JP\/11\/CPP<\/p>\n
Pertamina, Riau sign agreement to operate CPP block<\/p>\n
Moch. N. Kurniawan
\nThe Jakarta Post
\nJakarta<\/p>\n
State oil and gas company Pertamina and the Riau provincial
\nadministration signed an agreement on Thursday to jointly operate
\nthe Coastal Plains Pekanbaru (CPP) oil block, ending years of
\ndispute over rights to develop the block.<\/p>\n
The agreement was signed by Pertamina's president Baihaki
\nHakim and Riau governor Saleh Djasit and witnessed by Minister of
\nEnergy and Mineral Resources Purnomo Yusgiantoro.<\/p>\n
Under the agreement, Pertamina and the Riau province-owned
\nfirm PT Bumi Siak Pusako will form a joint venture to take over
\nthe operations of the CPP block from American firm PT Caltex
\nPacific Indonesia, whose contract ends in August this year.<\/p>\n
Both parties will have equal shares in the joint venture,
\nwhich will operate in accordance with a production sharing
\ncontract system.<\/p>\n
Caltex's contract expired in August last year, but the company
\nrequested the government extend it for another year following the
\nprotracted quarrel between Pertamina and Riau over the joint
\nventure's share composition.<\/p>\n
According to Pertamina's data, under the existing contract,
\nCaltex delivers 72.73 percent of the CPP total oil output to the
\ngovernment through Pertamina, while Caltex keeps the remainder.<\/p>\n
The CPP block produces around 50,000 barrels of oil per day.<\/p>\n
It remains unclear if the government will apply a similar
\nproduction sharing scheme in the future production sharing
\ncontract to be awarded to the joint venture.<\/p>\n
Under Law No. 25\/1999 on Regional Fiscal Balance, Riau will
\nalso receive 15 percent of the total oil revenue received by the
\ncentral government in the province.<\/p>\n
Baihaki welcomed the agreement, saying the joint venture would
\nseek to maintain current production levels at the block.<\/p>\n
Thee new operator should invest about US$50 million in the
\nfirst year, he said.<\/p>\n
Meanwhile, Saleh said the agreement was expected to boost Riau
\npeople's capability in managing oil upstream business.<\/p>\n
The province also planned to take over the operation of the
\nMountain Front Kuantan oil block from Caltex when its contract
\nexpired in 2005, he added.<\/p>\n
Caltex operates another two blocks in Riau province, namely
\nthe Rokan and the Siak blocks.<\/p>\n
Riau will become the first province in the country to enter
\nthe oil upstream business, which has been long dominated by
\nforeign corporations, Pertamina and some privately-owned national
\ncompanies.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/jp11cpp-1447899208",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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