Indonesia or Pertamina as proposed by the board of commissioners of the state oil and gas company, The Jakarta Post reported on Saturday.

"Now we have expanded the options to solve the CPP problems to four," Saleh told reporters after a meeting here with the Minister of Mines and Energy Susilo Bambang Yudhoyono.

Pertamina's board of commissioners initially offered the Riau province three options in operating the CPP oil block. The first option is to establish a joint venture between three parties, the second is a joint venture between Riau and Pertamina, and the third between Riau and Caltex.

But the Riau province turned down all the three options during the meeting, which instead proposed the fourth option to allow it to choose its own partner. The meeting was also attended by executives of Pertamina and Caltex currently operates the CPP oil block.

In 1998 the government told Pertamina and Caltex to form a joint venture to operate the oil block once Caltex's contract expires next year. President Abdurrahman Wahid, however, stepped in and bowed to demands from Riau officials to control the oil block, making the establishment of the joint venture no longer necessary.

But Saleh assured that Riau would comply to the existing oil law, which stipulated that oil resources should be operated under a production-sharing contract with Pertamina. In this cooperation scheme, Pertamina will receive 85 percent of the output and the operator the other 15 percent. (*)