Riau's fate in taking over CPP remains uncertain

Riau governor Saleh Djasit said that the province had yet received a written approval from the Ministry of Mines and Energy to take over the Coastal Plain Pekanbaru (CPP) oil block despite the recent go-ahead signals made by President Abdurrahman Wahid, Riau Pos reported on Tuesday.

The governor said that the ministry was still waiting for the province's concept in managing the CPP oil block once the contract, currently held by PT Caltex Pacific Indonesia (CPI), expired in August, next year.

He said during his recent visit to Jakarta, the ministry's director general of oil and gas mining asked him to provide details of the province's concept in operating the oil block before obtaining a final approval from the government.

"Our position is clear. We should first receive a clarification that we will be allowed to operate the oil block before explaining our concept," he added.

The government previously asked Caltex and Pertamina to jointly operate the oil block when the current contract expired next year but the plan was cancelled after Gus Dur finally bowed to the province's demand to take control of the oil block.

Many questioned the ability of the province to carry out the job because it lacked both technology and financing. Other also said that the transfer of the management of the oil block would be against the existing oil law, which stipulates that Pertamina is the only institution, which has the rights to operate and manage the country's oil resources,

Saleh stressed that the takeover of the oil block would not break the existing oil and gas law as the province would only take the place of the operator, in this case Caltex, while Pertamina would remain the majority owner of the oil block as stipulated in the law.

According to the law, all oil resources should be operated under a production-sharing contract with Pertamina. Pertamina will receive 85 percent of the production, while its partner get the other 15 percent. (*)