Riau begins CPP operation despite unfinished business<\/p>\n
Haidir Anwar Tanjung, The Jakarta Post, Pekanbaru, Riau<\/p>\n
A joint venture between state-owned oil and gas company Pertamina
\nand the Riau province-owned firm PT Bumi Siak Pusako (BSP)
\nofficially began the operation of the Coastal Plains Pekanbaru
\n(CPP) oil block on Friday despite the existence of some
\nunfinished business between local stakeholders.<\/p>\n
Siak Regent Arwin AS told reporters after a ceremony marking
\nthe historic event in the Riau town of Siak at midnight on
\nThursday that no agreement had been reached between the regencies
\nand the provincial government over their respective shares of the
\nblock.<\/p>\n
He said that Siak regency insisted on demanding the lion's
\nshare of 70 percent of the stake belonging to Riau on the grounds
\nthat most of the block was located within Siak.<\/p>\n
The law stipulates that the central government holds 85
\npercent of the shares and the rest goes to the regional
\ngovernment. State revenue from crude oil extraction after tax is
\ndivided up in a ratio of 85:15 and from natural gas extraction at
\n70:30.<\/p>\n
The CPP block covers an area of around 9,600 square
\nkilometers, of which some 92.8 percent is located in Siak
\nregency, about six percent in Bengkalis regency and two percent
\nin Kampar and Pelalawan regencies, with a total of 486 wells
\nbeing involved.<\/p>\n
Arwin expected the unsettled dispute would not affect the
\noperation of the oil block, the first in the country ever to be
\ncontrolled by a province.<\/p>\n
\"We mean business in the way we operate the oil block, so
\nlet's put the debates behind us. This is our internal problem
\nwhich the central government is not supposed to intervene in,\"
\nArwin said.<\/p>\n
The oil block was formerly operated by American oil and gas
\ncompany PT Caltex Pacific Indonesia, whose contract expired on
\nThursday.<\/p>\n
Riau Governor Saleh Djasit had wanted only 49 percent for
\nSiak, with 15 percent of the remainder being shared by the
\nprovince and 12 percent by each of the other three regencies.<\/p>\n
The governor's written proposal to energy and mineral
\nresources minister Yusgiantoro on July 22 that the signing of a
\nproduction sharing contract between PT BSP and Pertamina's Oil &
\nGas Executive Body be postponed from the scheduled date of Aug.
\n8, 2001, was turned down by the government.<\/p>\n
As the regencies were maintaining their claims, the control
\nover the oil field remained unclear, amid rumors that the central
\ngovernment would again take over the block.<\/p>\n
\"We disagree with (central) government control. The share
\nownership within the BSP should therefore be based more on
\nbusiness considerations than local interests, which will only
\nharm the stake belonging to the Riau community,\" Thamrin Nasution
\nof the provincial legislature told The Jakarta Post.<\/p>\n
Under the new management, the joint venture company expects to
\nmaintain the current production level of 42,000 barrels of oil
\nper day. BSP president Azaly Djohan said in that in the long term
\nthe company would boost production by establishing some five new
\nwells with an investment estimated to reach up to US$1 million
\nper well.<\/p>\n
BSP has announced a plan to recruit around 285 workers, of
\nwhich 29 would come from Caltex.<\/p>\n
Arwin expressed guarded optimism that the joint venture could
\nmanage the oil block, thanks to the new recruits.<\/p>\n
\"Everything is already in place, so there's nothing to worry
\nabout,\" Arwin said.<\/p>\n
The CPP block has been a topical issue for years in view of
\nthe presence of two billion barrels of oil deposits on 30 plains
\nin the block, making CPP's assets worth $500 million.<\/p>\n
Caltex has been contributing Rp 3 billion a year to the
\nprovincial government from oil production here.<\/p>\n
In sharp contrast, Caltex's contribution to the central
\ngovernment in November, for instance, totaled US$4.5 billion,
\nwhich had prompted Riau to fight for control of part of the
\nexisting fields.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/riau-begins-cpp-operation-despite-unfinished-business-1447893297",
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