Caltex renews hope after a gloomy year 2000<\/p>\n
By Berni K. Moestafa<\/p>\n
JAKARTA (JP): Bruised by conflicts with locals and labor,
\nentangled in a political tug-of-war between the local and the
\ncentral government, Indonesia's largest oil and gas company takes
\na look back at an eventful year 2000.<\/p>\n
\"The year 2000 wasn't exactly our best year, no, it wasn't
\nsmooth sailing,\" president of PT Caltex Pacific Indonesia,
\nHumayunbosha said in an interview with The Jakarta Post.<\/p>\n
Frequent unrest eroded Caltex's average production level to
\n710,000 barrels of oil per day (bpd) from its target of 740,000
\nbpd.<\/p>\n
However, he said his company had worked hard to get where it
\nwas now and was undeterred by the ongoing crisis.<\/p>\n
Caltex's hope was fueled by the continued support of its
\nshareholders, employees and partners, Humayunbosha said.<\/p>\n
\"We have been operating here for 70 years and have passed
\ndifficult times in Indonesia. If we do our best we'll be fine,\"
\nhe said.<\/p>\n
Located in the province of Riau, Caltex was founded in 1936 by
\nthe American oil companies Chevron Corp., formerly known as
\nStandard Oil of California, and The Texas Company Inc. (Texaco).<\/p>\n
The company accounts for about 40 percent of Indonesia's total
\ncrude oil production.<\/p>\n
Humayunbosha, who joined Caltex in 1974, said that the company
\ncontributed some 50 percent of the country's oil revenue.<\/p>\n
But Caltex has come under the media spotlight due to a
\nmultitude of problems ever since the downfall of former president
\nSoeharto in 1998.<\/p>\n
His resignation followed a general break down of law and order
\nthat surfaced long withheld resentments against foreign oil and
\ngas or mining companies.<\/p>\n
Being the country's largest oil producer, Caltex was one of
\nthe first to feel the sting of the reform euphoria.<\/p>\n
In December 1998 and in June the year after, workers of one of
\nCaltex's major subcontractors went on strike and disrupted the
\ncompany's operations.<\/p>\n
In April 1999, some 1,500 students demonstrated before a
\nhousing complex belonging to Caltex, after the company dismissed
\ntheir demand that the province be given a 10 percent share of its
\nrevenue.<\/p>\n
But in late 1999 when the country's first democratically
\nelected president, Abdurrahman Wahid, took office, expectations
\nran high that Indonesia was nearing the end of its crisis.<\/p>\n
His election came amid growing cries for independence in the
\ncountry's far flung provinces of Aceh and Irian Jaya. Other
\nprovinces joined the clamor, including Riau.<\/p>\n
Then, in January this year, police injured at least 10
\nstudents when it broke up a sit-in at Caltex's office during a
\nprotest against the company.<\/p>\n
Caltex turned down the students' demand to shut down its
\noperations for three days in observance of the Riau People's
\nCongress.<\/p>\n
Up to November, Caltex's production dropped by between 15,000
\nbpd and 20,000 bpd following a blockade of several of its oil
\nrigs by job seekers whose applications had been rejected.<\/p>\n
Weeks later, a group of farmers set fire to four of Caltex's
\noil wells in the Bengkalis regency, which temporarily halted
\nproduction.<\/p>\n
The farmers were believed to be disappointed by Caltex's
\nunwillingness to pay compensation for their land because their
\nwere deemed as not eligible.<\/p>\n
Still in November, some 3,000 workers of Caltex's contractors
\nwent on strike again.<\/p>\n
Caltex claimed it had lost an average of 30,000 bpd due to the
\nunrest.<\/p>\n
\"This is not Indonesia's real face,\" said Humayunbosha, \"if
\nthe country is sick, everyone is affected.\"<\/p>\n
He said that in conditions like these, adaption was the key to
\nsurvive in the country.<\/p>\n
As an illustration, Texaco has proven capable of operating
\nunder a dictatorial leadership in one of Africa's countries as
\nwell as under a highly democratized country such as the U.K., he
\nexplained.<\/p>\n
Caltex's shareholders, he said, remained committed to
\nIndonesia, unless conducting business here became unfeasible.<\/p>\n
\"If political risks run too high, it is best to invest the
\nmoney in other safer places,\" he said.<\/p>\n
The frequent run-ins with the locals also prompted the company
\nto improve its relations with them, according to him.<\/p>\n
Caltex's community development program, he said, must give
\nstronger emphasis on building relations.<\/p>\n
Although the company has helped Riau build its infrastructure,
\nsuch physical contributions were not a priority in the company's
\ncommunity development program.<\/p>\n
Unfortunately, he said, people placed more value on money and
\nmaterial objects these days.<\/p>\n
\"Our employees' wives teach at their schools, but they (the
