Pertamina and Caltex negotiations suspended

Pertamina and Caltex negotiations suspended

JAKARTA (JP): Current negotiations between state oil and gas
company Pertamina and PT Caltex Pacific Indonesia over future
operations in the Coastal Plain Pekanbaru (CPP) oil producing
block, have been suspended following President Abdurrahman
Wahid's decision to allow the Riau provincial administration to
take over the block.

Minister of Mines and Energy Susilo Bambang Yudhoyono said on
Wednesday that the negotiations would no longer be needed.

"The negotiation has lost its basis with the possibility of
Riau owning the block," Bambang told reporters prior to a meeting
of economic ministers at the Bina Graha presidential office.

The government asked Pertamina and Caltex to form a joint
venture to operate the CPP block once Caltex's contract expires
next year. The two companies have been engaged in talks since
early last year to prepare the joint venture. But negotiations
did not run as expected as both parties demanded the majority
stake in the planned joint venture.

President Abdurrahman Wahid unexpectedly yielded to demands
from Riau officials to control the block.

During his visit to the province last week, the President
suggested Riau form a company to operate the block.

The statement came after Pertamina and Caltex had settled
their differences and agreed to a 55-45 stake in the joint
venture, respectively.

Bambang said that the share composition in the joint venture
had yet to receive approval from the board of commissioners,
which he chairs.

"At present, I have not given my definite approval," he said.

He said the final stakes of both companies in the CPP block
would have to await clarification of Riau's participation in the
operation.

"It's therefore highly likely that the latest share percentage
will change," Bambang added.

He said during Tuesday's night meeting with Pertamina, the
board of commissioners outlined several options to include Riau.

"We've discussed three to four options," he said, declining to
elaborate further.

Bambang expects to discuss details of Riau's involvement with
the President by Thursday.

It is unclear whether the President will grant Riau the entire
block, but state secretary Bondan Gunawan earlier indicated that
the province should join Pertamina and Caltex in a joint venture
to operate the block.

"We'll further discuss this with the Riau provincial
administration, Caltex and Pertamina," Bambang said, adding that
the House of Representatives would also be included in the
discussion.

Under the current oil and gas law, the joint venture would
receive 15 percent of the oil revenue. The remaining 85 percent
must be transferred to the government through Pertamina.

At present the CPP block produces about 70,000 barrels of
crude oil per day (bpd).

Caltex is a joint venture of American-based oil companies
Chevron Corp. and Texaco Inc. and currently operates four oil
producing blocks in Riau: CPP, Rokan, Kuantan and Siak.

Caltex is the country's largest oil producer with a current
output of 740,000 bpd, or 80 percent of Indonesia's total oil
production. (bkm/prb)