Caltex says govt may extend oil field contract

Caltex says govt may extend oil field contract

JAKARTA (JP): The country's biggest oil producer, PT Caltex
Pacific Indonesia (CPI), said the government was considering
extending its contract in the Coastal Plains Pakanbaru (CPP) oil
field in Riau which expires in 2001.

CPI president Baihaki Hakim said over the weekend that it
would need a huge investment to develop the field which
contributes an average of US$400 million to the government's
coffers every year.

"In the current (difficult economic) conditions, the
development of the oil field is likely to be returned to Caltex,"
Baihaki was quoted by Antara as saying in Rumbai, Pakanbaru.

"If that happens, Caltex is ready to (continue) developing the
field," Baihaki said.

CPP currently produces 70,000 barrels per day (bpd) of crude
oil.

Last year Caltex asked then-president Soeharto to allow it to
continue developing the field for another 20 years.

Soeharto turned down the request and transferred the field to
state oil and gas company Pertamina after Caltex's contract ends.

Minister of Mines and Energy Kuntoro Mangkusubroto recently
said he was currently reviewing Soeharto's decision in light of
the fact that Pertamina was faced with huge cash flow problems
amid the monetary crisis.

Pertamina would need to invest US$1.2 billion to install
enhanced oil recovery (EOR) technology at the field to maintain
its current production level.

Kuntoro said the government was currently weighing three
alternatives for the CPP field: either Pertamina will develop it
by itself, Caltex will do it by itself or the companies will
develop it jointly.

Pertamina has said that it is determined to develop the oil
field by itself, calling on Kuntoro to honor Soeharto's decision.

Legislator Djusril Djusan who sits on House of Representatives
Commission V for mines and energy, industry and trade, manpower,
environment, investment and cooperatives, recently urged the
government to involve the commission in choosing alternatives for
the development of the field.

He told The Jakarta Post that at a recent commission hearing
Caltex had recently expressed its intention to continue
developing the oil field, but that the Commission had not yet
decided if it would back the proposal.

Djusril said he was disappointed with the fact that Caltex had
done little to help enhance the welfare of the poor people living
around its contract areas in Riau.

"Caltex has been developing the oil resource located in the
traditional land of the Sakai ethnic group for 50 years. But,
sadly, over the years, the company has only employed one Sakai
man as a security guard," Djusril said, adding Sakai people are
considered some of the country's poorest people.

"If such a situation continues, I would ask the government not
to extend Caltex's CPP contract, but give it to companies which
will care more," Djusril said.

Caltex, jointly owned by the US giant oil companies Chevron
Corp and Texaco Inc, is currently developing four blocks in Riau:
CPP, Rokan, Mount Front Kuantan and Siak. (jsk)