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)