Uncertainty still clouds the future operation of CPP oil block

The future operation of the Coastal Plain Pekanbaru (CPP) oil block remains uncertain although the contract to operate the Riau-based oil field would expire in August this year, Suara Karya reported on Thursday.

Pertamina?s director for production sharing operation Iin Arifin said in Jakarta on Wednesday that the proposal of the current operator PT Caltex Pacific Indonesia (CPI) to extend its contract over the CPP oil block by another one year had yet to receive a formal approval from the government.

He acknowledged that the government had expressed its readiness to give Caltex another one year to operate the CPP oil block as a transition period before the formal transfer of the oil block?s operation to the planned joint venture.

But, the delay in the establishment of the joint venture still cast a shadow over the future of the CPP oil field, he said, adding that the uncertainty had caused a drop in the production in the oil block by an average of 5,000 barrels per day.

Arifin said that the production of the CPP oil block is now about 48,000 bpd, far lower than 65,000 bpd in the last two years.

According to him, the provincial administration?s demand to have controlling stake has contributed to the delay in the establishment of the joint venture.

The government has allocated 90 percent of the joint venture?s shares to Pertamina and 10 percent to the local administration. But the share composition is rejected by Riau.

The joint venture will take over the management and operation of the CPP under a production sharing contract under which the central government will receive 85 percent of the oil production and the joint venture the remaining 15 percent.(*)