Megawati extends Caltex oil contract for one year
Megawati extends Caltex oil contract for one year
JAKARTA (JP): President Megawati Soekarnoputri has issued a
decree extending the contract of PT Caltex Pacific Indonesia over
the Coastal Plains Pekanbaru (CPP) oil block in Riau for one year
following a lingering dispute between the central and Riau
governments over stakes in the oil block.
Outgoing Vice Presidential Secretary Bambang Kesowo said on
Friday that the extension was ordered to allow the government and
the Riau provincial administration to resolve their dispute.
Caltex's production sharing contract for the oil block expires
on Aug. 8.
"This step is being taken so that by the time the extension is
over there would be an acceptable stake split," he said.
A disputes has flared between Jakarta and Riau over how big a
stake each party should control in a new joint venture that is to
be established to manage the CPP oil block after the American oil
and gas firm's contract expires.
Riau is demanding that it be given a 70 percent stake in the
new joint venture while the government is only willing to give 10
percent. The remaining 90 percent would be controlled by Jakarta
through the state-owned oil and gas company Pertamina.
The government had agreed in 1999 to allow Caltex and
Pertamina to jointly operate the oil block but the decision was
annulled after president Abdurrahman Wahid unexpectedly bowed to
Riau's demand to take part in the management and operation of the
oil block.
Riau's struggle for a bigger stake intensified when Governor
Saleh Djasid set up a team three years ago to persuade Jakarta
and Pertamina to surrender the majority equity stake. But, the
team's efforts have thus far been to no avail.
The administration last month planned to establish a joint
venture company, Riau Petroleum, to further pressure Jakarta into
letting it control the oil block.
The company will be jointly owned by Riau, and the province's
Siak, Bengkalis Palalawan and Kampar regencies where the oil
wells are located.
It is estimated that the CPP oil block holds more than 2
billion barrels of oil reserves in its 30 fields and 300 wells.
The government has said it plans to offer Riau incentives to
compensate it for its small equity interest in the CPP. These
include the possibility of Riau exporting its oil allocation by
itself.
Bambang Kesowo also said that the President has signed
government decrees on the debt restructuring of two state-owned
companies, power company PT PLN and port operator PT Pelindo.
The decrees were a follow-up to the government's decision
taken at a limited Cabinet meeting on the economy in June, he
said, but he did not elaborate.
The government agreed that month to the restructuring of PLN's
Rp 34.07 trillion (about US$3.5 billion) debt to help it stay
afloat.(tnt/dja)