Caltex blockade ends in Riau

Caltex blockade ends in Riau

Tom Wright Dow Jones Jakarta

PT Caltex Pacific Indonesia, the country's largest crude oil producer, said on Friday that operations had returned to normal at its facilities in Riau province after a three-day blockade by local villagers.

Caltex, which is a unit of U.S.-based Chevron Texaco Corp. (CVX), said the villagers began blocking the roads around one small crude oil field Monday, demanding Caltex improve the roads in the area. The protesters dispersed on Thursday after police intervention, Caltex said.

The company said in a statement that it lost only 5,400 barrels in crude production due to the blockade, a small amount compared with its daily average output in Riau of 630,000 barrels a day.

Caltex has faced numerous disruptions to production in Riau from locals that have complained for years that they see little of the benefits from the extraction of natural resources in the area.

Decentralization laws two years ago - an attempt by the central government to buy off the country's most restive provinces and keep the country in one piece - have stoked discontent among villagers.

Part of the problem is that decentralization laws have given huge new powers to the provincial government in Riau, by handing it greater control over revenues from natural resources.

Critics of the decentralization law say much of this money is spent on prestige products, or is corrupted, leaving little to improve the life of villagers.

In its defense, Caltex says it has improved the infrastructure in Riau province, including building roads, schools, and a sports stadium.