House to decide on Caltex's oil contract in two weeks

House to decide on Caltex's oil contract in two weeks

JAKARTA (JP): The House of Representatives promised on Tuesday
to make a decision in two weeks on the status of the development
of the Coastal Plains Pekanbaru (CPP) oil block in Riau after the
contract of PT Caltex Pacific Indonesia expires in 2001.

Marzuki Achmad, head of the House's Commission V for mines and
energy, industry and trade, manpower, investment, cooperatives
and environment, told The Jakarta Post that the commission, faced
with a tight schedule, had had no chance over the past two months
to assess the development of the oil block.

"But, we hope to make a final decision regarding the block
within two weeks," Marzuki said.

The government is required by law to get House approval for
any oil extraction contract awarded to foreign companies.

Marzuki made the statement in response to Minister of Mines
and Energy Kuntoro Mangkusubroto's complaint over the
commission's delay in making a decision regarding the block.

Kuntoro said on Monday that, in a letter, he had urged the
commission to make a decision regarding the block by the end of
last year at the latest.

"This is a serious matter because the development of the block
will involve a huge investment. Two years is not a long time for
an investor to prepare such a huge investment," Kuntoro said.

Marzuki said the House had no intention of delaying a decision
but its members had had no time to talk about the block.

The CPP block is currently being developed by PT Caltex
Pacific Indonesia (CPI) with an output of 77,000 barrels per day.

An inter-ministerial task force -- composed of officials from
the ministries of mines and energy, finance, the state
secretariat and national development planning -- recommended last
year that the block be jointly developed by state oil and gas
company Pertamina and Caltex after 2001.

The team also recommended that Caltex and Pertamina take equal
stakes in the CPP block joint venture.

It also advised the government to increase its share in the
block's oil wells -- which are being developed with primary
technology and secondary enhanced oil recovery (EOR) technology
-- from its present 85 percent.

Caltex, which is jointly owned by giant U.S. oil companies
Chevron and Texaco, has pushed for years to extend its contract
on the block for a further 20 years, but the then president
Soeharto decided in 1997 to transfer exploitation of the block to
Pertamina after the contract ends.

But, after BJ Habibie took over from Soeharto in May, 1997,
the government opted to review Soeharto's decision given
Pertamina's financial woes amid the economic crisis which had
been battering the country since mid-1997.

Kuntoro promised to honor the House decision regarding the
block, but called on the commission to make a correct, speedy
decision so as not to disrupt oil production there.

"I don't have a preference for any particular company to
develop the block. But, whoever is recommended by the commission
to be the developer, the company must be able to maintain the
block's oil output at 70,000 barrels a day ," Kuntoro warned.

Marzuki said the commission's members were thus far split into
two camps. One favored the joint venture solution recommended by
the inter-ministerial team and the other preferred Pertamina as
sole developer. (jsk)