Transfer of CPP operation to Riau province delayed

The signing of a contract regarding the transfer of the management and operation of the Coastal Plain Pekanbaru (CPP) oil field from PT Caltex Pacific Indonesia (CPP) to Riau province has been delayed, as the local government demands a larger share from the oil production, Suara Karya reported on Saturday.

The daily said that the signing of the contract which was initially scheduled to be held on Friday was delayed as both Riau and state owned oil and gas company Pertamina demanded a larger share in the production split.

Riau governor Saleh Djasit said in Pekanbaru on Friday that the negotiations related to production split was continuing and he hoped the latest talks would be able to produce a fair solution to both parties.

The secretary of the province's technical team for the takeover of the oil block Edi Syahputra said recently that Pertamina, which acts on the behalf of the central government, would receive 85 percent of the oil production from the CPP oil block while the local government would receive the remaining 15 percent.

He said that the provincial administration would control about 70 percent of the 15 percent allocation while the province's partner in operating the oil block would get the remaining 30 percent.

Many local intellectuals, however, considered the production sharing arrangement as not fair. They said that the Riau province as de facto owner of the oil field deserved to receive a larger share in the production split.

Riau will formally take over the operation and management of the CPP oil block after the current contract held by PT Caltex Pacific Indonesia (CPP) expires in August, next year. (*)