Riau to tie up with local businessmen

The provincial administration of Riau will likely cooperate with Arifin Panigoro, Aburizal Bakrie and Iman Taufik in operating the Coastal Plain Pekanbaru (CPP) oil block, according to Republika daily quoting unnamed sources.

"If Riau is granted a contract to operate the CPP oil block, the province will tie up with the three businessmen, who have long been involved in oil related activities," the source said as quoted by the daily.

President Abdurrahman Wahid has agreed to allow the province to operate the oil block once the current contract now held by PT Caltex Pacific Indonesia (CPI) expires in August, next year.

The President's statement has provoked controversies not only because it is against the government's earlier decision, which assigned state oil company Pertamina and Caltex to operate the oil block, but also due to the fact that it contradicts with the existing law.

According to the existing law, the country's oil and gas resources should be operated under a production-sharing contract with Pertamina.

The provincial administration had already named three businessmen as its potential partners to replace the position of Caltex, the source said, adding that the choice was based on the three businessmen's good track record in the oil industry.

Arifin Panigoro is the chairman of Medco Corporation, which operates several oil blocks in the country and overseas, Aburizal, the chairman of the Bakrie Group, which has oil interests in Yemen while Iman is known as a supplier of oil drilling equipment. (*)