Megawati extends Caltex oil contract for one year<\/p>\n
JAKARTA (JP): President Megawati Soekarnoputri has issued a
\ndecree extending the contract of PT Caltex Pacific Indonesia over
\nthe Coastal Plains Pekanbaru (CPP) oil block in Riau for one year
\nfollowing a lingering dispute between the central and Riau
\ngovernments over stakes in the oil block.<\/p>\n
Outgoing Vice Presidential Secretary Bambang Kesowo said on
\nFriday that the extension was ordered to allow the government and
\nthe Riau provincial administration to resolve their dispute.<\/p>\n
Caltex's production sharing contract for the oil block expires
\non Aug. 8.<\/p>\n
\"This step is being taken so that by the time the extension is
\nover there would be an acceptable stake split,\" he said.<\/p>\n
A disputes has flared between Jakarta and Riau over how big a
\nstake each party should control in a new joint venture that is to
\nbe established to manage the CPP oil block after the American oil
\nand gas firm's contract expires.<\/p>\n
Riau is demanding that it be given a 70 percent stake in the
\nnew joint venture while the government is only willing to give 10
\npercent. The remaining 90 percent would be controlled by Jakarta
\nthrough the state-owned oil and gas company Pertamina.<\/p>\n
The government had agreed in 1999 to allow Caltex and
\nPertamina to jointly operate the oil block but the decision was
\nannulled after president Abdurrahman Wahid unexpectedly bowed to
\nRiau's demand to take part in the management and operation of the
\noil block.<\/p>\n
Riau's struggle for a bigger stake intensified when Governor
\nSaleh Djasid set up a team three years ago to persuade Jakarta
\nand Pertamina to surrender the majority equity stake. But, the
\nteam's efforts have thus far been to no avail.<\/p>\n
The administration last month planned to establish a joint
\nventure company, Riau Petroleum, to further pressure Jakarta into
\nletting it control the oil block.<\/p>\n
The company will be jointly owned by Riau, and the province's
\nSiak, Bengkalis Palalawan and Kampar regencies where the oil
\nwells are located.<\/p>\n
It is estimated that the CPP oil block holds more than 2
\nbillion barrels of oil reserves in its 30 fields and 300 wells.<\/p>\n
The government has said it plans to offer Riau incentives to
\ncompensate it for its small equity interest in the CPP. These
\ninclude the possibility of Riau exporting its oil allocation by
\nitself.<\/p>\n
Bambang Kesowo also said that the President has signed
\ngovernment decrees on the debt restructuring of two state-owned
\ncompanies, power company PT PLN and port operator PT Pelindo.<\/p>\n
The decrees were a follow-up to the government's decision
\ntaken at a limited Cabinet meeting on the economy in June, he
\nsaid, but he did not elaborate.<\/p>\n
The government agreed that month to the restructuring of PLN's
\nRp 34.07 trillion (about US$3.5 billion) debt to help it stay
\nafloat.(tnt\/dja)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/megawati-extends-caltex-oil-contract-for-one-year-1447893297",
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"sponsor": "Okusi Associates",
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