Students demand Riau to reject offer to have 10% stake in CPP

Over a hundred of students from several universities in Pekanbaru have protested against the central government's decision to give the local authority a 10 percent stake in a joint venture which will take over the management of the Coastal Plain Pekanbaru (CPP) oil block, Riau Pos reported on Tuesday.

In a meeting with Riau vice governor Rustam F, Abrus, representatives of the students said that the offer to have a 10 percent stake in the CPP oil block, which is now still operated by PT Caltex Pacific Indonesia, was unreasonably too small.

The students were earlier asked to discuss their protests with Governor Saleh Djasit but they refused to do so and instead demanded a meeting with the Vice Governor, who they considered, was more supportive to their demand.

The decision to give Riau only 10 percent stake in the planned joint venture reflected the lack of commitment in the part of the central government toward the welfare of the local people, the students said.

The local legislators are still studying the composition of the share ownership in the joint venture. But a source said that the legislators have approved the scheme and would sign the cooperation agreement on Tuesday (today).

Under the proposed cooperation scheme, Riau, which will be represented by a provincial administration-owned company, will have a 10 percent stake in a joint venture, which will take over the CPP oil block from Caltex when the current contract ends in August. The other 90 percent will go to state oil and gas company Pertamina.

The province is also offered some incentives such as the appointment of locals in the board of executives of the joint venture and allowing the local govt to sell directly their oil production share. In addition, Pertamina has also agreed to provide three of its oil fields near the CPP block as a training ground for developing the Riau expertise in oil and gas sector.

According to the existing regulation, oil concessions are developed under a production-sharing contract in which an operator receiving 15 percent of the production and the government the other 85 percent.

Under such a scenario, the Riau provincial administration will receive 10 percent of the 15 percent of the oil production which would be received by the planned joint venture as the operator of the oil block, while the other 90 percent to go to Pertamina.

In addition, the local government will also receive 15 percent of the government's share as stipulated in the inter-governmental fiscal balance law.

Meanwhile an executive of the Riau Indonesia Bersatu foundation, Rusli Achmad, said that his organization would ask President Abdurrahman Wahid to raise the ownership of the local authority in the planned joint venture to 15 percent.

Rusdi said that he also planned some meeting with other top government officials including Minister of Energy and Mineral Resources Purnomo Yusgiantoro.

The CPP oil block produces crude oil of about 60,000 per barrel per day. At the current price oil level, the oil block could generate revenues of about Rp 44 billion a year from its oil production. (*)