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)