Pertamina-Caltex clash causes ripples: Analysts<\/p>\n
SINGAPORE (Reuter): A decision by state oil company Pertamina
\nto take over a crude field operated by Caltex -- Indonesia's most
\nprolific producer -- is unlikely to represent a major policy
\nchange, industry sources said yesterday.<\/p>\n
"It may cause a little shudder, but it's not a major blow,"
\nsaid an analyst.<\/p>\n
"This is not the first time that Pertamina has decided to take
\nover a field, although in the past they have been much smaller
\nfields. But I don't think it is a signal that Pertamina will take
\nover every field that comes up for extension," said a producer in
\nIndonesia.<\/p>\n
But the decision was likely to sour relations between Caltex
\nand Pertamina, especially as the U.S. oil group produces half the
\nOPEC country's 1.59 million barrels-per-day (bpd) output.
\nHistorically, the relationship has been close, industry sources said.<\/p>\n
Pertamina said on July 23 it would take over the Coastal Plain
\nPakanbaru (CPP) block in 2001 when the 30-year contract of the
\noperator -- Caltex Pacific Indonesia -- ran out.<\/p>\n
Caltex, equally owned by U.S. oil giants Chevron Corp and
\nTexaco Inc, operates four production sharing blocks that produce
\nmainly heavy sweet Minas and Duri crudes.<\/p>\n
The CPP block produces 77,000 barrels per day (bpd) of Minas.
\nContracts to operate the three other blocks, including the
\n695,000-bpd Rokan Block, were renewed for 30 years earlier in the
\n1990s.<\/p>\n
Industry sources said the exact reasons for Pertamina's new
\nmove remained unclear. The decision was unexpected, but did not
\nbreak the terms of the contract.<\/p>\n
"Pertamina has every right to take over the field when it
\nexpires. Caltex probably took it for granted that it would
\nreceive an extension because of its close ties with Pertamina,"
\nsaid one analyst who declined to be named.<\/p>\n
The Pertamina decision sparked an unusually public response
\nfrom Caltex, which said it doubted Pertamina's ability to fully
\nexploit the block's potential on its own.<\/p>\n
The Caltex production system is one of the most sophisticated
\nin the world and relies on enhanced recovery techniques and heavy
\nfunding to keep oil flows going.
\nPertamina replied that it was capable of handling the fields.<\/p>\n
"We regret the Caltex president's statement that Pertamina
\nwill not be able to operate the field," Pertamina exploration
\ndirector Priyambodo Mulyosudirjo told reporters last week.<\/p>\n
The decision will certainly boost Pertamina's asset base,
\ncritical if the company eventually privatizes in line with the
\nderegulation of the oil sector that is sweeping Asia.<\/p>\n
"Pertamina has previously said that it wanted to increase its
\nparticipation in the upstream," said an analyst in Indonesia.<\/p>\n
"The Caltex block still has a lot of reserves, so this is
\nprobably why they want to take over the development," she added.
\nIndustry sources said the Caltex move appeared to be an isolated
\ncase because Pertamina has renewed most production sharing
\ncontracts in recent years.<\/p>\n
Blocks operated by VICO, Total SA and Mobil Corp were all
\nextended.<\/p>\n
Indonesia has also operated a steady policy on production
\nsharing with foreign partners, building up a good track record
\nwith the industry.<\/p>\n
"When you sign a contract in Indonesia, the terms specified in
\nthe contract are stuck to rigidly. This contrasts with somewhere
\nlike maybe the U.K., when tax terms are constantly changing,"
\nsaid a European analyst.<\/p>\n
So longer term, industry sources said they doubted the
\nPertamina\/Caltex spat would change the perception for investment
\nin oil exploration and development.<\/p>\n
Producers have not reassessed their positions or investments
\nas a result of Pertamina's decision. Caltex is appealing, and
\nthat could produce a more amicable result, they said.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/pertamina-caltex-clash-causes-ripples-analysts-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}