Caltex ready to help Riau operate CPP oil block

Caltex ready to help Riau operate CPP oil block

JAKARTA (JP): Oil company PT Caltex Pacific Indonesia offered
on Thursday help for the Riau provincial administration to
operate the Coastal Plains Pekanbaru (CPP) oil block should the
latter take over the block in the future.

Company spokesman Poedyo said Caltex did not mind the
provincial administration taking over the control of the block
after Caltex's 30-year production sharing contract on the block
expires in August 2001.

"Caltex will be ready to operate the block as it is doing now,
if it is trusted (by the Riau provincial administration)," Poedyo
was quoted by Antara as saying.

The statement came amid the growing pressure placed by the
central government and the House of Representatives on Caltex to
allow the state oil and gas company Pertamina to hold the
majority shares in the oil block after Caltex's contract expires.

Based on the recommendation of the previous House, the
government ordered Pertamina to set up a joint venture with
Caltex to develop the block, requiring that the state company own
the majority share in the block.

Caltex, which is jointly owned by American firms Chevron and
Texaco, however insist on a fifty percent stake in the block.

While Pertamina and Caltex are negotiating the share split,
the Riau provincial administration, backed by the provincial
council, is pushing ahead with demands to take over full
ownership of the block.

Riau's governor has lobbied Minister of Mines and Energy
Susilo Bambang Yudhoyono and Minister of Home Affairs Surjadi
Soedirdja to support the province's plan.

However, Bambang earlier said Riau may jointly own and develop
the block with Caltex and Pertamina, but he insisted Pertamina
should own the majority share in the block.

Some legislators have even called on the government to allow
Pertamina to take over full control of the oil block.

CPP produces around 70,000 barrels per day (bpd), less than 10
percent of Caltex's total production in the province.

The figure is, however, more than twice the output of the
largest national oil company Medco Energy Corp, which, with an
output of only around 30,000 bpd, has planned to float its shares
on the New York Stock Exchange.

Pertamina currently produces around 50,000 bpd.

Riau's people have repeatedly complained over the unfair
distribution by the central government of the oil revenue from
the province.

Poedyo said Caltex would not interfere in the dispute between
the provincial and central governments over the rights of the oil
in the province, adding that the company would abide by any
decision taken by the government.

He said under the current contract, Caltex was accountable to
the central government through Pertamina. But, if the Riau
provincial administration takes over the rights of the CPP block
from the central government, Caltex will be accountable to the
Riau provincial administration.

Member of Riau's provincial council Wan Abubakar said if the
central government transferred the rights of the block to the
province, the provincial administration was likely to re-appoint
Caltex to operate the block given its experience.

"What's important is that the company should employ as many
local people as possible," he said.

Meanwhile, Pertamina's president Martiono Hadianto said on
Thursday Pertamina wanted to own the majority or all shares in
the CPP block in line with the House and government's wishes.

He said Pertamina was capable of operating the block, adding
the development of the block did not require complicated
technology.

According to Martiono, Pertamina needs to put only US$35
million in initial investment.

"After that, what we have to do is extract the crude oil."
Martiono said. (jsk/rid)