Pertamina determined to take over CPP field

Pertamina determined to take over CPP field

JAKARTA (JP): State-owned oil and gas company Pertamina
asserted yesterday the government would not change its decision
allowing the company to take over the Coastal Plains Pakanbaru
(CPP) oil field in central Sumatra from PT Caltex Pacific
Indonesia (CPI).

"The government has allowed Pertamina to operate the CPP oil
field because it believes Pertamina is really capable of
operating it," Pertamina senior vice president for exploration
and production Priyambodo Mulyosudirjo said yesterday.

Priyambodo even hinted that Pertamina might also take over
other highly potential oil concessions after the end of their
contracts.

He said Minister of Mines and Energy I.B. Sudjana had sent a
letter to Pertamina on June 9 saying President Soeharto had
approved Pertamina's take over of the CPP oil field after
Caltex's contract for the field expires in 2001.

"We think the government will be consistent with its
decision," he said.

Priyambodo said Pertamina would also consider taking over
other oil fields in the country -- particularly the ones which
still had large potential -- when their contracts expired.

"The possibility that a contract will not be extended is well
understood by contractors. Therefore, the fact that the
government does not extend the CPP contract should not be
considered a big issue and won't affect investment climate in the
oil and gas sector," he said.

CPI president director B. Hakim said on Tuesday the government
would lose US$2.1 billion in potential additional revenues if
Pertamina took over the CPP field, because Pertamina had not
mastered the enhanced oil recovery (OER) technology.

Hakim said Caltex would be capable of producing 423 million
barrels from the oil field throughout the 20-year extension
period, including 250 barrels as a result of the application of
the EOR technology.

"We think Caltex underestimates our capability. We are not a
newcomer in this business," Priyambodo said.

He said Pertamina had well prepared its human resources and
funding to operate the field.

He added that about 40 Pertamina employees had been trained by
Chevron Corp. and Texaco Inc, which co-own Caltex, on EOR
technology.

"We have also applied EOR technology at some of our oil fields
in Jambi, Prabumulih and Tanjung," he said.

When asked if Pertamina would operate the oil field by itself
or give it to other contractors, Priyambodo said, "What I can say
is that Pertamina is for the moment determined to operate the oil
field by itself, and I believe the government does not want
Pertamina to act only as a broker for this field."

Caltex currently exploits four blocks in Riau: CPP, Rokan,
Mount Front Kuantan (MFK) and Siak fields. The contracts of Rokan
and Riak had been extended to 2020 and 2013 respectively, while
the MFK contract will expire in 2005.

The CPP field produces 77,000 bpd or less than 10 percent of
Caltex's total gross output of 770,100 bpd. (jsk)