Riau people threaten to blockade Caltex's CPP oilfield

In their protests against the one-year extension of the contract for PT Caltex Pacific Indonesia to operate the Coastal Plains Pekanbaru (CPP), about 200 Riau people have sent an ultimatum for the central government to accommodate the interests of Riau people or they would block the operation of oil exploitation activities in the CPP block.

Those people, after attending a great meeting of Riau people to grab the CPP block held in Adat Riau Hall in Pekanbaru, issued an ultimatum that they gave a three-day deadline, starting from Saturday, to the central government to review the extension. Otherwise, they would block CPP operation.

Edyanus Herman Halim, who read the ultimatum, said that the Riau people had given two conditions for the extension of the CPP block contract. First, they demanded that one third of the income from CPP for the empowerment of local people, and second, they wanted a number of local people be appointed to sit at the CPP management.

He said that basically, the "great meeting" produced five-point political manifesto, that states, among others, that CPP block belongs to the Riau people.

Therefore, the extension of CPP block contract must be rejected because it did not absorb the aspirations of the Riau people, as the owner of the CPP block, Edyanus said.

President Megawati Soekarnoputri has issued a decree extending Caltex's contract over CPP block for one year following a lingering dispute between the central and Riau governments over stakes in the oil block.

Caltex's production sharing contract for the oil block expires on Aug. 8.

Outgoing Vice Presidential Secretary Bambang Kesowo said on Friday that the extension was ordered to allow the government and the Riau provincial administration to resolve their dispute.

A disputes has flared between Jakarta and Riau over how big a stake each party should control in a new joint venture that is to be established to manage the CPP oil block after the American oil and gas firm's contract expires.

Riau is demanding that it be given a 70 percent stake in the new joint venture while the government is only willing to give 10 percent. The remaining 90 percent would be controlled by Jakarta through the state-owned oil and gas company Pertamina.

The government had agreed in 1999 to allow Caltex and Pertamina to jointly operate the oil block but the decision was annulled after president Abdurrahman Wahid unexpectedly bowed to Riau's demand to take part in the management and operation of the oil block.

Riau's struggle for a bigger stake intensified when Governor Saleh Djasid set up a team three years ago to persuade Jakarta and Pertamina to surrender the majority equity stake. But, the team's efforts have thus far been to no avail.

The administration last month planned to establish a joint venture company, Riau Petroleum, to further pressure Jakarta into letting it control the oil block.

The company will be jointly owned by Riau, and the province's Siak, Bengkalis Palalawan and Kampar regencies where the oil wells are located.

The government has said it plans to offer Riau incentives to compensate it for its small equity interest in the CPP. These include the possibility of Riau exporting its oil allocation by itself. (*)