Riau's MFL oil block to be offered under cost and fee contract

The government will auction the Mountain Front Langgak (MFL) oil block in Riau province latter this month following the agreement of the provincial administration and the local regency's administration to end their dispute over the oil block, Bisnis Indonesia reported Friday.

A source at the ministry of energy and mineral resources said in Jakarta Thursday that the operation of the oil block -- part of the Mountain Front Kuantan (MFK) oil block formerly owned by Caltex Pacific Indonesia (CPI) - would be carried out under cost and fee contract instead of the production sharing contract commonly used in most of the country's oil blocks.

"The ministry of home affairs has mediated the meeting between the provincial government and the local administration, and both agreed to form a consortium to handle the operation of the oil block," he was quoted as saying.

Caltex returned the Mountain Front Kuantan (MFK) to the government after its contract on the oil block ended in January 2005. The oil block was then split into two parts - the MFK and the MFL to meet the request of the two regencies which both claimed the ownership of the oil block. (*)