Caltex urges government to extend its CPP contract
JAKARTA (JP): PT Caltex Pacific Indonesia has appealed to the government to reconsider its decision allowing state-owned oil company Pertamina to take over the Coastal Plains Pakanbaru (CPP) oil field in central Sumatra, Caltex president director B. Hakim said yesterday.
Hakim said the government would lose US$2.1 billion in potential additional revenues if Pertamina took over the CPP field because the company had not mastered the enhanced oil recovery (EOR) technology.
He said Caltex had sent a letter to Minister of Mines and Energy I.B. Sudjana on July 7, asking for an extension of the CPP contract until 2021 after it expires in 2001.
Caltex said it would be capable of producing 423 million barrels from the oil field throughout the 20-year extension period, including 250 million barrels as a result of the application of EOR technology.
Hakim said Pertamina would not be able to produce such a capacity as it had not mastered EOR technology.
"The government will probably lose an additional 250 million barrels in oil production or $2.1 billion in additional revenue due to the stoppage of the EOR technology," Hakim told reporters.
Pertamina's president Faisal Abda'oe told the House of Representatives on Monday that he had notified Caltex on June 23 that Pertamina would take over and operate the oil field.
"Pertamina has the capability to operate the field, including technology and funding," Abda'oe said.
Abda'oe said the government had rejected Caltex's request for an extension of the CPP contract because Caltex had refused to meet its request for a 10 percent equity share for Pertamina.
Stake
Hakim admitted that Caltex had been willing to give only a 5 percent stake.
Caltex argued that the contract signed by Pertamina and Caltex in 1971 did not include an obligation to give Pertamina a 10 percent equity.
Caltex considered Pertamina's condition unfair because the government had extended the contracts of other oil companies without requiring them to give Pertamina equity shares.
"What, then, is the benefit of Caltex maintaining a good performance if Pertamina does not extend our contracts but extends the contracts of others which have performed worse?" Hakim queried.
He added that many foreign oil investors felt uneasy over Pertamina's treatment of Caltex.
Caltex, jointly owned by Chevron Corp. and Texaco Inc., currently exploits four blocks in Riau: CPP, Rokan, Mount Front Kuantan and Siak fields. The latter three contracts had all been extended.
The CPP field produces 77,000 barrels per day or 10 percent of Caltex's total gross output of 770,100 barrels per day.
Hakim said Caltex's production accounted for 45 percent of Indonesia's total oil output, but it contributed 88 percent to the government's revenue from the oil sector.
"The percentage of our contribution to government's revenue is bigger than the percentage of our production because we have the lowest production cost of $3 per barrel," Hakim said. (jsk)