Riau will continue to demand larger stake in CPP oil block

The Legislative Council of Riau province has asked the provincial administration to stick to its initial demand of owning at least 70 percent stake in the joint venture that will manage and operate the Coastal Plain Pekanbaru (CPP) oil block, Riau Pos reported on Saturday.

Abdul Kadir Kalim, the deputy chairman of the council's Commission IV, said in Pekanbaru on Friday that the provincial administration should not change its earlier position and continue to demand at least 70 percent stake in the joint venture.

"Pertamina should change its position not Riau province related to their ownership in the joint venture," he was quoted as saying. "It is fair enough o allow the province to have the larger stake, because Pertamina on the behalf of the government will receive 85 percent of the total production of the oil block," he added.

The government decided last week to takeover all issued related to the transfer of the operation of Coastal Plains Pekanbaru (CPP) oil block to Riau province after negotiations between the provincial administration and state oil and gas company Pertamina suffered a deadlock.

The government agreed early this year to allow the Riau province to take over the operation of the CPP oil block after the current contract ends in August next year. But the ministry of energy and mineral resource will not issue its final approval until the province finds its partners in managing the oil block.

The province then agreed to follow the government's advice to involve Pertamina and Caltex Pacific Indonesia as its partners in operating the CPP oil block but negotiations on the establishment of a joint venture to operate the oil block failed as all parties demanded larger stakes.

The Riau province insists to get a 70 percent stake in the joint venture and gives the other 30 percent to Pertamina and Caltex. Pertamina refuses the offer and demands to have at least 49 percent stake in the joint venture. (*)