Riau reminded about risks of managing oil blocks

Minister of Energy and Mineral Resources Purnomo Yusgiantoro said Tuesday Riau Province could take over the management of Lirik oil block, while reminding it that operating the block would not be an easy work.

?I should say that operating oil blocks will not be easy. It is a highly risky business which requires high technology and big investments,? Purnomo told reporters at his office.

The minister said further that oil production from Lirik could drop if it was not properly managed. If this happened, the country?s state budget would be troubled, he said.

Lirik Petroleum operates the block, which is located Riau?s Indragiri Hulu and Pelalawan regencies. The block has six productive oil fields.

Riau government officials were quoted by Kompas daily as saying Monday that Purnomo should fulfill his promise to allow the province to take over the management of Lirik block.

Secretary of Riau?s oil and gas team, Azlaini Agus, was quoted as saying that the province had got a green light to soon take over the oil block.

Riau provincial administration, through PT Bumi Siak Pusako, currently manages and operates Coastal Plain Pekanbaru block in cooperation with state oil and gas firm Pertamina. Last year, U.S. oil company Caltex Pacific Indonesia handed over the block to the Indonesian government after its contract for it expired.

Oil production from the block dropped to 28,000 barrels per day (BPD) in February, down from last year?s 50,000 BPD. (godang)