Pertamina, Riau to sign oil JV

CPP joint venture to go ahead

The Jakarta Post Jakarta

After years of negotiations, state oil and gas Pertamina and the Riau provincial administration have finally agreed to set up a joint venture to develop the Coastal Plains Pekanbaru (CPP) block in Riau, Minister of Energy and Mineral Resources Purnomo Yusgiantoro announced on Wednesday.

Both parties would officially sign the joint venture agreement on Thursday, he said.

The joint venture, in which Pertamina and the province would have equal shares, will take over the operation of the CPP block from American company PT Caltex Pacific Indonesia in August this year, Purnomo said.

Caltex's contract over the block expired in August last year, but the government allowed the American firm to extend its operation for another year given the fact that Pertamina and the province of Riau had not yet reached an agreement on the share composition in the joint venture.

Purnomo said the joint venture would operate the block in accordance with the production sharing contract (PSC) system.

Under the existing PSC, Caltex delivers 72.73 percent of CPP's oil output to the government via Pertamina and keeps the remaining 27.27 percent for itself.

The CPP block produces around 50,000 barrels of oil a day.

Under the Intergovernmental Fiscal Balance Law No. 25/1999, Riau will receive 15 percent of the government's share in the oil output. As one of the co-operators of the block, it will also receive half of the contractor's share in the oil output.