Riau to cooperate with Caltex, Pertamina in operating CPP block

The local government of Riau province might cooperate with state owned oil and gas company Pertamina and Pt Caltex Pacific Indonesia in operating the Coastal Plain Pekanbaru (CPP) oil block beginning in August next year, a source has said.

Iin Arifin Tahyan, the secretary of the board of commissioners of Pertamina, said on Saturday that based in the ongoing negotiations, Riau would likely agree to work with Caltex and Pertamina in operating the oil block.

"Riau will accept the cooperation scheme offered by the government. Its partners (in managing the CPP) will be Pertamina and Caltex," Bisnis Indonesia quoted Arifin as saying. But he did not mention whether the partnership agreement will be based on the production sharing arrangement currently applied by the government.

However, The Jakarta Post quoted Director General of Oil and Gas at the Ministry of Mines and Energy as saying that the government is still waiting for a concrete proposal from the province of Riau before allowing it to take over the Coastal Plain Pekanbaru (CPP), one of four oil blocks currently operated by PT Caltex Pacific Indonesia. He further said that he expected the Riau administration would submit a new proposal by the end of this month.

The government initially gave three options to Riau to operate the CPP oil block, which is currently operated by Caltex. The provincial administration under the three options was offered to manage the oil field in joint venture with Pertamina, or with Caltex or with both of two oil giants. But the province rejected the offer and demanded to select its own partners.

The Riau, however, later abandoned its own option and returned to a negotiation table to work with both Caltex and Pertamina in operating the oil block.

The Riau administration has established a new company to take over the management of the oil block after the current contract expired in August next year. The new company PT Riau Makmur Petroleum will represent the local government in the operation of the oil block. (*)