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)