Pertamina insists to develop Riau CPP oil field

Pertamina insists to develop Riau CPP oil field

JAKARTA (JP): State oil and gas company Pertamina is
determined to develop the Coastal Plains Pakanbaru (CPP) oil
field in Riau after PT Caltex Pacific Indonesia's contract
expires in 2001.

Pertamina's president, Soegianto, said Friday that Pertamina
had asked Minister of Mines and Energy Kuntoro Mangkusubroto to
honor the decision made by the previous government last year,
which would allow the state company to continue developing the
field after Caltex's 30-year contract ends.

"We want (the current government) to comply with the decision
of the former government," Soegianto said.

Caltex wanted to continue developing the block for another 20
years after 2001 but former president Soeharto gave approval last
year to Pertamina to take over the development of the block at
the end of the current contract.

Kuntoro had said earlier he would possibly revoke the previous
government's decision to transfer the development of the field to
Pertamina if the state company had financial and technical
problems to continue the development.

He said the government has three alternatives for the
development of the field after 2001.

The first alternative is for Pertamina to be given the rights
to develop the field, second, Caltex's contract to be extended,
and third, Pertamina and Caltex jointly develop the field.

"For me, it does not make any difference whether Pertamina or
Caltex develop the plan. The most important thing for me amid the
monetary crisis is how to secure the government's income from the
oil field," Kuntoro said.

Some analysts doubt Pertamina's ability to develop the field
given its financial problems.

The company has arrears amounting to US$732 million to oil and
crude importers, shipping companies and gas suppliers to mid-
1998.

The failure to meet financial obligations was mainly caused by
the late disbursement of the government's fuel subsidy to the
company, amounting to Rp 12.1 billion ($930 million) to mid-1998.

Analysts said Pertamina should install the sophisticated
enhanced oil recovery (EOR) technology at the block to maintain
its current production rate of 70,000 barrel per day (bpd),
otherwise the throughput would drop significantly.

They said Pertamina would need to invest $1.3 billion to
install the EOR technology.

Caltex, which claims to be skillful in the EOR technology,
said earlier it would be able to produce 423 million barrels of
oil from the field throughout the 20-year extension period,
including 250 million barrels as a result of applying the EOR
technology.

Soegianto denied allegations which doubt the company's ability
to develop the field.

"Who says we are not able (to develop the field)?" Soegianto
said. "Money is a small thing. We have the money and technology."

He did not, however, reveal how Pertamina would raise
financing to install the EOR technology amid the monetary crisis
and the company's cash flow problem.

Pertamina said earlier it had applied EOR technology in some
of its fields and it also had dozens of engineers who had been
trained in EOR technology by the United States' Chevron Corp and
Texaco Inc, which co-own Caltex.

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

Caltex, the country's largest oil company, currently produces
about 60 percent of the country's oil output of 1.5 million bpd.
(jsk)