Riau to open tender in operating CPP oil block

The Riau provincial administration will open a tender to decide in selecting its partners in operating the Coastal Plains Pekanbaru (CPP) oil block, the province's governor Saleh Djasit said in Jakarta as reported by Bisnis Indonesia.

"We will open a tender to ensure that the selection of our partners are transparent and fair," he told journalists following a meeting with executives of state owned oil company Pertamina, Caltex Pacific Indonesia and Minister of Mines and Energy Susilo Bambang Ydhoyono late Friday.

During the meeting the governor rejected the offers proposed by Pertamina's board of commissioners. The province had three options; one operating the oil block jointly with Pertamina and Caltex, the second, operating the oil block with Pertamina and the third operating the oil block with Caltex.

The governor instead demanded another option, which allows it to operate with partners of its own choice. The demand was approved.

Saleh said that the planned tender will also be open to the Riau-based companies especially those owned by the provincial government. He denied that his office had invited local mining companies such as Medco Corporation in operating the CPP oil block once the current contract, now held by Caltex, expires in August, next year.

Pertamina president Baihaki Hakim said that the operation of the oil block by the Riau province would be based on the existing law in all oil resources in the country should be operated under a joint production sharing contract with the state oil company, Mandiri online service reported.

Under such arrangement, Pertamina will receive 85 percent of the oil output and the other 15 percent goes to the oil mine operator, he said. (*)