Local firms to get better chance in oil industry<\/p>\n
JAKARTA (JP): Minister of Mines and Energy Kuntoro
\nMangkusubroto said on Friday his office would give local
\ncompanies a better chance to develop the country's oil and gas
\nreserves.<\/p>\n
The minister said that existing operators' contracts which had
\nexpired could be offered to local companies.<\/p>\n
"I want my fellow countrymen to be able to handle (the
\ndevelopment of) the country's (oil and gas) fields so much,"
\nKuntoro said at a weekly press conference.<\/p>\n
He, however, stopped short of saying whether all the country's
\noil and gas fields would be put out to tender after the contracts
\nexpire.<\/p>\n
The government formerly, through state oil and gas company
\nPertamina, in most cases allowed oil and gas contractors to
\nextend their contracts, with most lasting up to 30 years.<\/p>\n
But, analysts say, the current difficulties faced by PT Caltex
\nPacific Indonesia, a joint venture of the United States giant
\nenergy companies Chevron and Texaco, to extend its contract on
\nthe Coastal Plain Pekanbaru (CPP) oil block in Riau has sent a
\nsignal to oil and gas contractors that contract extensions can no
\nlonger be taken for granted.<\/p>\n
"The easiest alternative is extending every contract. But,
\nwhat will happen? Our people will remain backward in the oil and
\ngas industry," Kuntoro said.<\/p>\n
The country's oil and gas industry is dominated by foreign
\nfirms.<\/p>\n
Kuntoro said the government had been inclined to extend the
\ncontracts held by foreign contractors in the past because
\nPertamina and local companies were not ready to take over the oil
\nand gas fields after the contracts expired.<\/p>\n
The government had no other choice but doing that to maintain
\ncontinuity of production and secure flow of income from oil and
\ngas operations.<\/p>\n
"We were always in a disadvantageous situation so we were more
\ninclined to let the contractors extend their contracts," Kuntoro
\nsaid.<\/p>\n
Caltex<\/p>\n
Kuntoro also said the government had created a task force
\nconsisting of officials from several ministries, including the
\nMinistry of Mines and Energy, the State Secretariat and the
\nMinistry of Finance, to choose the best alternative for the
\ndevelopment of the CPP block.<\/p>\n
"The team is expected to give their answer to me by the end of
\nthe month," Kuntoro said.<\/p>\n
Kuntoro said the task force was pondering four alternatives
\nfor the development of the oil block: either Caltex or Pertamina
\nwould develop the block; they will cooperate in developing the
\nblock or it would be put out to open tender.<\/p>\n
Former president Soeharto last year allowed Pertamina to take
\nover development of the block after Caltex's contract expires in
\n2001.<\/p>\n
But the new government, which is in dire need of income from
\noil operations in the block, recently reviewed Soeharto's
\ndecision over doubts about Pertamina's financial capability to
\ndevelop the block's mature oil fields.<\/p>\n
Pertamina reportedly needs huge investments to install
\nadvanced enhanced oil recovery (EOR) technology in the block to
\nmaintain its current production rate of 77,000 barrels per day.<\/p>\n
Caltex claims to have mastered EOR technology, but Pertamina
\ninsists it would not face any difficulties raising the funds to
\ninstall the technology.<\/p>\n
The CPP Block is estimated to have a reservoir of 423 million
\nbarrels which is enough for 20 years of production at the current
\nrate. (jsk)<\/p>",
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