\nlocals) don't see that as a contribution,\" he said.<\/p>\n
The company, he said, did not value a project by its costs,
\nbut by the benefits it could bring to the local community.<\/p>\n
\"If our community development is only in the form of charity,
\npeople will soon think that it's their right,\" he said.<\/p>\n
According to him, a company's obligation is defined by ethical
\nbusiness practices and its compliance in paying taxes.<\/p>\n
\"Community development is what sets apart one company from
\nanother. Only if companies are able to make profits can they
\nafford community development programs,\" he explained.<\/p>\n
Politicking<\/p>\n
Humayunbosha further complained certain local politicians, who
\ntook advantage of the locals' resentment against Caltex.<\/p>\n
The ownership of one of Caltex's oil fields, has also been the
\ncenter of a political dispute between the local government of
\nRiau and the central government as well.<\/p>\n
Caltex's production sharing contract over the Coastal Plain
\nPekanbaru oil field (CPP) will expire in August next year.<\/p>\n
At present, the company, the state-oil and gas company
\nPertamina and Riau are all vying to control the block.<\/p>\n
Initially, in 1998 the central government instructed state-
\nowned oil and gas company Pertamina to form a joint venture with
\nCaltex for the operation of the oil block.<\/p>\n
An intense negotiation followed to determine the two
\ncompanies' respective stake in the joint venture; but Riau began
\nits own lobbying.<\/p>\n
Pertamina and Caltex were about to reach an agreement on a 55
\npercent and 45 percent share in the joint venture, when President
\nAbdurrahman bowed to pressure from Riau.<\/p>\n
To the dismay of both companies, the province was given the
\ngreen light to participate in the oil block's development.<\/p>\n
The president's unexpected move disrupted plans for the
\ntransition of the ownership of CPP.<\/p>\n
Months of indecision ended, when the government chose
\nPertamina to own a majority stake in the joint venture.<\/p>\n
Yet this decision almost effectively ousted Caltex from the
\nCPP oil block.<\/p>\n
Humayunbosha said he understood the province's wish for
\nrecognition of its natural resources. \"Though to investors, this
\nall appears like efforts to nationalize (the oil block),\"
\nHumayunbosha said.<\/p>\n
In 2005, he said, Caltex's contract over the Mountain Front
\nKuantan oil block would also expire.<\/p>\n
\"What will happen then? Can we still operate the oil block? If
\nnot, why should we continue investing there?\" he said.<\/p>\n
He said that the company must continuously invest in their oil
\nfields to at least maintain their production level.<\/p>\n
\"Otherwise, we can just become oilplumbers; and that's very
\nsimple, anyone can do that,\" he said.<\/p>\n
A sign of Caltex's commitment was that its five-year business
\nplan remained unchanged despite the prevailing crisis, he went
\non.<\/p>\n
According to him, the company will spend $450 million annually
\nfor the next five years for its operations.<\/p>\n
\"This is an achievement in a crisis situation like this,\" he
\nsaid of Caltex's shareholders who had refrained from revising the
\nfive-year budget plan.<\/p>\n
At present, Humayunbosha said, the company's investment focus
\nwas on drilling more oil from its existing fields.<\/p>\n
The Minas oil field, which is the largest oil field ever
\ndiscovered in Southeast Asia, contains another four billion
\nbarrels of oil since drilling there began in 1944.<\/p>\n
The Duri oil field has an additional five billion barrels of
\noil since the first drilling started in 1941.<\/p>\n
\"If we can extract just one percent of all of that, it would
\nalready be more than enough,\" he said.<\/p>\n
Caltex plans to produce a total of six to seven billion
\nbarrels of crude oil within the next 25 years, using enhanced oil
\nrecovery technology.<\/p>\n
The biggest challenge for next year, Humayunbosha said, was
\nthe \"classic\" challenge of maintaining oil production level.<\/p>\n
Humayunbosha also placed hope on the implementation of
\nregional autonomy in January next year.<\/p>\n
According to him, the implementation of regional autonomy
\nwould help improve the relations between Caltex and the people of
\nRiau.<\/p>\n
\"This is a chance to improve relations and understand each
\nother,\" he said.<\/p>\n
With the implementation of autonomy, the government hopes to
\nempower regions by granting them greater autonomy to manage their
\nown affairs, including their economies.<\/p>\n
\"If needed, we are there to help,\" Humayunbosha said.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/caltex-renews-hope-after-a-gloomy-year-2000-1447893297", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }